B2-1.2-01, Loan-to-Value (LTV) Ratios (06/01/2022)

The maximum allowable LTV ratio for a first mortgage is based on a number of factors including, the representative credit score, the type of mortgage product, the number of dwelling units, and the occupancy status of the property.

The following table describes the requirements for calculating LTV ratios for a first mortgage transaction. The result of these calculations must be truncated (shortened) to two decimal places, then rounded up to the nearest whole percent. For example:

• 94.01% will be delivered as 95%, and

• 80.001% will be delivered as 80%.

The rounding rules noted above also apply to the CLTV and HCLTV ratio calculations. Lenders' systems must contain rounding methodology that results in the same or a higher LTV ratio.

Note: The LTV ratio calculations shown above may differ for certain mortgage loans. For details on these differences, see  B2-1.3-05, Payoff of Installment Land Contract RequirementsB2-1.3-05, Payoff of Installment Land Contract Requirements; B5-2-03, Manufactured Housing Underwriting RequirementsB5-2-03, Manufactured Housing Underwriting Requirements; B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing TransactionsB5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions; B5-3.3-01, HomeStyle Energy for Improvements on Existing PropertiesB5-3.3-01, HomeStyle Energy for Improvements on Existing Properties; B5-3.2-03, HomeStyle Renovation Mortgages: Collateral ConsiderationsB5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations; B5-5.1-02, Community Seconds Loan EligibilityB5-5.1-02, Community Seconds Loan Eligibility;   B5-5.2-02, Loans with Resale Restrictions: Eligibility, Collateral and Delivery RequirementsB5-5.2-02, Loans with Resale Restrictions: Eligibility, Collateral and Delivery Requirements; B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral RequirementsB5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral Requirements; and  B7-1-01, Provision of Mortgage InsuranceB7-1-01, Provision of Mortgage Insurance.

Refer to the Eligibility Matrix  for maximum allowable LTV ratios.

DU uses information in the loan application to determine the sales price and appraised value it uses to calculate the LTV, CLTV, and HCLTV ratios.

DU uses the amounts entered in the following data fields in the online loan application:

Sales price = Line A + Line B + Line C (in Section L4)

• Line A = Sales Contract Price (the sales price for purchase transactions, or the cost of construction for construction transactions).

• Line B = Improvements, Renovations,  and Repairs (the cost of these items for HomeStyle Renovation transactions).

• Line C = Land Value (For certain construction or manufactured home transactions the cost or value of the land if the borrower acquired the lot separately).

Appraised value = Appraised Property Value (in Section 4a)

Note: If the Appraised Property Value is not present, DU will use the Estimated Property Value. The Appraised Property Value must be entered (when available) and the loan casefile must be resubmitted.

An LLPA may apply to certain mortgages based on the loan-to-value (LTV) ratio and representative credit score. These LLPAs are in addition to any other price adjustments that are otherwise applicable to the particular transaction. See the Loan-Level Price Adjustment (LLPA) Matrix .