The number of loans backed by the Department of Veterans Affairs increased 2.3% in the 12 months through September, led by a 14% gain in the number of mortgages for Millennial-generation veterans and active-duty military.
Borrowers aged 23 to 38 accounted for 211,276 loans, a 34% share of the total 624,332 mortgages backed by the VA during the 12-month period, according to a report covering the entire market by Veterans United, the largest VA lender. That’s up from 30% a year earlier, the report showed.
“There has been a question in real estate circles for years about when Millennials are going to start buying,” said Chris Birk, director of education for Veterans United. Young buyers who are in the military or have veteran status “have been able to start buying way ahead of civilians because of these VA loans. They don’t have to spend years saving for a down payment.”
Mortgages backed by the VA allow borrowers to purchase homes without down payments. Even without an equity stake in their properties, the delinquency rate for VA borrowers is lower than mortgages backed by the Federal Housing Administration. The VA delinquency rate was 4.24% in the second quarter, the Mortgage Bankers Association said in August. That compares with 9.22% for borrowers with FHA-backed loans, the MBA data showed.
Combining the number of VA-backed loans taken out by Millennial and Gen Z – borrowers younger than 23 – those newer generations accounted for 45% of VA purchase loans, meaning mortgages used to buy homes, the Veterans United report showed.
The top 10 cities for Millennial and Generation Z buyers were:
- Jacksonville, North Carolina
- Killeen-Temple-Fort-Hood metro area, Texas
- Oklahoma City, Oklahoma.
- El Paso, Texas
- Fort Walton Beach-Crestview-Destin metro area, Florida
- Austin-Round Rock, Texas
- Jacksonville, Florida
- Tampa-St. Petersburg-Clearwater metro area, Florida
- Augusta-Richmond County, Georgia
- Las Vegas.
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