Buying a home represents an important milestone for most consumers. But for those who dive in to the deep end of real estate without a financial safety net, the decision could lead to buyer’s remorse in the long run. Mortgage rates hit an all-time low during the coronavirus pandemic, but they are beginning to rise again as conditions start to improve. In the wake of rates that are still quite low overall, many homeowners have looked to refinance, and many other Americans are wondering if now is a good time to buy.
As with any major financial decision, it’s wise to improve one’s credit score before applying for a mortgage in order to qualify for the best possible rates. Using a Mortgage Calculator can also help to determine an affordable monthly payment and realistic payoff timeline, whether borrowing for the first time or refinancing an existing loan. Without a good grasp of how to pay off mortgage debt, consumers might find that debt unsustainable.
In this report, WalletHub determined which cities are home to the most overleveraged mortgage debtors by comparing the median mortgage balances against the median income and median home value in more than 2,500 cities. Read on for our findings, expert homebuying advice and a full description of our methodology.
Main Findings
Cities with the Highest Mortgage Debts
| Percentile Rank* | City | WalletHub Home Overleverage Score** | Median Mortgage Debt | Median House Value | Median Income | Mortgage Debt-to-Income Ratio | Mortgage Debt-to-House Value Ratio |
|---|---|---|---|---|---|---|---|
| 99 | Willis, TX | 66.57 | $141,804 | $84,500 | $25,570 | 555% | 168% |
| 99 | Dumfries, VA | 66.49 | $280,392 | $213,300 | $39,079 | 718% | 131% |
| 99 | Bell Gardens, CA | 62.57 | $260,390 | $415,200 | $27,257 | 955% | 63% |
| 99 | Ewa Beach, HI | 62.25 | $378,795 | $561,600 | $40,636 | 932% | 67% |
| 99 | McKees Rocks, PA | 62.15 | $114,874 | $56,500 | $35,280 | 326% | 203% |
| 99 | Kahului, HI | 61.37 | $374,859 | $619,000 | $39,691 | 944% | 61% |
| 99 | Lahaina, HI | 58.98 | $390,616 | $684,500 | $42,356 | 922% | 57% |
| 99 | Santa Ana, CA | 56.36 | $289,561 | $501,400 | $33,144 | 874% | 58% |
| 99 | Santa Maria, CA | 54.5 | $252,636 | $348,700 | $32,329 | 781% | 72% |
| 99 | Watsonville, CA | 54.28 | $283,823 | $477,200 | $34,002 | 835% | 59% |
| 99 | Park City, UT | 54.03 | $382,745 | $890,100 | $42,440 | 902% | 43% |
| 99 | Fallbrook, CA | 54.02 | $336,711 | $533,300 | $41,394 | 813% | 63% |
| 99 | Waipahu, HI | 53.92 | $319,105 | $635,600 | $36,731 | 869% | 50% |
| 99 | Union City, NJ | 53.84 | $249,389 | $344,500 | $32,371 | 770% | 72% |
| 99 | Escondido, CA | 53.46 | $322,643 | $465,500 | $41,548 | 777% | 69% |
| 99 | Bay Point, CA | 53.38 | $290,095 | $345,300 | $40,911 | 709% | 84% |
| 99 | York, PA | 52.92 | $126,807 | $80,700 | $33,662 | 377% | 157% |
| 99 | Blacklick Estates, OH | 52.65 | $147,661 | $93,700 | $40,104 | 368% | 158% |
| 99 | Beverly Hills, CA | 52.06 | $780,457 | $2,000,000 | $88,032 | 887% | 39% |
| 99 | Spring Valley, NY | 52 | $261,275 | $317,400 | $37,594 | 695% | 82% |
| 99 | Hollister, CA | 51.47 | $342,131 | $479,000 | $46,576 | 735% | 71% |
| 99 | Imperial Beach, CA | 51.22 | $321,999 | $585,100 | $40,160 | 802% | 55% |
| 99 | Richmond, TX | 51.03 | $186,870 | $167,900 | $33,992 | 550% | 111% |
| 99 | El Cajon, CA | 50.75 | $313,886 | $457,900 | $42,904 | 732% | 69% |
| 99 | Vista, CA | 50.69 | $305,784 | $492,200 | $40,154 | 762% | 62% |
| 99 | National City, CA | 50.39 | $256,356 | $410,800 | $33,856 | 757% | 62% |
| 99 | Trenton, NJ | 50.39 | $141,312 | $100,400 | $34,816 | 406% | 141% |
| 99 | Canton, MS | 50.16 | $147,745 | $124,200 | $29,565 | 500% | 119% |
| 99 | Santa Paula, CA | 50.1 | $270,039 | $404,100 | $36,985 | 730% | 67% |
| 99 | Huntington Park, CA | 49.75 | $225,115 | $415,100 | $28,791 | 782% | 54% |
*99th Percentile = Most Overleveraged
**100 Points = Highest WalletHub Home Overleverage Score (Most Overleveraged)
Ask the Experts
As one of the biggest financial transactions in a lifetime, the purchase of a home requires careful assessment of one’s finances. For advice on both buying and owning a home, we asked a panel of experts to weigh in with their thoughts on the following key questions:
- Is now a good time to buy a home?
- What are the most common financial mistakes people make when buying a home, and which are most costly in the long-term?
- If someone is currently overleveraged and has trouble affording their mortgage payments, what steps should they take?
- Is there any way for an individual to tell if his or her local housing market is overpriced?
- Are there certain housing markets or circumstances in which it is acceptable to be overleveraged in mortgage debt? If so, how much is too much?
- According to a recent study, household debt increased by $87 billion in the third quarter of 2020. What drives Americans to take on much more debt during the pandemic?
Ask the Experts
Ph.D. – Professor of Finance; Director, Financial Services Lab., Kogod School of Business – American University
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MRE CCIM – Adjunct Lecturer, Masters of Real Estate Development (MRED) – University of Arizona
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Assistant Professor, Helen and O.N. Mitchell, Jr Faculty Fellow in Real Estate, Mays Business School – Texas A&M University
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Assistant Professor of Business and Economics, School of Business, Arts & Media – Cabrini University
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AIA – Adjunct Professor - CCE, Lecturer Construction/Facilities Management, Continuing and Professional Studies – Pratt Institute
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Ph.D., CFP® – Assistant Professor of Finance, College of Business Administration – University of Nebraska at Omaha
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Methodology
In order to determine the cities where people are most overleveraged on their homes, WalletHub first calculated the ratio between the median mortgage debt (based on TransUnion data from September 2020) and the median income in each of 2,530 U.S. cities. Next, we calculated the ratio between each city’s median mortgage debt and its median home value. Our sample considers only the city proper in each case and excludes the surrounding metro area.
Note: The median income for each city is based on the 2019 earnings of individuals aged 16 and older who worked full-time year-round, according to the U.S. Census Bureau's American Community Survey. The figure excludes income from sources other than work.
For each ratio, we determined a score, assigning 50 points to the city with the highest ratio and 0 points to the city with the lowest. For the cities in between, we linearly extrapolated between the two extremes.
We then calculated the overall ranking, or Home Overleverage Score, by adding the two scores. An overall percentile rank of 99, as reflected in our Main Findings, corresponds with the city with the highest total score and therefore represents the “most overleveraged.”
