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A wave equation-based semivectorial compact 2-D finite-difference time-domain (2-D-FDTD) method is developed and validated for optical waveguide modal analysis. This approach is a combination of the Maxwell's equation-based compact 2-D-FDTD and the wave equation-based semivectorial FDTD methods. Perfectly matched layer (PML) absorbing boundary condition (ABC) is also extended to this approach. Excellent accuracy is achieved for the entire spectrum even in the region near the cutoff. Through extensive study on the excitation conditions, it indicates that this method, when used as an explicit optical mode solver, is extremely robust.