Basic Allowance for Housing

Basic Allowance for Housing (BAH) is one of several VA benefits available to the men and women who proudly served our country. Military members and veterans who are not provided housing by the government are eligible for BAH payments.

How BAH works

The amount of each US Military Housing Allowance payment varies for each recipient. Monthly allowances depend on three things: pay grade, number of dependents and duty location. The latter is most critical in determining how much a veteran or military member will earn. Since those who receive BAH are not living in government-issued quarters, the allowances are intended to fund housing costs.

Therefore, the government studies recipients’ housing markets to determine the median housing cost.

Through phone interviews, reality listings and correspondence with real estate agents, the government calculates the median cost of housing. As a result, housing markets go a long way in figuring BAH payments. Residents in more expensive markets should expect bigger allowances.

BAH and VA Loans

Earning a BAH every month does not exempt recipients from getting a VA home loan. Since BAH counts as verifiable income, it reduces a recipient’s debt-to-income ratio, which is one of the many facets that lenders consider when issuing VA loans. By lowering this ratio, you become a more favorable candidate for a VA loan.

BAH Rates 2010

Because of those three factors — pay grade, dependence status and duty location — 2010 BAH payments differ for each recipient. Rates for allowances may change annually. There is good news for those already receiving BAH: Safeguards prevent reduction in BAH payments. So whether you’re living in housing that was not issued by the government, or you plan to, BAH allowances can help pay for housing costs.