Subordination Agreement Calculator

Refinancing your first mortgage with a HELOC in place requires a subordination agreement. Calculate your combined LTV, see whether the HELOC lender is likely to approve, and understand your options if they deny the request.

$
$
$
%
yrs
$
Combined LTV After Refi
73.3%
1st mortgage: 62.2% + HELOC: 11.1% = 73.3% CLTV
Subordination Likely?
Yes
New 1st Payment
$1,770/mo
Subordination Fee
$300
Total Costs (Sub + Refi)
$8,300
Very likely approved — CLTV well under 80%

When you refinance your first mortgage, you are replacing your old first lien with a new one. Your HELOC, which was in second position behind your old mortgage, must agree to remain in second position behind the new mortgage. That agreement is called a subordination agreement.

Before Refi
1st Position: Old mortgage ($280,000)
2nd Position: HELOC ($50,000)
During Refi (Without Sub)
Old 1st mortgage paid off by refi.
HELOC moves to 1st position automatically.
New mortgage cannot close — it would be in 2nd position.
With Subordination Agreement
HELOC agrees in writing to stay in 2nd position.
1st Position: New mortgage ($280,000)
2nd Position: HELOC ($50,000) — unchanged
CLTV After Refi
73.3%
Combined loan-to-value — key approval metric
1st Mortgage LTV
62.2%
New first mortgage alone
Risk to HELOC Lender
Minimal — CLTV under 80%, lender well protected
Why they may approve or deny
Your New Payment
$1,770/mo
New first mortgage only

If the HELOC lender denies subordination, you have three paths forward:

Option 1: Close HELOC

Pay off and close the HELOC before closing on the refi. The HELOC is released; no subordination needed.

Pro: Refi proceeds without complication
Con: Lose your HELOC; reopen later at higher rate or lower limit
Option 2: Cash-Out Refi to Combine

Do a cash-out refi to pay off the HELOC. New first mortgage = $330,000. No second lien, no subordination needed.

Pro: Simplifies to one loan
Con: Higher balance, may increase rate; CLTV issues resolved
Option 3: Different HELOC Lender

Pay off old HELOC at refi closing; reopen a new HELOC after the refi records. Takes 30–60 days after closing.

Pro: Keep HELOC access, potentially better terms
Con: Gap in access; new approval required
Pay Off HELOC Cost
$50,000
Cash needed to close HELOC before refi
Cash-Out Refi New Loan
$330,000
If combining both into new first
New CLTV (combined)
73.3%
If cash-out refi used to combine

How to Use This Subordination Agreement Calculator

Enter your Home Value, the New 1st Mortgage Balance (your refinance amount — typically equal to your current balance for a rate-and-term refi), your HELOC Balance, and your new mortgage rate and term. The calculator shows your combined loan-to-value (CLTV), estimates whether the HELOC lender will agree to subordinate, and displays the total costs of the refinance including the subordination fee.

A subordination agreement is required any time you refinance a first mortgage when a second lien (HELOC or second mortgage) is already in place. Without it, the refi cannot close.

Subordination Agreement Math

CLTV = (New 1st Mortgage + HELOC Balance) ÷ Home Value

1st Mortgage LTV = New 1st Mortgage ÷ Home Value

Subordination Likely Approved: CLTV ≤ 80–90% (varies by lender)

Total Refi Cost = Subordination Fee + Standard Closing Costs

Example: Refinancing with a HELOC in Place

Rate-and-Term Refi — HELOC Subordination

Home Value$450,000
Current 1st Mortgage (to refi)$280,000
HELOC Balance$50,000
Combined Balance$330,000
CLTV73.3%
Subordination LikelihoodVery Likely — CLTV well under 80%
Subordination Fee$300 (typical)
Sub Processing Time2–4 weeks

With a CLTV of 73.3%, the HELOC lender has significant equity protecting their second-lien position. Most lenders will approve subordination in this scenario. The only added cost is the subordination fee ($100–$500), which is a small price compared to the savings from refinancing the first mortgage.

Frequently Asked Questions

A subordination agreement is a legal document in which the holder of a second lien (your HELOC lender) agrees to remain in second position behind a new first mortgage. Without this agreement, when your old first mortgage is paid off during the refinance, your HELOC would automatically advance to first-lien position — making it impossible for the new mortgage to be a first lien. The subordination agreement maintains lien priority as: new mortgage first, HELOC second.
Not always. The HELOC lender reviews the request just like a new loan application — they check your credit score, payment history on the HELOC, and the combined LTV after the refinance. If the combined LTV stays under 80–85%, most lenders approve without issue. If you have late payments on the HELOC, a low credit score, or the new first mortgage is significantly larger than the current one, the HELOC lender may deny the request or require additional conditions.
The HELOC lender typically takes 2–4 weeks to review the request, order a property valuation, and issue the subordination agreement. This is why you must submit the subordination request on the same day you apply for the refinance — running both processes in parallel. If you wait until your refi is in underwriting to request subordination, you risk your rate lock expiring while waiting, forcing you to pay a lock extension fee or re-lock at a potentially higher rate.
You have three options: (1) Pay off and close the HELOC before the refi closes — you lose the credit line but the refi proceeds; (2) Do a cash-out refinance that includes both the first mortgage and HELOC balance in the new loan, eliminating the second lien; or (3) Pay off the HELOC at closing using refi proceeds, then reopen a new HELOC from a different lender after the new first mortgage records. Each option has trade-offs — paying off the HELOC is simplest but costs liquidity.
Yes, significantly. When you do a cash-out refinance, your new first mortgage is larger than your old one. This means more senior debt is placed ahead of the HELOC in lien position, increasing the HELOC lender's risk. Many HELOC lenders will deny subordination for cash-out refis that push the CLTV above 80–85%, or they may charge a higher subordination fee. A rate-and-term refi (no cash-out) is much easier to get subordinated because the first mortgage balance stays the same.

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