What’s Happening With Trump’s Tariffs?

On April 5, President Trump is introducing a sweeping 10% tariff on all imports. Certain countries are getting even higher rates:

• China: 34%
• European Union: 20%

He’s calling April 3rd “Liberation Day,” highlighting his plan to protect U.S. jobs by charging more for goods produced overseas. While some industries and workers may benefit in the long run, the immediate effect has been market volatility.

Stock markets have slumped 10% in two days, bond prices have risen, and the 10-year Treasury yield is hovering around 4.0513%. For veterans looking to buy a home, these tariffs mean the cost of common building materials—like lumber, steel, and drywall—will go up. If you’re leaning toward a new construction home or a fixer-upper, you could see higher prices due to increased material and labor expenses.

Why Tariffs Matter to Veteran Homebuyers

You’ve earned some powerful advantages through your military service, and one of the biggest is the VA loan. With 0% down, no private mortgage insurance (PMI), and a higher loan entitlement (up to $806,500 in 2025, depending on where you live), the VA loan is a great deal. However, the ripple effects of tariffs can still impact:

• Home Construction Costs: Higher prices on materials can make new homes more expensive.
• Mortgage Interest Rates: Rates may dip in the short term if the bond market rallies, but they can also increase if tariffs lead to inflation.
• Overall Housing Affordability: Every extra dollar spent on construction or interest adds up over the life of your mortgage.

Many veterans transitioning to civilian life are on tight budgets or fixed incomes. An extra $17,000 on a $350,000 home can stretch your monthly payment beyond what’s comfortable. Even a slight increase in mortgage rates can raise monthly payments by $50 or more—money you might need for family expenses or other financial goals.

How Tariffs Drive Up Home Prices

Construction Costs Climb

Tariffs directly affect the cost of raw materials such as:

• Lumber: A large percentage of lumber comes from Canada, where tariffs could now add 25% on top of existing duties.
• Steel: Much of our steel is imported from countries like China, where tariffs have jumped to 34%.
• Drywall (Gypsum): Imported from places like Mexico, now facing a 25% tariff.

When builders pay more for these materials, they pass those costs on to homebuyers. CoreLogic data suggests new home builds could rise 4%–6% in price. On a $350,000 home, that’s an extra $17,000–$22,000. Builders will likely increase list prices to maintain their profit margins, leaving you with a higher purchase price and possibly a larger monthly payment.

Supply Chain Snafus

Beyond higher costs, tariffs can disrupt the supply of building materials. If lumber yards in Canada cut production because of reduced demand, the limited supply can cause prices to spike even more. The National Association of Home Builders (NAHB) estimates that an industry-wide cost increase of $3–$4 billion might occur due to tariffs, which trickles down to individual homebuyers like you.

Estimated Tariff Impact on Home Costs

Mortgage Rates: A Double-Edged Sword

Tariffs can push mortgage rates in two different directions:

Short-Term Dip

Right after major tariff announcements, the stock market often drops while investors rush to buy U.S. Treasury bonds—seen as safer investments. This raises bond prices and usually lowers their yields. Mortgage rates often follow Treasury yields, so there might be a small temporary dip from 6.63% to around 6.55%. On a $350,000 home loan, that could mean a monthly payment of about $1,188 instead of $1,208.

Long-Term Risk

However, tariffs can lead to inflation. If prices on imports rise, other goods and services often follow. Nomura predicts inflation might climb to around 3.1%. When inflation goes up, the Federal Reserve may decide to raise interest rates to cool off the economy. That could push mortgage rates up to 7% or higher over time. A 7% rate on a $350,000 loan could mean around $1,234 per month, which can significantly stretch your budget.

Mortgage Rate Scenarios for Vets

VA Loans: Your Edge in a Tariff Storm

Even with tariff-driven costs, the VA loan remains a powerful tool for veteran homebuyers:

• No Down Payment Required: This helps you keep savings for home repairs or emergencies.
• No Private Mortgage Insurance (PMI): Conventional loans typically require PMI if you put down less than 20%. That can save you hundreds per month.
• High Loan Entitlement: In 2025, the standard entitlement can cover up to $806,500, depending on your location and personal eligibility.
• Funding Fee Waivers for Disabled Vets: Veterans with a disability rating of 10% or more can often have the VA funding fee waived. That’s thousands of dollars saved upfront.

If a $350,000 home goes up by $17,000 because of tariffs, your VA loan can still make it more affordable than a conventional loan requiring a big down payment. If you qualify for a funding fee exemption, you’ll have even fewer out-of-pocket costs.

How Vets Can Navigate Higher Home Prices

1. Shop Existing Homes: New construction is more likely to be hit hardest by tariff-driven price increases because builders must buy new materials at elevated costs. Existing homes are already built, so they won’t have the same immediate markup. If the median price for an existing home is around $385,000 and a comparable new build costs $422,000, you could save tens of thousands of dollars by purchasing an existing property.
2. Lock Rates Now: If your finances are in order, locking in your interest rate sooner rather than later could save you money. Rates around 6.63% might drop slightly, but they could also climb if inflation kicks in. Even a small difference, such as going from 6.63% to 7%, can add $26 to your monthly payment for every $100,000 borrowed. Multiply that by three or four if you’re buying at $300,000 or $400,000.
3. Use Your VA Benefits Wisely:
   • Check your remaining entitlement to ensure you’re covered for the full loan amount.
   • Get pre-approved for a VA loan. Knowing your price range lets you shop with confidence.
   • Look for lenders who specialize in VA loans for a smoother process. For more tips, visit our VA Loan Guide on our website or see VA.gov Home Loans for official information.

Could Tariffs Hurt Veteran Affordability?

For many veterans transitioning to the civilian workforce, extra housing costs can strain an already tight budget. The VA reports that about 36% of first-time veteran homebuyers have moderate incomes, so an additional $17,000–$22,000 to the overall price of a home might translate into an extra $62–$79 per month at current interest rates. That can be a big deal if you’re also juggling new expenses, family costs, or adjusting to civilian life.

Deportation Double Whammy

Alongside tariffs, stricter immigration policies can reduce the construction labor pool. The NAHB estimates that about 30% of construction workers are immigrants. If deportations rise and fewer workers are available, builder costs could spike by an additional $7,000–$10,000 per home. This “double whammy” of higher material costs and reduced labor could push new-construction homes even further out of reach.

Why Timing Matters for Vets in 2025

The housing market is in a constant state of flux. According to some economists, we could see:

• Modest Growth: Home values may still grow around 5% this year, adding about $15,000 in equity on a $300,000 home.
• Potential Recession: Some predict a 35% chance of a recession. In a downturn, the Federal Reserve might cut rates, leading to lower mortgage rates (potentially around 6.3%).
• Inflation Scenario: If tariffs cause prices to rise across the board, the Fed might raise rates to combat inflation, pushing mortgage rates to 7% or higher.

Deciding when to buy is never easy. If you find a home that fits your budget and your family’s needs, locking in a rate sooner can protect you from potential spikes. If you wait, there’s a chance rates or home prices could increase, but there’s also a chance you might catch a small dip. It’s all about weighing the risks and benefits based on your personal situation.

Silver Linings for Veteran Homebuyers

• Potential Lower Rates: If economic growth slows, interest rates could drop to the 6.3–6.5% range, reducing monthly payments.
• High VA Loan Limits: With entitlements up to $806,500, many homes remain within reach, even if prices tick up.
• Long-Term Equity: Despite temporary setbacks, owning a home can build wealth over time.
• Policy Changes: Future changes in trade policy or economic strategy might eventually lower material costs.

What If Tariffs Backfire?

Tariffs are a balancing act. If they cause inflation to jump to 3.1% or more, mortgage rates could reach 7% or higher. That would increase the monthly payment on a $350,000 home to around $1,234, putting extra strain on your finances. Trade conflicts could also slow economic growth if countries like Canada, China, or EU member nations impose retaliatory tariffs on U.S. goods.

Some analysts speculate the Federal Reserve might lower interest rates if the economy dips into a recession. But counting on a recession to time your home purchase is risky. It’s generally better to base your decision on your own budget, timeline, and life plans.

Steps Vets Should Take Now

1. Explore Multiple Neighborhoods: Look into areas like Schertz, Universal City, and Cibolo that may offer more affordable existing homes.
2. Lock in Today’s Rates: Contact your lender about rate-lock options. A difference of 0.10% can mean real savings.
3. Verify Your VA Entitlement: Make sure you have the full VA loan benefit available. Check how much you can borrow without a down payment.
4. Budget for Potential Increases: Set aside extra funds for closing costs or unexpected expenses, including a possible $17K–$22K tariff markup on new construction.
5. Stay Informed: Keep an eye on tariff news and mortgage rate forecasts. Sign up for alerts from reputable sites like VA.gov or your state’s veteran affairs office.

Your Next Move as a Veteran Homebuyer

Tariffs might add a layer of complexity, but homeownership can still be within reach thanks to the unique advantages of a VA loan. Whether you’re dealing with higher materials costs or fluctuating interest rates, the key is to do your research, stay flexible, and act decisively when you find a home that meets your needs and budget.

• If you’re building new: Plan for an extra $17,000–$22,000 in potential costs.
• If you’re buying an existing home: You might avoid much of the tariff impact.
• If you’re on the fence about buying: Weigh the risk of rising rates against the possibility of short-term dips.

Many veterans have already navigated these challenges successfully. With smart planning and the support of your VA benefits, you can do the same.

Frequently Asked Questions

How will Trump’s tariffs affect veteran homebuyers?

Tariffs can push up home construction costs by $17,000–$22,000 for a $350,000 home. Mortgage rates may briefly dip but could rise long-term if inflation kicks in.

Why do tariffs raise home prices for veterans?

Tariffs increase the cost of materials like lumber, steel, and drywall. Builders pass these costs on to homebuyers, driving up the final purchase price.

Will mortgage rates drop for vets after tariffs?

In the short term, you might see a small decrease (e.g., 6.63% to 6.55%) if bond markets rally. However, this is often temporary.

Could tariffs push veteran mortgage rates higher?

Yes. If inflation rises, the Federal Reserve may raise interest rates. Mortgage rates could hit 7%, adding $26 or more per month for each $100,000 borrowed.

How can vets avoid tariff-driven home costs?

Look for existing homes instead of new builds. Existing properties aren’t as affected by the higher cost of new construction materials.

Are VA loans still good with tariffs in place?

Absolutely. VA loans offer no down payment, no PMI, and competitive interest rates. Even if home prices or rates rise, VA loans can save you thousands.

What’s the labor impact on veteran home purchases?

If stricter immigration policies reduce construction labor, homebuilding slows, pushing costs higher. This can lead to fewer new-home options and higher prices overall.

Should vets buy now with tariffs looming?

If you’re financially prepared, locking a lower rate could save you money long-term. Waiting may increase your risk of facing higher home prices or mortgage rates later.

How much extra will vets pay monthly due to tariffs?

On a $350,000 home, a $17,000–$22,000 increase might add $62–$79 to your monthly payment at current rates.

Can vets still build wealth despite tariffs?

Yes. Even with added costs, real estate often appreciates over time, and the VA loan’s benefits (no down payment, no PMI) help keep overall costs manageable.