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73 December 2024 J O U R N A L December 2024 ยป VA Loans Promote Homeowner- ship and Help With Affordability In today's housing markets, military households are in a better position than non-military households because of 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 differenc- es, the average homeownership rate for military households in the top 100 met- ro areas in 2022 was 77.3%, significantly higher than the non-military popula- tion by roughly 8.5 percentage points. Among the top 100 metros, Myrtle Beach, South Carolina (92.9%) saw the highest homeownership among military households, followed by Des Moines, Iowa (88.8%), Deltona, Florida (87.5%), and Palm Bay, Florida (85.8%). Meanwhile, Urban Honolulu, Hawaii (55.1%), San Diego, California (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, California, Des Moines, Iowa, and Buffalo, New York, are the markets where we see the biggest age-adjusted increase in homeownership for military households. VA Borrowers More Likely to Have a Lower Credit Score The average down payment per- centage for VA loans is also consistently lower than that for conforming loans, which is another key point to empha- size. This pattern is especially notice- able for the approximately one in four VA borrowers who have credit scores below the "good" range. Younger home- buyers 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 bor- rowers had Fair credit scores, compared to 4.5% of conforming loan borrowers, demonstrating the f lexibility of VA loans' credit requirements. Recent VA borrowers had smaller down payments as a percentage of the purchase price than conforming loan borrowers for all credit score groups. VA loans not only make it possible for more people to become homeown- ers 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 Top 10 U.S. Markets with Significantly Higher Military Homeownership Rates Than Non-Military Rates Metros Age-Adjusted Homeowner- ship Rate Gap Homeown- ership Rate, Military HH Homeown- ership Rate, Non-Military HH Share of Military 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