Military vets have housing affordability edge, study finds

Active-duty military and veteran households are, on average, better able to afford housing than a typical U.S. household, according to a new Zillow analysis.

Nationally, it would take 29.6% of the typical household income to pay the median rent – just below the 30% rule of thumb for affordable housing. Active-duty military households would spend 24.9% of their income on that median rent, while a typical household with one or more veterans would spend 20.1%.

The results are similar for homeowners. The typical household in the U.S. would spend 16% of its income on a mortgage payment for the median home, while active-duty military households would spend 13.4% and veterans would spend 10.9%.

Improving the picture further are Veterans Affairs (VA) loans, which are available to military members and their families. VA loans typically offer lower rates, have more lenient credit requirements and do not require private mortgage insurance. About 77% of active-duty homeowners and 58% of veteran homeowners use VA loans, which take the share of income spent on mortgage payments down to 12.6% for active-duty households and 10.2% for veterans.

"At a time when housing affordability is a real issue for so many, including public servants like teachers and fire fighters, the outlook is encouraging in much of the country for current and former service members and their families," said Zillow Group Economist Joshua Clark. "Taking advantage of benefits like VA loans can really pay off as well. At current rates, a home buyer would save about $20,000 over the life of a loan on a typical home – and that's before factoring in other benefits of VA loans such as not always requiring a down payment and limits on closing costs."

There are only a few large metro areas where active-duty households have more difficulty affording housing than the population at large. Active-duty households in Seattle, San Diego and Portland typically spend a greater share of their income on mortgage and rent payments than the rest of the metro.

Military households in Florida enjoy the greatest relative affordability compared to their non-military neighbors. The gap in share of income spent on rent between active-duty households and the rest of the population is larger in Miami (15 percentage points), Orlando (11.7) and Tampa (11.3) than any other large U.S. metros.

Veteran homeowners and renters are typically better able to afford housing than non-veterans in each of the 35 largest metro areas in the U.S. Veterans in San Diego have one of the biggest advantages over non-veterans in both rent and mortgage affordability, despite active-duty households in San Diego being worse off than non-military households. This suggests that veterans are often able to transition into higher-paying jobs there once they have completed their military service.

Despite the relative advantage over the general population, the typical rent is still unaffordable for active-duty households in six of the 35 largest metros in the U.S., using the 30% standard. Mortgages are only unaffordable for active-duty military and veteran households in San Jose, the most expensive housing market in the country.