Key Takeaways
- CLTV is often the main factor lenders use to decide whether to approve or deny a HELOC, even when your credit and income are strong.
- Even small changes in your home value or mortgage balance can push the CLTV above lender thresholds.
- You can improve your CLTV over time by paying down your mortgage, increasing your home’s value, or requesting a smaller credit line.
When applying for a home equity line of credit (HELOC), you might assume the main factors your lender looks at are your credit score and income.
And while they do matter, many HELOC decisions hinge on a less visible number: the combined loan-to-value ratio, or CLTV.
Your CLTV determines whether a lender will approve your application and how much you’ll actually be allowed to borrow. And if a HELOC offer comes back smaller than expected — or is denied outright — the CLTV is often why.
What is CLTV?
CLTV measures how much of your home’s value is already tied up in loans. It includes your primary mortgage balance plus any other liens on the home, along with the HELOC you’re applying for.
For example, if your home is worth $400,000 and you owe $240,000 on your mortgage, your loan-to-value ratio is 60%. If you apply for a $40,000 HELOC, your total loans would rise to $280,000. That puts your CLTV at 70%. Lenders use the CLTV to understand how much equity cushion exists if home values fall or if they ever need to recover losses through a sale.
Most HELOC lenders set maximum CLTV thresholds, usually around 80%, 85%, or 90%. Staying below these cutoffs usually leads to an easier approval and larger credit lines. But once you cross them, you’ll find yourself with far fewer lending options.
Small changes in home value can make a big difference here. If your CLTV is already near a cutoff, even a modest appraisal adjustment can push it over the line. Even a few percentage points up or down in value can mean the difference between approval and denial.
How CLTV impacts your HELOC approval
Your mortgage balance plays a central role in your CLTV because it’s usually the largest loan tied to your home.
As you pay down your mortgage over time, your CLTV naturally improves, even if your home’s value stays the same. That gradual improvement often increases the amount of equity a lender is willing to let you access.
On the flip side, recent refinancing or cash-out activity can work against you. Increasing your mortgage balance raises the CLTV, sometimes enough to limit HELOC eligibility.
This is why even homeowners who’ve built a lot of equity in their homes are sometimes surprised by their smaller-than-expected credit lines.
CLTV affects both the likelihood of approval and the size of your credit line. If your projected CLTV exceeds a lender’s maximum, the HELOC may be denied entirely. If it falls close to the limit, lenders may approve the HELOC but reduce the credit line to stay within their risk tolerance.
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How borrowers can improve their CLTV
If you’re having a hard time qualifying for HELOC, improving your CLTV is the best place to start. This process takes time, but here are some practical strategies you can use:
Strategies to improve your CLTV
- Pay down your primary mortgage: Reducing your mortgage balance directly lowers your CLTV, and even a few extra payments can make a difference, especially if you’re near a lender’s cutoff. Over time, consistent paydowns improve both your approval odds and your potential credit limits.
- Increase your home’s value: Home values often rise gradually over time, which can naturally improve CLTV. In some cases, homeowners can also support a higher appraisal through targeted improvements. Projects like kitchen updates, bathroom remodels, roof replacements, or additions that increase usable square footage tend to carry more weight in appraisal than cosmetic changes alone.
- Request a smaller HELOC amount: The size of the HELOC you request directly affects your CLTV. Applying for a smaller line may bring your projected CLTV below a lender’s maximum, increasing the likelihood of approval. Some borrowers start with a modest credit line and revisit a higher limit later once balances fall or values rise.
- Improve your debt-to-income (DTI) ratio: While CLTV often sets the ceiling, lenders still consider your ability to manage payments. Lowering other debts can strengthen your overall application and make lenders more comfortable approving a HELOC near their CLTV limits.
- Boost your credit score: A strong credit profile won’t override an excessive CLTV, but it can help at the margins. Higher scores may expand lender options or lead to better terms when the CLTV falls within acceptable ranges.
The bottom line
Combined home-to-value ratio is one of the most important and least understood factors in HELOC approval. It influences whether you qualify at all and how much equity you can access.
Before applying, it’s worth estimating your CLTV and comparing it to common lender thresholds. If the numbers are close, taking steps to improve your position — whether through mortgage payoff, timing, or a smaller request — can help you avoid surprises and put you in a stronger negotiating position with lenders.
If you’re ready to pursue a HELOC, reach out to your lender to get started.
