VA Loan Benefit Can Mean Big Savings for Military Households

At a time when homes are more expensive than ever in many markets across the U.S., taking advantage of Veterans Affairs (VA) loan benefits can save military and veteran households about $20,000 on average over the life of a 30-year mortgage, and much more in some metros.

Backed by the Department of Veterans Affairs, VA loans are available for active-duty service members and veterans who meet service-length requirements, as well as some other groups, and are buying a primary residence or refinancing an existing loan. The major benefits of VA loans include lower rates, more lenient credit requirements, not always requiring a down payment and not mandating private mortgage insurance.

At current rates and assuming a 20% down payment, a military household that secured a VA loan instead of a standard loan to buy a typical U.S. home would save about $55 a month. This works out to almost $20,000 over the lifetime of a 30-year mortgage, or about 9% of the value of the median home in the U.S. Buyers who put 20% down on a standard loan are also exempt from private mortgage insurance, so the savings with VA loans could be relatively larger for those with down payments of less than 20% who would have otherwise had to pay a monthly mortgage insurance premium on a standard loan.

In more-expensive metros, the savings can be much greater. Looking at San Francisco, for example, military households would save an estimated $227 on each monthly payment with a VA loan, which adds up to nearly $82,000 total over 30 years. The total savings would be more than $50,000 in Los Angeles and San Diego, and more than $40,000 in Seattle and Boston.

Even in the least-expensive large metros, primarily in the Midwest, the savings can be significant. Military home buyers in Pittsburgh, Detroit, Indianapolis and St. Louis would save between $400 and $500 each year with a VA loan.

Generally, the housing affordability outlook is encouraging for active-duty military and veteran households. Active-duty households with a VA loan would spend about 12.6% of their income on a mortgage payment on the typical U.S. home, and households with at least one veteran would spend 10.2% of their income. This is well below the 30% standard for affordable housing and the U.S. average of 16% for households with a standard loan.

Resources for military households interested in learning more about the home buying process are available at the U.S. Department of Veterans Affairs’ website. Read more about housing affordability for military households here, and find more affordability reports from Zillow here.

Metropolitan Area Mortgage Payment on Median Home (Standard Loan) Mortgage Payment on Median Home (VA Loan) Estimated Annual Savings Estimated 30-Year Savings
United States $852 $797 $663 $19,884
New York, NY $1,655 $1,548 $1,287 $38,620
Los Angeles-Long Beach-Anaheim, CA $2,434 $2,276 $1,893 $56,790
Chicago, IL $845 $791 $658 $19,727
Dallas-Fort Worth, TX $907 $848 $705 $21,163
Philadelphia, PA $870 $813 $676 $20,293
Houston, TX $768 $718 $597 $17,918
Washington, DC $1,523 $1,425 $1,185 $35,549
Miami-Fort Lauderdale, FL $1,060 $991 $825 $24,738
Atlanta, GA $822 $768 $639 $19,171
Boston, MA $1,732 $1,620 $1,347 $40,412
San Francisco, CA $3,508 $3,281 $2,729 $81,859
Detroit, MI $608 $568 $473 $14,178
Riverside, CA $1,385 $1,295 $1,077 $32,314
Phoenix, AZ $997 $933 $776 $23,268
Seattle, WA $1,834 $1,715 $1,426 $42,786
Minneapolis-St Paul, MN $1,016 $950 $790 $23,703
San Diego, CA $2,211 $2,067 $1,719 $51,580
St. Louis, MO $624 $584 $486 $14,569
Tampa, FL $803 $751 $625 $18,745
Baltimore, MD $999 $935 $777 $23,320
Denver, CO $1,529 $1,430 $1,189 $35,671
Pittsburgh, PA $538 $503 $418 $12,551
Portland, OR $1,481 $1,385 $1,152 $34,567
Charlotte, NC $785 $735 $611 $18,327
Sacramento, CA $1,539 $1,439 $1,197 $35,906
San Antonio, TX $728 $680 $566 $16,979
Orlando, FL $895 $837 $696 $20,884
Cincinnati, OH $636 $595 $495 $14,839
Cleveland, OH $547 $511 $425 $12,760
Kansas City, MO $716 $669 $557 $16,701
Las Vegas, NV $1,045 $977 $813 $24,381
Columbus, OH $723 $676 $562 $16,874
Indianapolis, IN $623 $583 $484 $14,535
San Jose, CA $4,313 $4,033 $3,354 $100,629
Austin, TX $1,165 $1,090 $906 $27,191
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