What’s the average VA loan amount in WA State? How many VA loans are processed and closed in Washington each year, and how does that compare to the rest of the nation?
These are just a few questions we can answer by reviewing a recent VA loan usage report published by the U.S. Department of Veterans Affairs, summarizing the previous 12 months.
What is the Average VA Home Loan Amount in Washington in 2024?
As we head into 2024, the average VA loan amount for the state of Washington is around $500,000. That’s for a home purchase loan. The average loan size across all VA mortgage products, including home refinancing, was around $477,000.
These numbers are not surprising when you consider that the median home price for Washington is hovering around $566,000 at the start of 2024.
Borrowers who use VA loan programs to buy a house can finance up to 100% of the purchase price, eliminating the need for a down payment. Because of this, the average VA home loan amount tends to track closely with median home prices.
The average VA loan size increased by more than $200,000 over the past 10 years due to rising house values in the state of Washington.
States With the Highest Average Mortgage Amounts
This end-of-year report from the Department of Veterans Affairs also listed the average VA loan amount for every state across the U.S., and the state of Washington ranked among the top five.
Here are the four states (and one district) with the largest average VA loan size last year:
- Hawaii: $695,527
- Washington, D.C.: $671,041
- California: $592,927
- Washington: $496,125
- Colorado: $494,148
At the bottom end of this spectrum, the five states with the lowest average VA loan amount were Iowa, Michigan, Ohio, Kansas, and Arkansas (in that order). Not surprisingly, all of these states have a much lower median home price when compared to those listed above.
10,609 VA Loans Generated in Washington Last Year
Last year, more than 400,000 VA loans were processed in the United States. This includes home purchase loans, Interest Rate Reduction Refinance Loans (IRRRLs), and cash-out refis.
Here in the state of Washington, 10,609 VA loans were generated during the calendar year 2023. Most of those (8,297) were purchase loans used by home buyers across the state, while the rest were refinance loans used by homeowners.
Both of those numbers were lower than historical averages for one primary reason.
Mortgage rates more than doubled during 2022, cooling the real estate market during the first half of 2023. Rates went as high as 7.79% in late October 2023, making mortgages far more expensive than they were only a few months earlier. This caused many homebuyer hopefuls to put a pause on buying a home.
Because of this, we saw fewer mortgage loan originations last year compared to previous years. This downturn applied to all mortgage types, including FHA and conventional. Even mortgage refinance activity slowed as homeowners had little incentive to take a risk on a potentially higher mortgage rate compared to the rates they were currently locked in at.
During a typical year, the state of Washington might chalk up more than 25,000 VA loans, including a mix of purchase and refinance. But 2023 was much slower by comparison, and not just here in the state of Washington. VA home loan activity was down nationwide last year due to higher mortgage rates and housing costs.
You can see this clearly in the total nationwide VA loan volume for the past five years:
- 2019: 624,535
- 2020: 1,246,815
- 2021: 1,441,745
- 2022: 746,091
- 2023: 400,692
We are seeing two different anomalies within these numbers. First, we can see that 2021 was a record year for VA-backed mortgage loans. That was when the pandemic created a nationwide real estate market frenzy, with a corresponding spike in mortgage loan origination. The housing market across the nation was one of the few industries that was not negatively affected by the health crisis. Instead, the real estate market sizzled in many major markets across the US.
The other anomaly occurred last year when VA loan volume in Washington and elsewhere across the country hit one of the lowest levels we’ve seen.
This year, we might be getting back to “normal.”
Higher Mortgage Volume Expected in 2024
In 2024, we will likely see an increase in VA loan volume in Washington and nationwide. That’s because mortgage rates have declined for the past few months and are expected to continue throughout 2024.
According to a January 2024 report from Freddie Mac:
“Between late October and mid-December, the 30-year fixed-rate mortgage plummeted more than a percentage point … Given the expectation of rate cuts this year from the Federal Reserve, as well as receding inflationary pressures, mortgage rates will likely continue to drift downward as the year unfolds.”
As of this writing, the rate for a 30-year fixed-rate mortgage is currently 6.62%. While that’s still much higher than the rock-bottom rate of 2.73% in February 2021, it’s still a bit lower than where rates were just a couple of months ago. And they’re expected to go down even further in 2024 and 2025.
The Mortgage Bankers Association (MBA) has also predicted a slight increase in the total number of home purchase loans during 2024 compared to last year.
A Solution to the Down Payment Hurdle
In a strong year with an active real estate market, there can be more than 20,000 VA loans generated across the state of Washington. And that’s a testament to this program’s popularity, which offers many compelling benefits.
Among other things, VA loans allow home buyers in Washington to finance the entire purchase price. Eligible borrowers (military members and veterans) can buy a house without a down payment while avoiding mortgage insurance.
With a conventional mortgage loan not backed by the government, a home buyer might have to put down anywhere between 3% and 20% of the purchase price. It can take years to save up for that kind of investment.
For instance, a 10% down payment on a home in Washington based on the state’s current average home price of $566,052 would come to $56,605. Saving up that much money for a down payment can significantly challenge many homebuyers.
The VA home loan guaranty program eliminates the biggest obstacle for home buyers—the down payment.
As the average price for a home continues to increase, so will the average VA loan amount in WA State. Luckily for those who apply for a VA loan, the zero down payment feature of these loans should help buyers get into the market more easily.
Have questions about the program? Sammamish Mortgage specializes in the VA loan program and serves all of Washington and the broader Pacific Northwest. Please contact us if you have financing-related questions or would like to apply for a loan.