What is the maximum Combined Loan-to-Value (CLTV) percentage allowed for rehab loans?

The correct answer is 110%. In the context of rehabilitation loans, the Combined Loan-to-Value (CLTV) ratio is a crucial metric that measures the total amount of all loans secured by a property against its appraised value. For rehab loans, which are specifically designed for purchasing a home and funding necessary renovations, lenders allow a higher CLTV to accommodate both the purchase price and the cost of the improvements.

This maximum CLTV of 110% reflects the understanding that the value of the property will increase as a result of the renovations and repairs. It enables borrowers to access additional funds beyond the traditional mortgage limits, making it feasible for them to invest in significant repairs or upgrades without immediate out-of-pocket expenses. This is particularly important for properties that may need substantial work to bring them up to livable or market standards.

Thus, the 110% maximum CLTV for rehab loans supports homebuyers in improving their properties effectively while ensuring that they do not exceed financing limits that could pose undue risk to both the lender and the borrower.