Home loans for U.S. military veterans insured by the Department of Veterans Affairs (VA) provide access to homeownership for veterans with no money down.

The use of VA loans can help first-time homebuyers attain homeownership years faster than conventional alternatives, according to a recent analysis by Realtor.com. The loans are available to veterans, service members and their surviving spouses.

But persistent housing affordability barriers mean only about 1 in 5 homes nationwide is affordable to veterans.

In 2023, the share of listings affordable to veterans using VA loans or conventional financing fell to record lows of 20.2% and 25.5%, respectively. Those levels remain near historic lows of 22% and 27%, recent data from Redfin shows.

In San Jose, Calif., Los Angeles and San Francisco, a veteran purchasing a home with a VA loan can afford less than 1% of for-sale homes — the lowest shares in the U.S. — followed by San Diego and Anaheim, Calif., where they can afford 2% of listings.

Still, homebuyers armed with VA loans have a distinct advantage.

“The standout benefit of a VA loan is the 0% downpayment but without the extra risk,” said Lawrence Yun, chief economist of the National Association of Realtors, in a press release.

Taking the no-downpayment option does raise veterans’ monthly payments relative to conventional non-veteran borrowers, but it enables VA-loan buyers to begin building equity sooner by accessing homeownership on a shorter timeline.

On a typical $430,000 home, a conventional buyer would need more than $50,000 in downpayment funds that a VA-loan buyer does not. Saving 15% of a median $78,700 annual gross income to build that downpayment, Realtor.com says, would take roughly 4.4 years.

The effect of VA loans in shortening first-time buyers’ timeline to homeownership varies across markets, with the “benefit intensity” generally concentrated in more expensive markets. In many metro markets where benefit intensity is high but VA-loan utilization rates are low, Realtor.com says a mismatch exists, underscoring the need for greater VA-loan awareness among veterans who could use the benefit to finance homebuying in those markets.

Metros with such mismatches are located across the U.S., from Boston and Cape Coral, Fla., to Chattanooga, Tenn., and Fresno, Calif.

Los Angeles presents as a mismatch market, where the median home price is $1.14 million and VA loans can shave a decade off the time it takes typical first-time homebuyers to make a first purchase in that market.

“The lower upfront cost makes homeownership more attainable, especially in high-cost markets and amid elevated mortgage rates, giving qualified buyers a critical advantage and the ability to start building equity sooner,” Yun added.