Due to the increased rates from a few years ago there have been many more people requesting Home Equity Loans recently.  The higher rates have slowed down applications for new refinances as homeowners do not wish to give up the low rate they have on the first mortgage just take out cash to pay off credit card debt, put in the new kitchen or bathroom that has been on the list.    

Due to the increased demand the options on getting 2nd mortgages have really increased.  As a matter of fact, I have never seen so many options come about in my 25-year lending career.  With all the options on how the loan is structured, what you need to qualify is generally not changed.

Below I will list the general qualifications for 2nd mortgages and this includes HELOCS (home equity lines of credit), Fixed 2nd Mortgage, Equity Loan, Home Equity Loan, etc.).

Second Mortgage

The maximum combined loan to value (CLTV) is how much you can borrow in relation to the value of your home and includes what you owe on your first.  As an example: If the max CLTV is 80% and your home is worth $100,000, you can borrow a total of $80,000.  If your first mortgage is $65,000 then you could take out a 2nd mortgage of $15,000 ($65,000 + $15,000 = $80,000)

OK now that we now know what that means, this is what you can expect from many lenders for a 1 unit property on a 2nd mortgage…

1. The max CLTV you can get on the high side is 85% if you have a 740 FICO score
2. The max CLTV you can get on the low side is 75% if you have a 640 FICO score
3. The maximum debt ratio accepted is 50% (this means if you make $6,000/month then all your payments on your credit report along with all your mortgage payments (PITI) is less than $3,000/month

For a 3rd mortgage on an owner-occupied home…

1. The max CLTV is 70% with a minimum FICO score of 680
2. The maximum debt ratio is 50%

For a 2nd mortgage on a single unit non-owner occupied (2nd homes and investment properties) …

1. The max CLTV is 70% with a minimum FICO score of 680

For a 2nd mortgage on a duplex…

1. The max CLTV is 70% with a minimum FICO score of 680 if non-owner occupied
2. The max CLTV is 80% with a minimum FICO score of 680 if owner occupied
3. The max debt ratio is 45%

As a broker I can often find an additional 5% loan to value to lend and often at 20 points less FICO score so the above is a general idea of what you will find.  If you are close or have some questions, give me a call and I can let you know what is currently available for you.  

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