In addition to regular base pay, eligible active military service members receive allowances each month to assist with the cost of housing, food and other necessities.
How is BAH calculated?
Basic Allowance for Housing rates are updated annually depending on median rent and utility costs in the region where a service member is based. It’s important to note that BAH calculations are made according to the location of the service member’s base or duty station and not their primary residence.
A service member’s rank, pay grade, number of years in service and whether they have dependents determine their monthly disbursement. For example, an officer with dependents will generally receive a higher BAH rate than a single enlisted member in most cases.
It’s also important to remember that the allowance a service member receives won’t necessarily cover their exact housing expenses.
Let’s imagine an active duty member receives a $1,000 monthly allowance for housing. If he rents a two-bedroom apartment at $1,200 per month, he’ll need to come out of pocket for the extra $200. Conversely, if he decides to rent a cheaper apartment for $800, he’ll be free to reallocate the $200 that’s left over each month. In other words, BAH rates are independent of a service member’s actual monthly housing expenditure.
Does BAH count as income for a VA loan?
Yes — you can typically use BAH as part of your income on an application for a VA loan. If you’re interested in using this benefit, you’ll simply need to show your lender proof of how much you receive each month, and they will usually be able to add it to your income on the VA loan application.
From a lender’s perspective, Basic Allowance for Housing is a stable and reliable income source. Although BAH rates are recalculated each year, rate protections help ensure service members aren’t left in the lurch if their regional allowance decreases. Any published BAH increase will still be applied on an annual basis.
As long as the service member doesn’t change their dependent status, receive a permanent change of station or receive a reduction in pay grade, BAH won’t decrease year to year. BAH is a safe source of income in the eyes of a VA lender.
Can you use BAH to pay a mortgage?
Yes. Although BAH isn’t disbursed specifically to assist with house payments, service members can certainly use the allowance to help pay a mortgage.
Because monthly mortgage costs may be higher than the average cost of housing in a service member’s area, there is a chance the BAH payments won’t cover the entire mortgage. In this case, a service member will have to make up the difference in costs. Mortgage payments will also vary depending on the borrower’s credit score, interest rate and down payment, which is important to keep in mind when shopping for a home. Estimate how much you can afford using our VA loan affordability calculator.