Military Home Loans Surge To Highest Levels Since 2019 as Buyers Gain Power
Military members and veterans are making up a growing share of homebuyers as the U.S. housing market shifts slightly toward buyers. About 7.3% of mortgaged buyers nationwide used a VA loan in August, up from 6.5% a year earlier, marking the highest share for this month since 2019, according to a report from Redfin. The number of VA loans rose 3% year-over-year in August, even as conventional obligations fell 9%, signaling growing traction for VA buyers as competition cools.
“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 shots,” said Bill Banfield, chief business officer at Rocket Mortgage, Redfin’s parent.
During the peak seller’s market of 2020–2021, when mortgage rates were near historic lows, less than 6% of mortgage buyers used VA loans.
VA loans are most popular in military-heavy metros. Particularly, in Virginia Beach, Virginia, 43.2% of mortgage buyers used this type of financing, the highest share nationwide. Jacksonville, Florida, followed at 17.2%, with the Washington, D.C., metro at 16.7%, San Diego at 15.2% and Las Vegas at 11.9%. Virginia Beach also posted the largest year-over-year increase, up from just under 40%. Other notable gains occurred in Orlando, Florida (8.2% from 5.3%) and San Diego (15.2% from 12.3%). Overall, VA loan usage increased in 32 of the 40 metros analyzed.
Several factors are boosting VA loan competitiveness. Fewer bidding wars and less competition from cash buyers make sellers more willing to accept VA-financed offers. High mortgage rates, hovering around 6%–7%, increase affordability pressure, making zero-down VA loans particularly attractive. Additionally, more listings and longer time on the market give VA buyers greater leverage to negotiate successfully.
Despite the gains, VA loans remain a modest share of purchases nationwide. Eligibility is limited to active-duty service members, veterans and surviving spouses. Some sellers still prefer conventional or cash offers because VA loans require appraisals and inspections. In high-cost markets such as San Francisco and San Jose, where VA loan usage is below 1%, home prices remain a significant barrier even for zero-down loans.
Source: GlobeSt/ALM