San Diego, home to 300,000 active or retired military, and a close to $1 million median area home price, has seen veterans emerge as highly competitive buyers thanks to changes in the VA loan program.

Vanya Cook-Letoud, 38, is in rare company: a homeowner twice over in San Diego, a market that saw the largest increase in home prices in 2023. She was able to join that group in part because, as a U.S. Navy veteran, she qualified for a loan through the Veterans Administration.

Nationally, would-be homeowners in expensive metropolitan areas are finding themselves priced out, but one group remains competitive despite soaring home prices: veterans. Recent changes to the VA loan program have led to an uptick in the program's popularity, particularly in higher priced real estate markets.

In San Diego, where more than 300,000 active or retired military personnel live, veterans using the VA loan account for close to 14% of homebuyers, roughly double the share in the country as a whole, according to data from CoreLogic. 

And because of the diversity of the ranks in the US military, VA loans have helped groups who historically struggle to become homeowners afford their first homes.

“Actually when I think about Black homeownership for my peer group here, it’s vets,” Cook-Letoud, who is Black and who retired from the Navy in 2018, said. 

Created in 1944 and signed into law by then President Franklin D. Roosevelt, VA loans are part of a  government-backed mortgage insurance program aimed to help veterans who served during World War II. The original program included access to competitive rate mortgages, with the government insuring 50% of the purchase price capped to $2000 total. 

The program was initially popular, but struggled in the years that followed as home prices grew and the program couldn’t meet the needs of its participants. Over the years the program has been amended on several occasions to include veterans from subsequent wars until finally being expanded to include all veterans and active service members.

In 2019, however, then-President Trump signed Blue Water Act, which aimed  to help Vietnam Veterans exposed to harmful chemicals. The legislation effectively eliminated  borrowing caps on VA loans — particularly helpful in places like San Diego where homes are often double or triple previous VA loan caps.

“We went from VA nay to VA yay,” said Jimmy Vercellino, USMC veteran and mortgage loan originator. Vercellino, who runs a popular YouTube channel aimed at educating veterans about their home buying benefits, said the popularity of the VA loan has increased over the past two decades. 

VA loans insure the mortgages of service members, allowing them to purchase homes with no money down, looser credit requirements, and reduced closing costs. Eligibility for certain service members can begin after 90 days of active service. Despite generous loan program guidelines, some lenders may require down payments, have higher minimum credit score requirements, or impose more stringent income criteria.

Two things are still stopping more buyers from using the VA loan in San Diego: There aren’t enough homes, and not all veterans are up to date on rule changes to the program.

Vercellino said most veterans are in the dark about VA loans and their power. Vercellino started his YouTube channel to dispel myths around the homebuying process for veterans.

“The VA doesn’t teach this; the military doesn’t teach this,” he said, adding, “If loan originators don’t understand this, how do we expect veterans to understand this.”

Recent changes to VA loan guidelines mean many aspects of homebuying for veterans are outdated or full of misinformation.

Will Flores, a real estate agent and veteran, who hosts a podcast, “Mortgage Heroes,” about the San Diego housing market, agrees with Vercillino’s take on the about-face buyers with VA loans have experienced. In a recent episode, he recalls a time when buyers with VA loans were flat out turned down based on their loans.

But when the loans do work out, they can be life-changing.

Cook-Letoud, a mother of two, took advantage of the change in borrowing limits, purchasing her second home in 2021. She said she navigated the buying process having gained a fluency in the VA loan guidelines by using a broker who understood the process, and having witnessed her father, who is also a veteran, praise the benefits of the VA loan.

“I bought both (homes) with the VA home loan,” she said, adding, “I had a pristine experience both times.” Since purchasing her homes, she remains optimistic about her ability to build generational wealth and secure stability for her young family, as local prices climb. 

But some experts worry about buyers with access to loans that make buying homes too easy.

Peter Morici, an economist at the University of Maryland, is concerned that limited inventory could lead to people making poor decisions when shopping for homes.

“A bad investment is a bad investment,” Morici said. Morici is worried about markets like California, plagued by extreme weather in recent years, seeing a decline in home prices as homes there become harder to insure. 

Morici said VA loans make it easier for some borrowers, but stressed the need to assess other market factors before leveraging VA loans to buy a home.

“If It’s going to burn down, it’s going to burn down regardless of how you paid for it,” he cautioned.  

 Vercellino said VA loans include guard rails, like the Tidewater Initiative, that prevent loans in excess of appraisal values.

Cook-Letoud is fortunate to have purchased real estate in her hometown, avoiding getting priced out like many of her non-veteran friends.  New rules and timing worked in her favor.

Owning two homes was not the goal. In fact, I always thought that I would flip the equity into a bigger home,” she said.  “Life just worked out in such a way that an opportunity to purchase a similar sized home and layout became available.”