The Department of Veterans Affairs will need $2.5 billion in congressional appropriations over the next few years just to cover the bad loans in its housing programs, according to a new government prediction.

Congress already has spent $2.3 billion to cover losses during the four years ending in 1989, the General Accounting Office said in its report. But housing downturns since the early 1980s, particularly in oil-dependent states of the West and Southwest, have led to widespread foreclosures on veterans' homes that will necessitate the new funding.

The GAO report makes clear that the worst may not be over.

Losses predicted by the agency will occur as a portion of the 3.9 million home loans now being backed by the government go into default.

The agency based its estimate of how many loans would go bad on the types of mortgages it has insured, its experience with defaults and economic conditions, according to Dennis Duquette, the GAO's director of civil audits.

The GAO did not estimate the exact number of years over which the losses will be spread, but most veterans who default on their mortgages do so in the second through fifth years after they buy their homes, Duquette said.

Most veterans pay some fees when they get a government-guaranteed loan under the program, which was created by Congress in 1944 to help returning World War II veterans make a new start in civilian life.

Although the program was not designed to break even or make a profit, it was not expected to be a massive money loser.

Under recent legislative changes, a home-buying veteran will pay a fee ranging from nothing to 1.875 percent of the loan amount to secure a VA loan, depending on the size of the down payment.

This is a change from the 1 percent fee once charged all veterans.

The fee paid by the veterans, along with a one-half percent fee from the government, goes into the Guarantee and Indemnity Fund, also created by the law to help cover losses from loans issued after last Jan. 1.

Additional reforms are being proposed by some members of Congress, including Sen. Barbara A. Mikulski (D-Md.), chairwoman of the VA, Housing and Urban Development and independent agencies subcommittee of the Senate Appropriations Committee.

An aide said this week that Mikulski believes the VA needs more employees to oversee loan operations.

At the end of the 1989 fiscal year, the loans being backed by the VA had a total face value of $152 billion, with the government guaranteeing $60 billion of that amount, according to the GAO.

The VA guarantees mortgages for up to 50 percent of a loan of $45,000 or less. On loans of more than $45,000, the department guarantees 40 percent of the total or $36,000, whichever is higher.

D. Mark Catlett, the VA's deputy assistant secretary for budget, said the department "agrees with {GAO's} estimates {of future loan losses} in general."

The loan guarantee program has never been totally self-sufficient and with the housing recession in the early 1980s, the problem got worse, Catlett said.

"The VA has been one of the first agencies to come up with a complete financial statement" in line with a government-wide drive to have all agencies and departments issue audited statements, he said.

"This certainly is one of the steps ... to point in the direction of where we may have problems ... so we know what needs to be fixed."

In addition to the loan guarantees, which comprise the largest VA housing program, the department makes direct loans in rural areas where veterans are unable to get loans from private lenders.

The department also makes direct loans to buyers of houses the VA has taken over through foreclosure.

The number of VA foreclosures declined last year for the first time since 1980, as economies strengthened in states where many of the defaults have occurred.

The department said about 43,000 veterans lost their homes, roughly 6,000 fewer than in 1988.

But with housing markets turning down in many parts of the nation this year, it seems that "1989 turned out to be an aberration," Duquette said.

The GAO report said the VA has "serious credit management problems," noting that between 1986 and 1989 the department's bad debt losses from uncollectible accounts and loans in all its programs, including housing, education and medical care, totaled $3.1 billion.