Every so often, you can feel strain building inside the housing system long before it shows up in headlines. The numbers still look manageable, the markets are still functioning, but people working on the front lines know something is off.
We are at one of those moments.
I review loan files every day. I see income documentation, purchase contracts, debt obligations, and the gap between what borrowers earn and what homes cost. That gap has been widening for years, and in 2026, it is no longer a coastal story. Rural counties, small cities, fast-growing suburbs, and major metros are all running into the same wall. The basic cost of housing has pulled away from wages, and years of underbuilding have left the country short of the housing it needs.
The Affordability Gap Is Real and Getting Wider
The data confirms what the files show. According to the Harvard Joint Center for Housing Studies State of the Nation's Housing 2025 report, the median existing single-family home price hit a record high of $412,500 in 2024, roughly five times the median household income. Home prices have risen 60% over the past six years. Existing home sales dropped to their lowest level in 30 years.
First-time buyers are feeling this most acutely. The median age of a first-time homebuyer reached 38 in 2024, a record high, as younger buyers are increasingly priced out before they can get to the closing table.
Renters are under equally serious pressure. The renting population grew by 848,000 in 2024, driven largely by households that want to buy but cannot afford to. Cost-burdened renters, those spending more than 30% of income on housing and utilities, are now at a record high. The number of cost-burdened homeowners also rose, reaching 20.3 million, or 24% of all homeowning households.
Those renters are not a separate population from the borrowers we work with. Many of them are Veterans and service members who want to stop renting and start building equity. What I see in underwriting is the moment where that ambition meets market reality.
Why Qualifying Has Gotten Harder for Good Borrowers
When home prices and interest rates rise faster than incomes, qualifying for a home loan gets harder for everyone. The monthly payment on a median-priced home today is significantly higher than it was just a few years ago, even for buyers with the same income and the same credit. The homes that used to be within reach are not anymore, and the ones that are within reach require more of a borrower's monthly budget to get there.
Veterans face a particular version of this pressure. Many fall into what housing analysts call the workforce housing gap: they earn too much to qualify for traditional housing assistance, but too little to comfortably afford market-rate homes in the areas where they live and work. A police officer, a nurse, a Veteran transitioning out of service: these are borrowers with stable employment and real creditworthiness. The problem is not who they are. The problem is what homes cost.
Elevated interest rates have compounded this. Every rate increase translates directly into a higher monthly payment, which tightens qualification and reduces how much home a borrower can afford. Borrowers who were well within range two or three years ago are now right at the edge, or just outside it. That is not a reflection of their financial responsibility. It is a reflection of the market they are trying to buy into.
Why the VA Loan Benefit Matters More Than Ever
The VA home loan benefit was designed with exactly this kind of pressure in mind. No down payment requirement. No private mortgage insurance. Competitive interest rates that consistently outperform conventional alternatives. A residual income standard that measures whether a borrower can genuinely sustain homeownership, not just technically qualify for a payment.
In a market where affordability is this compressed, those features are not just conveniences. They are the difference between qualifying and not qualifying for a large number of Veterans and service members.
The no-down-payment feature alone removes one of the most significant barriers first-time buyers face. In high-cost markets, a conventional 5% down payment on a median-priced home can represent tens of thousands of dollars in required savings. For a Veteran in the early years of post-service employment, that kind of cash reserve may not be available. The VA benefit eliminates that requirement entirely.
The elimination of PMI keeps monthly obligations lower, which directly improves the qualification calculation. A conventional borrower putting less than 20% down is paying PMI on top of principal, interest, taxes, and insurance, but a VA borrower is not. That difference may move a file from a decline to an approval.
The residual income requirement, which is sometimes misunderstood as an additional hurdle, is actually a feature that protects Veterans from overextending. It ensures that after all obligations are met, a borrower has enough left over to cover living expenses. It is a more complete picture of financial health than debt-to-income ratio alone, and it reflects the reality of what sustaining a household costs.
What Has to Happen
No single policy lever fixes a housing shortage that took decades to create. But from where I sit, a few things are clear.
Veterans who have earned this benefit should be using it. The VA home loan is one of the most powerful financial tools available to any borrower in today's market, and it is well calibrated for the affordability environment we are in right now. Awareness remains a genuine problem. Many Veterans either do not know the full scope of the benefit or carry misconceptions about how it works. Closing that gap is part of the work.
Federal housing policy needs to keep the programs that support Veterans and workforce borrowers strong. Benefit structures, funding mechanisms, and guidelines that make VA loans accessible and competitive need to be protected and, where possible, expanded.
Local governments need to address the supply side. Layers of process, each added with good intentions, have become a collective brake on new construction. Realistic timelines and predictable permitting make a direct difference in whether new homes get built and at what cost.
Private capital and lenders need to stay engaged with Veterans. Disciplined underwriting, responsible use of the VA benefit, and a long-term relationship approach with the families we serve matter more during periods of market stress, not less.
The View From Here
I spend my days looking at the intersection of what Veterans have earned, what they make, and what housing costs. That intersection is under more pressure than at any point in my career. But the VA loan benefit is still doing what it was designed to do: giving Veterans a real and meaningful advantage in a market that is hard for everyone.
The crisis is real. The urgency is real. And the tool to help Veterans navigate it is right there, for every qualified Veteran who wants to use it.
FAQs
Why is housing so unaffordable right now?
A combination of years of underbuilding, rising construction costs, elevated interest rates, and wage growth that has not kept pace with housing costs has created a shortage that now affects every region of the country.
Does this affect Veterans specifically?
Yes. Many Veterans fall into the workforce housing gap, earning too much to qualify for traditional housing assistance but too little to comfortably afford market-rate homes in many areas. The VA home loan benefit is specifically designed to address this.
How does the VA loan help Veterans qualify in a tough market?
The VA loan's no-down-payment requirement, no PMI, and competitive rates reduce monthly obligations and upfront cash requirements, both of which directly affect a Veteran's qualification in today's higher-rate, higher-priced environment.
What should Veterans do right now?
Using the VA home loan benefit remains one of the most powerful financial tools available to borrowers. Veterans who have earned this benefit should understand it fully and work with a lender experienced in VA underwriting to explore their options.
