A Texas homeowner's property has a fair market value of $350,000. The homeowner has a first mortgage balance of $200,000 and wants to obtain a home equity line of credit (HELOC). Under Texas law, the maximum HELOC amount is approved. What is the borrower's combined loan-to-value (CLTV) ratio after obtaining the HELOC?
Correct Answer
C) 80.00%
Under Texas Constitution Article XVI, Section 50(a)(6)(B), total liens on a homestead cannot exceed 80% of fair market value. The maximum HELOC = ($350,000 x 0.80) - $200,000 = $280,000 - $200,000 = $80,000. The combined loans would be $200,000 + $80,000 = $280,000. CLTV = $280,000 / $350,000 = 80.00%.
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