2020’s Cities with the Most Overleveraged Mortgage Debtors

Adam McCann, Financial Writer  •  March 18, 2020

Adam McCann

Adam McCann, Financial Writer
Mar 18, 2020

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 recently due to the negative effect of the coronavirus pandemic on the U.S. economy. However, while the 15-year fixed-rate average and five-year adjustable rate average have continued to drop, the 30-year fixed-rate average has begun to rise again. In the wake of overall lower rates, 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

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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

Ask the Experts

As one of the biggest financial transactions of our lives, the purchase of a home requires careful assessment of our finances as well as the potential impact of a mortgage. 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?

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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 2019) 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 2018 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.”

Mortgage Calculator

Before accumulating unsustainable debt, it’s important to use a Mortgage Calculator like the one below to help you determine your monthly mortgage payment and the time it would take to pay off your debt.

Loan Info

Home Price
Down Payment
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Loan Amount
Interest Rate
Loan Term (Years)(Yrs)
Monthly Payment

Mortgage Summary

Monthly Payment
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Start Date
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Pay Off Date
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Total Interest
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Est. Closing Costs
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Year Beginning Balance Total Payment Principal Interest Ending Balance Cumulative Interest
See how your payments are allocated between interest and principal over time.

Total Home Ownership Cost

The total cost of home ownership is more than just mortgage payments. Additional monthly costs include homeowner's insurance, property taxes, Home Owners Association (HOA) dues or Condo fees, and maintainance costs. Use the options below to calcuate the full cost of homeownership. Enter your zipcode for more accurate estimates of property taxes and insurance.
Annual Income
Zip Code
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Mortgage Payment
PMI
Property Taxes
Insurance
Association Dues
Other Maintainence
Utilities
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Electricity
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Heating Fuel
Total Cost:
Tax Savings:
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Net Monthly Cost:

How you compare

Total Housing Cost vs Income Ratio
0%
Your housing costs relative to your income is greater than of all homeowners

Tips

Save on interest if you are willing to make payments every two weeks.

Making smaller payments every two weeks instead of once a month saves you interest and pays down your loan faster. How? By making payments every two weeks you actually end up paying more per year (the equivalent of one extra monthly payment).

Loan Comparison Monthly Every 2 Weeks
Mortgage Payment
Number of Payments
Start Date
Pay Off Date
Total Interest
Monthly Every 2 Weeks
Mortgage Payment
Mortgage Payment
Number of Payments
Number of Payments
Start Date
Start Date
Pay Off Date
Pay Off Date
Total Interest
Total Interest
Make extra payments of toward your loan and save more.

Making extra payments every month can reduce the total amount of interest paid and help you pay off your loan faster.

Add Extra Monthly Payment Amount
Total Monthly Cost
Loan Comparison Current Proposed
Monthly Mortgage Payment
Number of Payments
Start Date
Pay Off Date
Total Interest
Interest Savings Payoff Shortened by
Current Proposed
Monthly Mortgage Payment
Monthly Mortgage Payment
Number of Payments
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Community Discussion

Leverage the expertise of the WalletHub community to make better decisions.