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Nearly 80 Years Later, GI Bill Helps Shrink Homeownership Gap for Veterans and Service Members

Nearly 80 years ago, the GI Bill promised to help economically disadvantaged Veterans become homeowners. Today, the same program is living up to its original promise by helping narrow the homeownership gap for female Veteran and Veterans of color.

Since the GI Bill’s inception in 1944, the Department of Veterans Affairs (VA) has backed more than 25 million home loans. In that same time, the military has undergone significant demographic shifts, with increasing opportunities for women and people of color.

The VA loan’s cornerstore benefits – no down payment, flexible credit underwriting and no mortgage insurance – have expanded access to homeownership for generations.

Demographics of the military have changed drastically since the program’s inception for key groups such as African Americans, women, Asian American and Pacific Islander, and Hispanics and Latinos.

Military Population Today vs. 1945
National WWII Museum/VA

The Veteran populations of women and people of color are expected to increase between now and 2048. The VA loan benefit continues to allow future generations of Veterans and service members the opportunity to purchase their own piece of the American Dream.

At the same time, the rise of independent mortgage bankers has helped open doors for minority applicants. Based on 2021 Home Mortgage Disclosure Act data, independent mortgage bankers had a much higher share of minority applications compared to banks and credit unions, despite there being fewer IMBs.

Overall Veteran Population Outlook

As the VA loan program continues to grow, the homeownership gap will almost certainly continue to shrink for diverse Veteran populations.

By 2048:

  • The Hispanic and Latino population is expected to make up over 16% of the total Veteran population
  • Women will account for about 18% of the total Veteran population
  • By 2048, Asian American and Pacific Islanders (AAPI) are expected to make up 5% of the Veteran population
  • The African American and Black population is expected to make up about 15% of the total Veteran population
Demographics as Percentage of Total Veteran Population
Vet Pop Model (VA)
Gender breakdown as percentage of total military population
Vet Pop Model (VA)

The change in the military population is significant considering the important role the VA home loan program plays in increasing homeownership. For each of these demographics, Veteran status has contributed either to higher homeownership rates, higher homeownership growth within a five-year period, or both. While there’s still a lot of work to be done, today’s VA home loan program is closer than ever to living up to its original promise to our Veterans.

Hispanic and Latino Veteran Homeowners

An incredible 70% of new homeowners between 2020 and 2040 will be Hispanic and Latino, according to the Urban Institute.

Hispanic and Latino homebuyers face unique challenges with credit access and building assets needed for conventional financing. The VA home loan benefit helps to eliminate these hurdles, especially not requiring a down payment.

On average, the homeownership rate is over 18 percentage points higher for Hispanic and Latino Veterans compared to their civilian counterparts. Hispanic and Latino Veterans also have a higher chance of closing on their loan compared to Hispanic civilians, according to 2021 HMDA data.

The Hispanic and Latino population of Veterans is expected to grow by 35% by 2048, which will double the share of Hispanic Veterans among the total Veteran population (it will grow from 8% currently to 16% in 2048).

Percentage of Hispanic Veterans as a share of Total Veteran Population
Vet Pop Model (VA)

African American and Black Veteran Homeowners

On average, the homeownership rate for Black Veterans is about 17 percentage points higher compared to their civilian counterparts.

VA loan usage for Black Veterans also increased by 23% from 2018 to 2021 according to HMDA. Meanwhile, Black renter households are being priced out of the market more than any other racial/ethnic group, according to the National Association of Realtors (NAR).

Data from a NAR study show that:

  • 1 in 2 Black renter households spend more than 30% of their income on rent.
  • About 28% of Black renter households, which equates to 2.3 million Black households, spend more than 50% of their income on rent

Over the next two decades, the percentage of African American and Black Veteran homeowners will increase. According to the VA, the African American and Black Veteran population is expected to increase 12% to 15%.

By 2048, the African American and Black Veteran population could be expected to make up about 15% of the total Veteran population. The impact on bridging the racial homeownership gap will position future generations for success.

Average Homeownership Rate 2015-2019
Census ACS 2015-2019

Asian American and Pacific Islander (AAPI) Veteran Homeowners

AAPI Veterans also have higher homeownership rates than their civilian counterparts. On average, their homeownership rates are 13 percentage points higher based on Census data from 2015 to 2019.

While educational attainment and household income are significant contributors to obtaining homeownership for all demographics, these factors have driven growth for the AAPI population particularly.

Asian households have an average median income of $94,903 compared to the national average of $67,521, according to Census data.

One reason why household income among the Asian and Pacific Islander population is high is that there are more family members who are earning. In fact, 60% of Asian family households had two or more members who were working, higher than the national average of 52%, according to NAR.

While members of the AAPI community earn higher salaries on average than their white counterparts, they still make up a smaller percentage of homeowners, according to the Asian Real Estate Association of America.

AAPI homeownership rates have also collectively increased since 1980. Between 1980 and 2019, AAPI households had the largest homeownership rate increase of any racial or ethnic group, from 52% in 1980 to 60% in 2019, according to the Urban Institute.

In addition, the growth of VA loan usage among the AAPI community increased by 42% from 2018 through 2020.

AAPI Veterans currently make up about 2% of the total Veteran population. This population is expected to increase significantly from about 5% of the U.S. population in 2015 to nearly 10% in 2060 (NAR). This would mean that by 2060, the AAPI population is expected to surpass 38 million, according to the Urban Institute.

AAPI Veterans are expected to make up 5% of the overall Veteran population and mark an expected growth of 45% by 2048.

As the AAPI population continues to grow, the VA loan usage for this group will grow as well.

Female Veteran Homeowners

Since as early as the Revolutionary War, women have served in the military. Today, female Veterans of various ages have served in higher ranks in every branch of service in the military contributing the same as their male counterparts.

The VA home loan benefit has not only expanded access to homeownership among people of color, but it has also created more opportunities for female Veterans. Over the last decade, female Veterans have made up roughly 11% of Veterans using their VA home loan benefit according to the VA.

More than 451,000 female Veterans used their home loan benefit from 2016 to 2020, according to the VA. In FY2021 alone, female Veterans accounted for almost $375 billion in VA loan volume.

According to HMDA, between 2018 and 2021, female Veterans utilizing the VA home loan, had a higher chance of closing compared to their civilian counterparts. VA loans among female Veterans grew by almost 35%, and had a higher closing success rate every year in comparison to conventional loans.

More female Veterans are projected to be homeowners as the population is expected to increase at a fast rate. By 2048 female Veterans will make up almost 18% of the Veteran population, equating to a seven percentage point growth from today.

Gender breakdown as percentage of total military population
VA, VetPop Model

Future of Homeownership

Access to the VA home loan benefit, higher homeownership rates among the military population, as well as other benefits attached to military service help eliminate barriers to homeownership for Veterans in key demographics.

The expansion of the VA home loan benefit is allowing access to homeownership for women and people of color like never before. The trend of population growth, military service, and income will continue to open up doors to homeownership for generations to come.

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