California tops the list for highest leverage ratios!

We all know that buying a home in many areas of California can be a challenge. The Monterey Peninsula is no exception and this summer's HOT market continues to move prices upward as demand rises and inventory remains low. In a recent study by Lending Tree, money borrowed was analyzed against a person's income. The general rule is that no more than 3 times your annual income should be spent on buying a home but obviously, most buyers can't meet that guideline. When lenders calculate your qualifying ratios, they ideally like to see your debt to income ratio at or below 36% but 43% is the max limit and will depend on other qualifying factors. No surprise, 5 of the top 50 cities were located in California. Perhaps the pandemic will change some of this data as buyers move further afield and continue to work from home. Cities Median Income Median Loan Amount Leverage Ratio 1. San Diego $128,000 $485,000 3.789

2. Los Angeles $138,000 $505,000 3.659

5. San Jose $210,000 $725,000 3.452

7. San Francisco $189,000 $645,000 3.413

12. Sacramento $103,000 $335,000 3.252

Source: Realtor Magazine, September 11 When Buyer's Housing Budgets Are Stretched the Most, Least