The Veterans Affairs (VA) home loan guaranty program substantially reduces or eliminates down payments for veterans purchasing homes, thus making homeownership more attainable for service members, veterans, qualified reservists, and spouses. Historically, the VA loan program has contributed to the expansion of homeownership, and during the current mortgage crisis, VA loans outperformed many other types of mortgages, despite involving high loan-to-value ratios. 

Despite the generosity of the VA loan program, awareness and understanding of the program may be hindering its use.  Recent government surveys of veterans find that nearly one-third are not aware that the VA loan program exists, while roughly another third are aware of the program but report that they do not understand it.  Interestingly, VA mortgages are disproportionately concentrated in some areas, even after accounting for concentrations of veterans and active duty servicemembers.  Using loan-level data, we examine the place-based factors that explain the uneven distribution of VA home loans nationwide. We test the hypothesis that proximity to military bases and veteran service centers, like VA medical centers, explains a portion of the variation.  Proximity to military and veteran service centers may increase the likelihood that service members and veterans become aware of benefits and in turn take advantage of these programs.  We also explore competing explanations, such as availability of alternative financing programs (including state-run loan programs for veterans) and local housing market conditions.