A Veteran’s guide to navigating property taxes and insurance costs

A cornerstone of the American Dream is homeownership, symbolizing stability and financial achievement. However, homeownership’s increasing costs pose affordability challenges for homeowners nationwide, including Veterans seeking a VA-guaranteed home loan.

Anecdotal evidence suggests the rising cost of homeowners insurance and property is making homeownership less affordable. VA is committed to doing everything possible to keep military families fully informed about the associated costs of owning a home and helping your family obtain, and stay, in your home.

What are the reasons for the rising costs?

As more frequent and intense natural disasters occur, insurance companies have responded with sharply increasing the cost of insurance in many areas or eliminating the availability altogether to reduce perceived risks. On average, insurance premiums have gone up an estimated 61% over the past five years. As losses related to natural disasters continue to increase, so does the costs of home construction, as builders add design improvements to withstand the effects of extreme weather. It’s not just single-family homes that are impacted; condominium fees are also increasing to cover the rising costs of homeowners insurance. To make matters worse, high insurance costs can reduce the amount of the home loan you can borrow.

Due to increased home values, property taxes have increased in many areas, too. Since 2019, home prices nationwide have risen by more than 50%, while homeowners’ property taxes are up by an average of 27%. Property taxes and homeowners insurance are what make up your homebuyer’s escrow, which the mortgage servicer is required to pay on your behalf each month as part of the monthly mortgage payment. Every year, the servicer will reevaluate your escrow payment, and as home prices continue to gain value, property taxes go up, likely resulting in an overall higher monthly mortgage payment.

What resources are available to you?

Fortunately, there are options for Veterans to preserve the peace of mind, security and legacy that come with owning a home.

• Shop around for homeowners insurance: There are several companies that offer exclusive rates, discounts and other unique benefits for the Veteran community. Explore your options to determine what is available and what best meets your needs. Also, many insurance companies offer a discount if you bundle multiple insurance products together, like car insurance, life insurance and homeowners insurance. This can lead to considerable cost savings.
• State-level insurance relief options: In some states that often experience disasters, homeowners can receive lower insurance premiums if they make their homes better protected from disasters. Check the state you live in to see what is available to you.
• State Insurance Pools: Some states have designated high-risk areas where private insurers are not allowed to operate. These “pools” offer insurance coverage at more affordable rates. Check the state you live in to see what is available to you.
• State-level property tax exemptions: Many states offer property tax exemptions or reductions for disabled Veterans and their surviving spouses. Check the state you live in to see what is available, and if you meet the eligibility requirements.
• Local tax relief programs: Check with your local tax assessor’s office for programs like tax freezes or deferrals. Tax freeze programs allow qualifying homeowners to keep their tax rates at a certain level, even if property tax rates increase. Tax deferral programs enable eligible homeowners to postpone payment of their property taxes until a designated later date.

Need help or more information?

VA is dedicated to keeping you fully informed about the costs of homeownership, and helping your family obtain and stay in your home. By using these resources, you can tackle the challenge of homeownership. Exploring these options can ease financial burdens and build a stronger foundation to preserve what matters most. If you need additional support, you can always contact VA directly by calling 877-827-3702 or visiting the VA home loans webpage at va.gov/homeloans. Whether it’s buying a home or maintaining your home, VA is committed to helping Veterans purchase or keep their homes.