More than three out of four (74.5%) home sales with Veterans Affairs (VA) loans over the past year had a 0% down payment, and nearly eight out of ten (83.5% of) VA home loan sales had a down payment below 10%, according to new information released by Realtor.com celebrating the recent holiday of Veterans Day. According to recent Realtor.com research, VA borrowers are more than twice as likely as conforming borrowers to have made a small down payment, which lowers the upfront costs of homeownership. Down payments are a significant obstacle to homeownership.
“Realtor.com compared loan characteristics of VA and conforming borrowers to highlight the many advantages that VA loans offer enabling Veteran households and the industry professionals working with them to better grasp the impact that this has on Veteran households and homeownership,” said Danielle Hale, Chief Economist at Realtor.com. “Despite the significant advantages provided to Veterans with VA loans, according to a survey conducted by Veterans United Home Loans, only 3 in 10 veterans and active-duty service members were aware of the zero down payment benefits of VA loans. With this research, we hope to empower Veteran households with the knowledge and tools they need to make informed decisions about their homeownership goals and financial well-being.”
VA Loans Promote Homeownership and Help with Affordability
In today’s housing markets, military households are in a better position than non-military households because to the benefits of VA loans. Due to a zero or small down payment, VA loan applicants frequently take on a little greater debt, but the combination of reduced mortgage rates and fees results in cheaper monthly payments. A VA loan saves $69 (2.7%) a month and $824 annually for first-time homeowners with a 0% down payment compared to a somewhat comparable conforming loan with an 8% down payment.
After controlling for age differences, the average homeownership rate for military households in the top 100 metro areas in 2022 was 77.3%, significantly higher than the non-military population by roughly 8.5 percentage points.
Among the top 100 metros, Myrtle Beach, SC (92.9%) saw the highest homeownership among military households, followed by Des Moines, IA (88.8%), Deltona, FL (87.5%), and Palm Bay, FL (85.8%). Meanwhile, Urban Honolulu, HI (55.1%), San Diego, CA (62.6%), and El Paso, Texas (64.7%) saw the lowest homeownership among military households.
When looking at the difference between the military and non-military rates of homeownership, Stockton, CA, Des Moines, IA, and Buffalo, NY, are the markets where we see the biggest age-adjusted increase in homeownership for military households.
Top 10 U.S. Markets with Significantly Higher Military Homeownership Rates Than Non-Military Rates
| Metros | Age-Adjusted Homeownership Rate Gap | Homeownership Rate, Military HH | Homeownership Rate, Non-Military HH | Share ofMilitary HH | Share of Saleswith VA Loans | Monthly Savingswith VA Loans |
| Stockton, CA | 18.8 % | 80.9 % | 61.7 % | 9.8 % | 5.4 % | $92 |
| Des Moines-West Des Moines, IA | 18.4 % | 88.8 % | 68.5 % | 9.5 % | 6.4 % | $58 |
| Buffalo-Cheektowaga, NY | 16.7 % | 81.9 % | 63.9 % | 10.6 % | 6.6 % | $45 |
| Syracuse, NY | 16.4 % | 84.4 % | 63.9 % | 11.7 % | 6.9 % | $48 |
| Little Rock-North Little Rock-Conway, AR | 15.5 % | 78.7 % | 60.6 % | 14.8 % | 14.2 % | $47 |
| Fresno, CA | 14.9 % | 71.2 % | 53.1 % | 10.0 % | 6.6 % | $75 |
| New York-Newark-Jersey City, NY-NJ-PA | 14.7 % | 71.5 % | 51.3 % | 5.6 % | 2.0 % | $123 |
| Memphis, TN-MS-AR | 14.3 % | 79.7 % | 57.9 % | 11.5 % | 9.9 % | $54 |
| Virginia Beach-Norfolk-Newport News, VA-NC | 13.4 % | 71.6 % | 59.3 % | 31.5 % | 42.3 % | $63 |
| Providence-Warwick, RI-MA | 13.4 % | 77.8 % | 61.1 % | 9.9 % | 4.4 % | $92 |
VA Borrowers More Likely To Have a Lower Credit Score
The average down payment percentage for VA loans is also consistently lower than that for conforming loans, which is another key point to emphasize. This pattern is especially noticeable for the approximately one in four VA borrowers who have credit scores below the Good range. Younger homebuyers who could encounter difficulties because they lack both high credit scores and the sizeable down payment money usually required for their first home purchase will particularly benefit from this advantage.
By enabling lower down payments, credit scores, and interest rates, VA loans enable Veterans to become homeowners. Being able to buy a house without a down payment is one benefit of VA loans. The average down payment percentage for VA loans was roughly 4.6%, which is far lower than the average down payment percentage for conforming loans, which is 19.7%.
However, some borrowers do make down payments in order to lower the principal balance of their loans. This year, some 23.2% of recent VA loan borrowers had Fair credit scores, compared to 4.5% of conforming loan borrowers, demonstrating the flexibility of VA loans’ credit requirements. Recent VA borrowers had smaller down payments as a percentage of purchase price than conforming loan borrowers for all credit score groups.
VA loans not only make it possible for more people to become homeowners with smaller down payments, but they also usually have lower mortgage interest rates, which reduces monthly expenses. For 30-year fixed-rate VA loans, the average mortgage rate from October 2023 to September 2024 was 6.05%; for conforming loans, it was 6.58%. In addition, VA loans often have lower mortgage interest rates than conforming loans for all down payment categories.
To read the full report, including more data, charts, and methodology, click here.
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