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15 cities with the highest debt ratios in 2022

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Editor’s note: This story was originally published on Construction Coverage.

For much of the COVID-19 pandemic, favorable financial conditions for many middle- and upper-income households led to a rush of new buyers into the real estate market.

In 2020 and 2021, rising savings rates and government stimulus measures have helped millions of people pay off credit card debt, student loans and other consumer borrowing, while more recently, a tight labor market has helped raise wages. These two factors have helped potential buyers improve one of the key metrics mortgage lenders consider when evaluating mortgage applications: the debt-to-income ratio.

The debt-to-income ratio is calculated as an individual’s monthly debt payments divided by their monthly income. As regular debt payments increase relative to income, an individual’s ability to pay debts while covering other expenses becomes more difficult. For this reason, lenders assess debt-to-income ratios when approving loan applicants to ensure that borrowers will be able to reliably make payments.

The debt-to-income ratio is particularly important for mortgage loan approvals. According to data from the Home Mortgage Disclosure Act, 31.2% of mortgage applications are denied due to the applicant’s debt-to-income ratio.

To determine the locations with the highest debt-to-equity ratios, Construction Coverage researchers calculated the share of home purchase loans with a debt-to-equity ratio above 36%. In the event of a tie, the location with the highest share of home purchase loans with a debt-to-equity ratio greater than 43% was ranked first.

The data used in this analysis comes from the Home Mortgage Disclosure Act of the Federal Financial Institutions Examination Council. Only conventional home loans initiated in 2020 were taken into account.

Here are the metropolitan areas with the highest debt-to-income ratios (DTIs).

15. Seattle-Tacoma-Bellevue, WA

Seattle, Washington
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  • Share of home purchase loans with >36% DTI: 48.9%
  • Share of home purchase loans with >43% DTI: 19.2%
  • Home Purchase Loan Approval Rate for >36% DTI: 89.4%
  • Home Purchase Loan Approval Rate for >43% DTI: 81.4%
  • Homeownership loan approval rate for all loans: 92.1%
  • Median interest rate on all home loans: 3.13%

14. Phoenix-Mesa-Chandler, AZ

Phoenix, Arizona
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  • Share of home purchase loans with >36% DTI: 49.3%
  • Share of home purchase loans with >43% DTI: 19.7%
  • Home Purchase Loan Approval Rate for >36% DTI: 89.0%
  • Home Purchase Loan Approval Rate for >43% DTI: 81.7%
  • Homeownership loan approval rate for all loans: 91.3%
  • Median interest rate on all home loans: 3.25%

13. San Antonio-New Braunfels, TX

San Antonio, Texas away
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  • Share of home purchase loans with >36% DTI: 49.7%
  • Share of home purchase loans with >43% DTI: 21.7%
  • Home Purchase Loan Approval Rate for >36% DTI: 75.6%
  • Home Purchase Loan Approval Rate for >43% DTI: 62.6%
  • Homeownership loan approval rate for all loans: 81.4%
  • Median interest rate on all home loans: 3.25%

12. Tampa-St. Petersburg-Clearwater, Florida

Tampa, Florida
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  • Share of home purchase loans with >36% DTI: 49.8%
  • Share of home purchase loans with >43% DTI: 20.2%
  • Home Purchase Loan Approval Rate for >36% DTI: 83.3%
  • Home Purchase Loan Approval Rate for >43% DTI: 72.4%
  • Homeownership loan approval rate for all loans: 87.0%
  • Median interest rate on all home loans: 3.25%

11. San Jose-Sunnyvale-Santa Clara, CA

The San Jose skyline, which has a median rent lower than the median mortgage payment
stellamc / Shutterstock.com
  • Share of home purchase loans with >36% DTI: 49.9%
  • Share of home purchase loans with >43% DTI: 15.4%
  • Home Purchase Loan Approval Rate for >36% DTI: 87.8%
  • Home Purchase Loan Approval Rate for >43% DTI: 75.8%
  • Homeownership loan approval rate for all loans: 90.6%
  • Median interest rate on all home loans: 2.99%

10. Denver-Aurora-Lakewood, CO

Denver, Colorado
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  • Share of home purchase loans with >36% DTI: 50.3%
  • Share of home purchase loans with >43% DTI: 21.9%
  • Home Purchase Loan Approval Rate for >36% DTI: 90.3%
  • Home Purchase Loan Approval Rate for >43% DTI: 83.9%
  • Homeownership loan approval rate for all loans: 92.7%
  • Median interest rate on all home loans: 3.13%

9. Orlando-Kissimmee-Sanford, Florida

Orlando Skyline
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  • Share of home purchase loans with >36% DTI: 51.4%
  • Share of home purchase loans with >43% DTI: 22.0%
  • Home Purchase Loan Approval Rate for >36% DTI: 81.2%
  • Home Purchase Loan Approval Rate for >43% DTI: 70.2%
  • Homeownership loan approval rate for all loans: 85.0%
  • Median interest rate on all home loans: 3.25%

8. Sacramento-Roseville-Folsom, CA

Adonis Villanueva / Shutterstock.com
  • Share of home purchase loans with >36% DTI: 51.8%
  • Share of home purchase loans with >43% DTI: 20.7%
  • Home Purchase Loan Approval Rate for >36% DTI: 89.3%
  • Home Purchase Loan Approval Rate for >43% DTI: 81.6%
  • Homeownership loan approval rate for all loans: 91.4%
  • Median interest rate on all home loans: 3.13%

7. Salt Lake City, UT

Salt Lake City, UT
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  • Share of home purchase loans with >36% DTI: 52.4%
  • Share of home purchase loans with >43% DTI: 21.8%
  • Home Purchase Loan Approval Rate for >36% DTI: 89.0%
  • Home Purchase Loan Approval Rate for >43% DTI: 81.8%
  • Homeownership loan approval rate for all loans: 90.8%
  • Median interest rate on all home loans: 3.25%

6. Fresno, CA

Fresno California
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  • Share of home purchase loans with >36% DTI: 53.3%
  • Share of home purchase loans with >43% DTI: 19.9%
  • Home Purchase Loan Approval Rate for >36% DTI: 89.4%
  • Home Purchase Loan Approval Rate for >43% DTI: 80.2%
  • Homeownership loan approval rate for all loans: 90.1%
  • Median interest rate on all home loans: 3.13%

5. Las Vegas-Henderson-Paradise, NV

Las Vegas Skyline
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  • Share of home purchase loans with >36% DTI: 54.9%
  • Share of home purchase loans with >43% DTI: 23.4%
  • Home Purchase Loan Approval Rate for >36% DTI: 85.6%
  • Home Purchase Loan Approval Rate for >43% DTI: 77.7%
  • Homeownership loan approval rate for all loans: 87.8%
  • Median interest rate on all home loans: 3.25%

4. San Diego-Chula Vista-Carlsbad, CA

Dance Shots / Shutterstock.com
  • Share of home purchase loans with >36% DTI: 56.2%
  • Share of home purchase loans with >43% DTI: 24.2%
  • Home Purchase Loan Approval Rate for >36% DTI: 86.9%
  • Home Purchase Loan Approval Rate for >43% DTI: 78.5%
  • Homeownership loan approval rate for all loans: 89.5%
  • Median interest rate on all home loans: 3.13%

3. Los Angeles-Long Beach-Anaheim, CA

The streets of Los Angeles, where the median rent is relatively low
Sean Pavone / Shutterstock.com
  • Share of home purchase loans with >36% DTI: 57.9%
  • Share of home purchase loans with >43% DTI: 24.8%
  • Home Purchase Loan Approval Rate for >36% DTI: 86.0%
  • Home Purchase Loan Approval Rate for >43% DTI: 77.7%
  • Homeownership loan approval rate for all loans: 88.7%
  • Median interest rate on all home loans: 3.13%

2. Miami-Fort Lauderdale-Pompano Beach, Florida

GagliardiImages / Shutterstock.com
  • Share of home purchase loans with >36% DTI: 58.5%
  • Share of home purchase loans with >43% DTI: 26.2%
  • Home Purchase Loan Approval Rate for >36% DTI: 81.5%
  • Home Purchase Loan Approval Rate for >43% DTI: 72.9%
  • Homeownership loan approval rate for all loans: 83.6%
  • Median interest rate on all home loans: 3.25%

1. Riverside-San Bernardino-Ontario, CA

Riverside, California
MattGush / Shutterstock.com
  • Share of home purchase loans with >36% DTI: 60.3%
  • Share of home purchase loans with >43% DTI: 26.3%
  • Home Purchase Loan Approval Rate for >36% DTI: 85.4%
  • Home Purchase Loan Approval Rate for >43% DTI: 77.3%
  • Homeownership loan approval rate for all loans: 87.5%
  • Median interest rate on all home loans: 3.13%

Methodology

Man analyzing data on laptop
fizkes / Shutterstock.com

The data used in this analysis comes from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act. Only conventional home loans initiated in 2020 were taken into account.

To determine where debt-to-income ratios are highest, the researchers calculated the share of home purchase loans with a debt-to-income ratio above 36%. In the event of a tie, the location with the highest share of home purchase loans with a debt-to-equity ratio greater than 43% was ranked first.

To improve relevance, only metropolitan areas with at least 100,000 inhabitants were included.

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