FHA Loan Expert Blog

Many borrowers purchased properties with an 80/20 mortgage loan.  The property has since gone down in value and the combined loan to value (CLTV) is now above 100%.  Let’s use the following numbers as an example.

A family purchased a property for $200k with a $160,000 first mortgage and a $40,000 second mortgage.  Two years later, the home is only worth $170,000.  The CLTV = 200/170 = 117.6%.  In this scenario, it would appear to be difficult for this family to refinance their mortgage loan.  Not true!  The second mortgage can subordinate through a subordination agreement and this family can refinance the first mortgage with a new FHA loan.

FHA has no CLTV restrictions for refinancing.  Now, certain FHA lenders have limitations, but FHA does not.  Simply select your FHA mortgage lender carefully and the CLTV restriction will not be a problem.

Find FHA mortgage lenders with no CLTV restrictions in your State.

This entry was posted on Tuesday, April 15th, 2008 at 7:01 pm and is filed under FHA CLTV. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.