Gen Z Veterans Drive VA Loan Growth What It Means for California Homebuyers

The housing market is shifting, and one of the most powerful forces behind this change is coming from an unexpected group Gen Z veterans. These younger service members, many still in their twenties, are using their VA home loan benefits to buy homes earlier than past generations.

For homebuyers in California, this trend is not just a statistic—it is shaping real estate markets in San Diego, Los Angeles, Sacramento, and beyond. Understanding how Gen Z veterans are driving VA loan growth gives insight into affordability, inventory, and opportunities across the Golden State.

The Rise of Gen Z Veterans in the Housing Market

Recent VA data shows VA purchase loans to Gen Z veterans surged by more than 20 percent in fiscal year 2024 compared to 2023. Gen Z borrowers now make up about 12 percent of all VA purchase loans, a number that has tripled in the last three years.

This shift highlights two key realities:

• Gen Z is financially proactive. Rather than waiting, these young buyers are using their VA benefits to get into homes early and build equity.
  
  
• VA loans are a critical tool. With no down payment, no private mortgage insurance (PMI), and competitive interest rates, VA loans remove many traditional barriers to homeownership.

Why California Is at the Center of This Growth

California has quickly become one of the most active states for Gen Z veteran homebuyers. In 2024:

• Los Angeles saw a major increase in VA loans to Gen Z veterans.
  
  
• San Diego, home to one of the nation’s largest military communities, posted a strong rise in VA backed purchases.
  
  
• Sacramento and the Inland Empire also rank among the top markets nationally for younger veteran buyers.

What drives this momentum?

• Military presence. Bases such as Naval Base San Diego, Camp Pendleton, Edwards Air Force Base, and Travis Air Force Base make California one of the largest veteran hubs in the country.
  
  
• Relative affordability pockets. While California overall has high housing costs, regions like Sacramento, Riverside, and Bakersfield still offer more affordable entry points compared to the coastal metros.

How This Impacts California Homebuyers

If you are a homebuyer in California—veteran or not—this Gen Z VA loan surge matters for you:

• More competition for affordable homes. Younger buyers are especially active in entry-level markets, making desirable neighborhoods near bases more competitive.
  
  
• Price stabilization benefits buyers. While competition is increasing, overall home prices in cities like Sacramento and Riverside have cooled compared to pandemic highs.
  
  
• Opportunities in new construction. California continues to expand housing developments, much of which qualifies for VA financing. This gives veterans access to brand new, move in ready homes.

Why Veterans in California Should Act Now

California’s housing market in 2025 presents a unique opportunity:

• Inventory is rising. Homes available for sale have grown by nearly 30 percent compared to last year.
  
  
• Prices are softening in key markets. Sacramento, Riverside, and parts of Los Angeles are all seeing moderating prices, giving buyers more room to negotiate.
  
  
• New homes are VA friendly. With builders adding thousands of single-family homes, veterans can find properties that meet VA appraisal and inspection standards.

This means Gen Z veterans—and any veteran eligible for VA benefits—have more power to buy on favorable terms right now.

The Generational Shift in VA Loan Use

The growth of Gen Z veterans marks a turning point in VA lending:

• Millennials and Gen Z dominate. While Baby Boomers and Gen X previously led the VA loan space, younger generations are now the most active borrowers.
  
  
• Digital first mortgage preferences. Gen Z values speed and tech driven solutions, pushing lenders to simplify and digitize the VA process.
  
  
• Flexible buyers. Younger veterans are more willing to move across states or metros to find affordability and opportunity.

For California, this generational shift ensures continued VA loan strength for years to come.

Challenges Gen Z Veterans Face

Even with VA advantages, younger buyers encounter hurdles:

• Building credit. Many are still establishing financial histories, which can impact loan approval.
  
  
• Economic pressures. Inflation and everyday expenses remain challenges for entry-level buyers.
  
  
• Market competition. Competing with cash buyers or conventional borrowers with high down payments can be tough, especially in sought-after neighborhoods.

Still, VA loans balance the scales by removing PMI and down payment requirements, allowing Gen Z veterans to compete effectively.

What California Homebuyers Can Learn

Whether you are a veteran or a civilian buyer, the Gen Z VA loan trend provides useful lessons:

• Start early. Gen Z veterans prove that buying young can create long term financial stability through equity growth.
  
  
• Use VA benefits to your advantage. Even National Guard and Reserve members may qualify, making this option broader than many realize.
  
  
• Act while conditions are favorable. More inventory and moderating prices create better buying conditions now than in the last several years.

Final Thoughts

The rise of Gen Z veterans driving VA loan growth is more than a trend—it is a transformation of the housing market. For California, it means stronger demand in areas like San Diego, Los Angeles, and Sacramento, where military ties run deep and affordability opportunities still exist outside the coastal hotspots.

At Merchants Home Lending, we are committed to helping California veterans—whether Gen Z, Millennial, or beyond—make the most of their VA loan benefits. With expert guidance, local insight, and personalized support, we ensure your path to homeownership is clear and achievable.

Ready to buy your California home with the power of a VA loan? Contact Merchants Home Lending today and let us get started.

FAQs

1. Do VA loans in California require mortgage PMI?

No. A VA loan does not require private mortgage insurance (PMI). This saves California veterans hundreds of dollars each month compared to conventional loans, making VA financing one of the most affordable ways to buy a home in areas like San Diego or Sacramento.

2. What are typical VA loan PMI rates in California?

There are no VA loan PMI rates because the VA program completely removes the need for PMI. Instead, qualified California veterans benefit from low fixed interest rates and no down payment, making homeownership more accessible in a high-cost state.

3. How does VA mortgage PMI differ from conventional loan PMI in California?

Conventional mortgages in California often require PMI if you put less than 20% down, which can add hundreds to your monthly bill. VA mortgage loans eliminate PMI entirely, giving veterans a financial edge when buying homes, especially in competitive markets like Los Angeles.

4. Can VA loans help me get rid of mortgage PMI on a refinance in California?

Yes. Many veterans in California refinance into a VA loan specifically to remove mortgage PMI. By switching, they cut costs and lock in VA benefits such as lower interest rates and flexible qualification requirements, improving long-term affordability.

5. What steps should I take to learn how to get rid of mortgage PMI in California?

The best step is to check if you qualify for a VA loan. Eligible veterans, service members, and surviving spouses can replace their current loan with a VA mortgage, instantly eliminating PMI. California buyers gain immediate monthly savings while keeping homeownership costs predictable.

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