VA Loan Program Experiences 27% Surge in 2025, Driven by Gen Z Homebuyers

VA Loan Program Experiences a 27% Surge in 2025

The VA loan program has made a striking recovery in Fiscal Year 2025, with a substantial increase of 26.8% in total VA lending compared to the previous year. This surge, which saw a leap from 416,363 loans in FY 2024 to an impressive 528,343 loans in FY 2025, reflects the resilience of a crucial benefit for veterans and active service members. The increase is attributed to a more stable purchase market, coupled with a notable rise in refinancing opportunities.

A key driver of this rebound has been the participation of Generation Z, who have emerged as prominent players in the real estate market. This youngest cohort of veterans was the only age group that demonstrated growth in home purchases during FY 2024, and they have continued this upward trajectory in FY 2025, comprising 38% of all VA loan activity. Gen Z veterans have outpaced older generations in purchase growth, signaling a shift in the demographic landscape of homebuyers.

According to Chris Birk, Vice President of Mortgage Insight at Veterans United Home Loans, Gen Z is establishing themselves rapidly in the VA loan space. He notes that they are entering a market characterized by affordability challenges, yet the benefits of VA loans, particularly the zero-down payment advantage, provide them with essential leverage to succeed in purchasing homes.

Overall, VA purchase loans increased by 8.5% year-over-year to reach 323,835 loans, a recovery from the decline seen in FY 2024, where the purchase volume fell by more than 5%. The attractive features of VA loans continue to serve as vital resources for first-time buyers facing financial constraints.

Another trend observed is the spike in refinancing, with total VA refinances soaring by 73.2% over the past year. Borrowers, recognizing opportunities to improve their rates or access equity, are taking action in today’s dynamic market. Notably, cash-out refinances constituted over a quarter of refinancing activity.

The growth of Gen Z homebuyers is particularly evident in various metropolitan areas across the United States. Key regions such as Texas, California, and the Carolinas have reported robust increases in VA purchases among young veterans, showing growth rates that exceed the national average.

Top Emerging Markets for Gen Z VA Buyers

1. Houston-Sugar Land-Baytown, Texas: 60.5% increase in VA purchases
2. Killeen-Temple-Fort Hood, Texas: 59.4% increase
3. Phoenix-Mesa-Scottsdale, Arizona: 57.6% increase
4. Dallas-Fort Worth-Arlington, Texas: 55.9% increase
5. Las Vegas-Paradise, Nevada: 54.8% increase

These statistics demonstrate where young service members are choosing to establish their roots, thus reshaping future military homebuying trends.

In conclusion, the impressive growth of the VA loan program in 2025 stands as a testament to the adaptability of both the market and its participants. The influence of Gen Z buyers will likely shape the landscape of military home ownership for years to come, highlighting the enduring value of the VA loan benefits they fought hard to earn.