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Veterans are taking advantage of the U.S. housing market tilting in buyers’ favor, new data from Redfin shows, with lower borrowing costs and more for-sale inventory leading to greater numbers purchasing homes this summer than a year earlier. What Do the Numbers Tell Us? In August, the latest month for which data is available, the share of mortgaged U.S. home sales using VA loans nationwide was 7.3 percent, up from 6.5 percent a year earlier and the highest percentage for that month since 2019. VA loans are provided by private lenders, but some of them are guaranteed by the U.S. Department of Veterans Affairs, which allows eligible veterans, active-duty service members, and surviving spouses to get more favorable terms. They require little to no down payment. Federal Housing Administration (FHA) loans, which are meant for low- to moderate-income borrowers, typically require a 3.5 percent down payment. In August, 13.9 percent of mortgaged U.S. home sales were made using these. The number of homebuyers taking out VA loans also increased in August, rising 3 percent year-over-year nationwide—bucking the trend observed for conventional loans, which declined 9 percent year-over-year in the same month. A single-family house for sale in southwest Portland, Oregon, on February 25, 2022. Conventional loans are still the most popular in the country, accounting for nearly eight in 10 (78.9 percent) home loans in August. Redfin obtained an estimate of this nationwide increase in the use of VA loans to purchase homes in August by analyzing county records across 40 of the most populous U.S. metropolitan areas. All-cash purchases were not tracked. Where Are Veterans Buying Homes? In August, the largest share of homes purchased by mortgaged buyers using VA loans was in Virginia Beach, Virginia, at 43.2 percent. That is also the most prevalent VA loans have been in Virginia Beach of any August on record, according to Redfin. Jacksonville, Florida, followed with 17.2 percent. A close third was Washington, D.C., with 16.7 percent—the highest share for the city in any August in the past 14 years. San Diego and Las Vegas rounded off the top five with, respectively, 15.2 percent and 11.9 percent. What these places have in common is a large military presence. With nearly 100,000 active-duty military members, Virginia Beach has the largest concentration of military personnel outside the Pentagon. Jacksonville can count on several military facilities, including naval stations and a submarine base, and Washington is, of course, home to the Pentagon. Why Are VA Loan-Backed Home Purchases Up? During the pandemic, historically low borrowing costs and a renewed interest in the domestic space sparked a home-buying frenzy across the country which clashed with a chronic lack of inventory nationwide. Buyers fought over a limited supply, with those offering higher down payments and higher offers ultimately being favored by the market. These dynamics sidelined veterans with lower or no down payments. In late 2020 and early 2021, under 6 percent of mortgaged homebuyers were using VA loans, according to Redfin. But the situation has changed now that the U.S. housing market has seen a growth in inventory in recent months which has given buyers more negotiating power. “A buyer can make an offer with a VA loan, put virtually no money down, ask for $5,000 in closing credits, and get their offer accepted,” Jim Fletcher, a Redfin Premier agent in Tampa, Florida, said in the Redfin report. “The market is slow, there’s a backlog of inventory, and buyers are in the driver’s seat. Florida historically has had a lot of all-cash buyers, but recently, there are more financed buyers—and many of them are able to win homes with ultra-low down payments while also having the seller cover most closing costs.” How Can Veterans Get a VA Loan? To apply for a VA loan, you must first make sure you are eligible. Requirements can be checked on the VA website. After obtaining a Certificate of Eligibility, or COE, you can find a VA lender and get pre-approved for a loan amount. After you find a home you want to buy, you must complete the application to the VA loan by providing the relevant documents to the lender. “Military members have made sacrifices to protect our home,” said Bill Banfield, chief business officer at Rocket, in the Redfin report. “VA loans are one of the most powerful benefits available to veterans and service members, opening doors to homeownership with zero down payment, no monthly mortgage insurance and flexible credit requirements,” he said. Banfield believes that now is a “prime time” for veterans and service members to take out a VA loan and buy a home. “VA loans have a better chance of getting accepted in today’s buyer’s market than they did several years ago, when buyers were competing against each other and sellers were calling the ...
