These 5 Expensive Cities Are Popular With Millennial Veterans -- Here’s Why

One perk of serving the country is access to a VA home loan.

Millennials are currently between the ages of 25 and 40 and are hungry for housing. In 2020, around 37% of all home buyers were millennials, and they accounted for 50% of all VA purchase loans. While millennials across the board spent part of 2020 buying a home, it's where millennial veterans were able to purchase that surprised us.

Where millennial veterans are buying

According to data gathered by Veterans United, these are the top five cities where millennial military veterans bought homes in 2020:

• Washington, D.C.
• Virginia Beach, Virginia
• San Diego, California
• Colorado Springs, Colorado
• Dallas, Texas

Here are the top five cities where civilian millennials purchased homes in 2020, based on a report from ICE Mortgage Technology:

• Williston, North Dakota
• Eagle Pass, Texas
• Hobbs, New Mexico
• Midland, Texas
• Big Spring, Texas

High-cost vs. low-cost areas

What immediately became apparent upon comparing the two lists is that veterans are buying homes in higher-priced areas of the country. Using stats from Realtor.com, we compared the median prices for each city to get a sense of how much more veterans are spending.

Four possible reasons why

The "Top 5" list for civilians changes each year. However, for vets, the list has remained the same since 2018. Here are four possible reasons vets may be taking the plunge to buy a home in their dream area.

1. Lowest average interest rate

According to Chris Birk, vice president of Mortgage Insight & Director of Education at Veterans United Home Loans, VA loans have offered the lowest average interest rate on the market for at least six years.

2. VA loans require no down payment

The average home buyer puts around 12% down. If a property costs $300,000, that means the buyer puts $36,000 down. And they'll pay between 2% and 5% in closing costs (about $6,000 to $15,000 on a $300,000 home). Because VA buyers are not required to make a down payment, they must only save up enough to cover 1% to 5% in closing costs. Even then, in a buyer's market, the home buyer can ask the seller to cover some of their closing costs.

3. VA loans have less stringent minimum credit score requirements

While the VA backs loans to veterans, it is not the lender. VA loans are handled through lenders like Veterans United that have experience dealing with government loans. Each VA lender sets its own minimum credit score. However, since the loan is guaranteed by the U.S. government, the credit score a veteran needs to make a new home purchase may be as low as 600. This means that vets don't have to wait for a high credit score to make a home purchase.

4. Better odds of making it to closing

According to Birk, VA loans have enjoyed a higher closing rate than conventional loans over the past six years. "That speaks to the fact that a pre-approved VA buyer is about as strong a bet as you can get," he said.

Comparing the investments

It's impossible to predict what the return on investment will be for veteran home buyers vs. civilian home buyers. While it appears that VA loans help vets buy homes in idyllic locations, we wanted to know if homes in those cities have appreciated more than homes in other areas. Using real estate data from NeighborhoodScout, here's a breakdown of what we found:

We were a bit surprised to learn that inland homes appreciated at roughly the same rate as those in beach towns, and that homes in lesser-known towns held their value relatively well. What that ultimately means is that buying a home from either "Top 5" list looks to be a safe bet over the long term.

While not everyone wants to own property, homeownership appears more accessible to vets. "Overall, the homeownership rate is about 63.4%," Birk said. "The homeowner rate for veterans is about 80%."

It's not just that veterans have access to a loan program that makes it easier to get into a house of their own. "I think vets are a group that believe in owning a piece of the American dream, the country they defended," Birk added.