When buying a home, the most important numbers for mortgage lenders are the buyer’s credit score and the buyer’s debt-to-income ratio. The first is a summary of how the buyer has been managing debt, and the second indicates whether the lender can reasonably expect the borrower to be able to pay back the loan.

Another important, if little-known, fact about debt-to-income ratios is that when they are high it is a signal that the housing market is near a top. Markets that are most sensitive to homes becoming too expensive typically include lower-priced homes or are markets where loan-to-value ratios are high.

As home prices rise, however, mortgage loan sizes typically rise as well, and if incomes don’t keep up, home buyers may obtain a mortgage loan that could become a real albatross in the event of an unexpected medical expense or job loss or some other black swan event.

Consumer website WalletHub analyzed data from 2,533 U.S. cities and ranked all of them on the basis of a “WalletHub Home Overleverage Score.” The score was derived from a city’s median mortgage debt, median house value, median income, mortgage debt-to-income ratio and mortgage debt-to-house value ratio.

The 10 U.S. cities with the highest overleverage scores are:

1. San Luis Obispo, California: 59.62
2. Williamsburg, Virginia: 58.76
3. Brooksville, Florida: 57.44
4. Bay Point, California: 56.68
5. Willis, Texas: 54.81
6. McKees Rocks, Pennsylvania: 51.52
7. Ellensburg, Washington: 50.03
8. Dumfries, Virginia: 49.27
9. North Fort Myers, Florida: 47.26
10. Kailua, Hawaii: 47.06

Using San Luis Obispo as an example, here are the numbers:

• Median mortgage debt: $333,641
• Median house value: $546,200
• Median income: $16,565
• Mortgage debt-to-income ratio: 2014%
• Mortgage debt-to-house value ratio: 61%

If your mortgage loan is 20-times larger than your annual income, you are overleveraged.

The 10 U.S. cities that are the least overleveraged and their scores are:

1. Decatur, Georgia: 3.87
2. Bronxville, New York: 4.56
3. Naples, Florida: 6.14
4. Homosassa, Florida: 6.82
5. Scarsdale, New York: 7.52
6. Bloomfield Hills, Michigan: 7.62
7. Port Richey, Florida: 9.04
8. Dublin, Ohio: 9.9
9. Cupertino, California: 9.97
10. East St. Louis, Illinois: 10.58

The breakdown for Decatur looks like this:

• Median mortgage debt: $131,215
• Median house value: $365,900
• Median income: $56,026
• Mortgage debt-to-income ratio: 234%
• Mortgage debt-to-house value ratio: 36%

For the full list and more details on the methodology, visit the WalletHub website.

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