To process a combined home purchase loan in the United States, the borrower must secure both a primary mortgage and a secondary mortgage from separate lenders. The primary mortgage typically covers 80% of the home’s appraised value, while the secondary mortgage (e.g., a home equity loan or HELOC) covers the remaining 20%. Lenders evaluate the borrower’s credit score, income stability, debt-to-income ratio, and assets to ensure repayment capacity. The combined loan-to-value (CLTV) ratio must align with the lenders’ risk thresholds, often capped at 90-95% for conforming loans. The process involves joint underwriting, where both lenders assess the borrower’s qualifications and coordinate closing documents. Once approved, the loans are closed simultaneously, with the primary mortgage recorded first.

The combined home purchase loan model is common for borrowers seeking to avoid private mortgage insurance (PMI) on loans exceeding 80% of the home’s value. However, lenders impose stricter criteria due to higher CLTV ratios, which correlate with elevated default risks. Data from the Urban Institute (2020) shows that loans with CLTVs above 90% had default rates 1.5 times higher than those below 80%. Additionally, the Federal Housing Finance Agency (FHFA) reports that non-conforming loans (exceeding $765,800 in 2024) require dual underwriting to mitigate risk, as these loans are not eligible for Fannie Mae or Freddie Mac guarantees. In 2023, the Mortgage Bankers Association noted a 12% increase in combined loan originations, driven by rising home prices and limited conforming loan availability. By structuring loans to balance risk and borrower needs, lenders ensure compliance with regulatory standards while meeting market demands for higher borrowing limits. This approach balances accessibility with prudent risk management, supported by empirical data on CLTV performance and underwriting best practices.