As the VA Loan Turns 80, New Analysis Finds the Benefit Has Contributed $3.9 Trillion to the U.S. Economy

June 12, 2024

COLUMBIA, Mo., June 12, 2024-- Celebrating its 80th anniversary on June 22 as part of the original GI Bill, the VA loan program has contributed $3.9 trillion to the U.S. economy, and VA loans rank as the top benefit Veterans and military members receive for serving their country, according to a first-of-its-kind economic analysis and companion survey released today by Veterans United Home Loans, the nation's largest VA lender.

In anticipation of the 80th anniversary, Veterans United this spring surveyed 500 Veterans and service members to get their insights on the VA loan. In addition, the company also engaged University of Missouri economics Professor Joseph Haslag to determine what the VA loan benefit has meant to the American economy over its eight decades.

The economic impact analysis considers what the economy would have looked like if the VA loan hadn't existed. It found the loan program has withstood various market changes, accounting for as much as 11% of new home mortgages in the postwar building boom. Total VA loan volume in 1947 was more than $3 billion, compared to its $447 billion peak in 2021, according to the study.

"The survey findings and economic analysis underscore the profound impact of the VA loan program on Veterans and service members, particularly younger generations," said Chris Birk, vice president of mortgage insight at Veterans United. "This historic benefit has helped millions of Veterans and military families build wealth and shaped the growth of the American middle class. VA loans are also helping to close the homeownership gap for women and minorities. Today, this hard-earned benefit is more important than it's ever been."

Veterans Rank the VA Loan As Top Benefit
The survey found that 93% of Veterans and service members used a VA loan to purchase their first home. At the same time, 8-in-10 Veterans were 34 years old or younger the first time they used their benefit.

In addition to taking advantage of the benefit early in life, 89% ranked the VA home loan as the top benefit they are satisfied with, ranking higher than healthcare (73%), education and training (85%) and insurance (83%).

Overall, 90% of Veterans and service members said the VA home loan makes buying a home affordable. Competitive interest rates (48%) and the ability to reuse the VA loan benefit (48%) tied as the top advantages of VA loans, followed by no down payment (47%), VA Funding Fee exemptions (40%) and limits on closing costs (37%).

Expanding Homeownership for Younger and Minority Veterans
VA loan use has surged since the Great Recession and is expanding access to homeownership for younger buyers, female Veterans and Veterans of color, according to a separate Veterans United analysis of Census data.

Over the last five years, nearly 1 million millennials have used their home loan benefit. Nearly 60% of VA purchase loans in fiscal year 2023 went to millennial and Generation Z buyers.

In addition, the VA loan has helped to boost homeownership for minority groups. The homeownership rates for African Americans, Asian Americans, Hispanics and Latinos, Pacific Islanders and female Veterans and service members are higher than their civilian counterparts.

The homeownership rate gap between Black and white Veterans is 18 percentage points, compared to a nearly 30-percentage point gap between Black and white civilians, while the homeownership rate for female Veterans was 4 points higher than female civilians.

VA Loans Are Loved, But Misconceptions Exist
Despite the popularity of VA loans, myths and misconceptions surrounding the benefit still exist among Veterans, service members and the real estate community.

The Veterans United survey found that 75% of Veterans and service members believe at least one myth about VA loans:

• 35% think they take longer to close than other loan types
• 32% think the government sets interest rates
• 18% think the VA loan can only be used once
• 18% think VA loans cost more than other loan products

In reality, lenders set their own interest rates based on a host of factors, and VA loans typically have the lowest average rates on the market. Closing time frames for VA loans are similar to other types of mortgage loans, and VA loans tend to be less expensive than other loans in both upfront costs and monthly payments. They're also not a one-time benefit and can be used multiple times in a Veteran's life.

The survey also uncovered other challenges and improvement areas that highlight the outsized role that real estate agents and home sellers can play when it comes to whether Veterans can compete with their earned benefit.

About 1-in-5 Veterans cited seller hesitation about VA offers and negative attitudes about VA loans among sellers' real estate agents as major challenges with using their benefit.

"Although the VA loan program has achieved great success and growth, many Veterans and service members still face misunderstandings and hurdles when trying to use their benefits," Birk said. "It's important to dispel the myths and misconceptions about VA loans, especially among home sellers and real estate agents, to help Veterans make the most of the benefits they've earned. One way for Veteran buyers to get the most from their benefit is to work with real estate agents who know and understand the power of VA loans."

To commemorate the 80th anniversary, Veterans United has compiled historic highlights, trends and Veteran voices on the VA loan. You can view this information, along with the survey results and economic analysis, at https://www.veteransunited.com/education/market-trends/

About Veterans United Home Loans

Based in Columbia, Missouri, the full-service national lender financed more than $17 billion in loans in Fiscal Year 2023 and is the country's largest VA lender, according to the Department of Veterans Affairs Lender Statistics. The company's mission is to help Veterans and service members take advantage of the home loan benefits earned by their service.

VeteransUnited.com | 1-800-884-5560 | 550 Veterans United Drive, Columbia, MO 65201 | Veterans United Home Loans NMLS # 1907 (www.nmlsconsumeraccess.org). A VA approved lender; Not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. Licensed in all 50 states. For State Licensing information, please visit https://www.veteransunited.com/licenses/. Equal Opportunity Lender.