The basic allowance for housing: Helping military members afford a home

Today is Memorial Day in the United States, a federal holiday to commemorate U.S. soldiers who died while in military service. This is a guest post from Chris Birk, a recovering journalist and the director of content and communications for Veterans United Home Loans, the nation's leading dedicated VA-approved lender. Birk writes about mortgages and military home buying for a variety of sites and publications, from the Huffington Post and About.com to Mortgage News Daily and Our Broker.

An ex-Marine friend recently told me about his father, who served our nation for more than two decades before returning to civilian life. Given the lack of on-base housing during most of his career, my friend's father earned a small fortune in BAH — or Basic Allowance for Housing, a monthly stipend to cover shelter costs — but never took a step toward purchasing a home.

He's now spending his golden years in a small apartment financed by his son.

Scores of service members have access to BAH, but a surprising number don't have a solid understanding of just how powerful it can be. Military members constantly on the move often fail to think of themselves as likely candidates for homeownership.

But these tax-free payments make buying a home and building wealth possible for a deserving demographic that can easily feel left out. The key is ensuring that service members and their families understand the unique tool at their disposal.

Important note! Many readers have raised valid concerns over the quality of advice in this article. Please read the comments below for first-hand experience with the BAH and important cautions against blindly buying a home just because you can get a little help. Home ownership is a huge responsibility with enormous financial repercussions. Be smart about it.

The Basic Allowance for Housing is available to qualified service members when government quarters aren't provided. BAH payments vary depending on a service member's rank, dependent status and location. For example, a married E-4 with dependents stationed at Fort Bragg, N.C., currently receives $990 per month in BAH. At Fort Bragg, Calif., the BAH rate for that same soldier rises to $1,161, a reflection of the higher cost of living.

Rates can change annually and are designed to ensure military members can keep up with real estate costs in the civilian world. For many service members, the phrase “real estate costs” simply winds up meaning “rent payments.” That certainly makes sense for some, but the reality is that BAH payments can serve as a significant springboard to homeownership and building wealth.

Over the course of a military career — be it four years or 40 years — service members can accrue a significant chunk of change to purchase and even pay off a home. What's more, using BAH to cover housing costs frees up income and other military pay for other needs, from debt repayment to investment.

Here's an example to help explain. In this scenario, let's assume a married service member with a child enlists, leaves boot camp as an E-2 and retires after 25 years as an E-8:

BAH example

Service members are often stunned to see that bottom line.

That's more than half a million dollars tax free over the course of a career. Even those who aren't considering a life-long hitch still reap more than $90,000 in BAH after just four years in this scenario.

Homeownership rates remain strong in military circles, but many service members still worry that the process is out of reach financially. There's also concern about how long they'll be at any one duty station.

Military life is a transient one, and service members would certainly expect to move multiple times during the course of a career. But the Basic Allowance for Housing can help carve a clearer path to homeownership at each of those stops, especially when coupled with the flexibility of low- and no-down payment mortgage programs.

Service members and their families can learn more about Basic Allowance for Housing, watch an animated video explaining the program, and check out a BAH calculator at the Department of Defense Center for Travel Excellence.

J.D.'s note: Get Rich Slowly rarely covers military-specific topics, though there've been several requests for such stories. Now's a good chance for current and former service members to contribute their knowledge and expertise. Have you made use of BAH? What advice do you have for other service members who might consider doing so? Share your advice and experience in the comments.

 
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Allie
Allie
9 years ago

Neat article. I’m from a military family, and we have always rented. My dad’s family was military too, and they also always rented, so that may be why. I know that their early careers were full of moving frequently (sometimes every year) until we were in elementary school (then it slowed down to every two or three years). Perhaps they just got comfortable with a renting mentality, since it made more sense earlier on. My understanding from the few times I’ve talked to my parents about BAH is that they preferred to find places to rent for under the BAH… Read more »

Aaron
Aaron
9 years ago

This article hits on something I know a little of since I am currently in the military, so this is my first comment after being a reader of getrichslowly for many years. Overall, I think this article would be beneficial to anyone who is relatively new to the military…seeing how much money there is in housing payments and the potential for saving some of that money over the course of a career. One point that was not covered and one that is crucial to this subject are the disadvantages of moving an average of every 3-5 years with respect to… Read more »

Leah
Leah
9 years ago
Reply to  Aaron

My brother used his BAH to buy a house when he was living in the area. Once he had to move, he started renting that house out to another service member and bought another house. He owns three houses now and rents all of them out because he’s been deploying and moving around so much recently. So, renting out your house is a possibility, especially if you live in an area without a lot of rental properties.

Aaron
Aaron
9 years ago
Reply to  Leah

I also have purchased many homes while in the military. At one time I owned 4 different homes and I was renting out 3 of them. And I currently own 2 in the U.S. while living in Japan. I’m not saying it can’t be done, it can, but land-lording is not something that everyone wants to do and it is definitely not something that most people sign up for when they buy a home… It sounds like your brother put some thought into his plan and has made it work, like I have, but it is hard work. Taking into… Read more »

SB (One cent at a time)
SB (One cent at a time)
9 years ago

Wow that was eye opener, an appropriate memorial day post! Thanks for sharing this, I had no clue about BAH.

Celia
Celia
9 years ago

Great article in general, but I think your assessment is a little simplistic. When you write the BAH for the hypothetical enlisted service member above, are you taking into consideration the actual take-home pay and cost of living (particularly in San Diego and Honolulu)? Also, because of the transient nature of military life, many live in military housing. In those cases, *all* of your BAH goes to the housing office, regardless of rank. I’m not sure looking at the simple dollar totals is enough. My husband is active duty military, and at six years in we have moved five times,… Read more »

Emma
Emma
9 years ago

BAH is supposed to cover utilities, maintenance, etc. as well – it isn’t just your house payment. Keep that in mind. One thing you don’t consider is how hard it might be to sell the house that you buy with your BAH. I’ve had friends trying to pay 2 mortgages because the house that they were sure would sell didn’t (for a year or more) or the renters they were sure they would always have didn’t materialize, which left them paying 2 mortgages AND a property manager’s fees. The best thing to do with BAH that I’ve seen is this… Read more »

chett daniel
chett daniel
9 years ago

We rented the entire time I was in the military. We always tried to find a place that rented under the BAH rate for the area so we could save the difference. The funny thing was though, landlords were very aware of BAH rates and the rental market prices oddly tracked BAH rates, regardless of the condition of the property. (J.D., It’s been too long since I’ve been in the military now and lived next to an active base, but another military story that would be interesting would be on the topic of predatory lending, and sales directed at young… Read more »

Lizzy
Lizzy
9 years ago
Reply to  chett daniel

Predatory lending aimed at the military would be a really good topic. It’s still a major problem! They aim at low ranking soldiers, who are young and have never had so much money in their lives. That’s a really great idea.

Jeff
Jeff
9 years ago
Reply to  Lizzy

It’s not as bad in some places as it used to be. I know that in the Navy, all members are given training about predetory lending in Boot Camp and then annually. With the advent of new laws limiting the APR of these “short term loans”, the rates that some of these companies can charge are greatly decreased and it has actually driven them out of of the area in some states. I was showing a few new guys around the area surrounding the base the other day and one asked where the “payday loan sharks” were (his words, not… Read more »

Ross @ Go Be Rich
Ross @ Go Be Rich
9 years ago
Reply to  Jeff

When I was in Tech School for the Air Force down in Biloxi, Mississippi, there were entire car lots devoted to selling brand-new cars to these 18-year-old kids who thought they were filthy, stinking rich after a few steady paychecks. I’d say about 25% of the students I was with bought brand new cars.

Jennifer B
Jennifer B
9 years ago

My father was military, we moved all over and my parents owned 3 houses over his military career – broke even on one, lost money on one and made a profit on one. We also rented twice and lived in base housing 3 times. What wasn’t said in this article is that the BAF can often be a significant part of a serviceman/woman’s salary. Using today’s rates, an E-2’s base pay is only 1645 per month, or 19,764 per year. For that E-2 living in San Diego, the BAH is more than his salary! So, that E-2 with family (since… Read more »

Jeff
Jeff
9 years ago

Hey all, long time reader, first time commenter. I’m a Navy Chief and have 19+ years in. I’ve been eligible for BAH for more than half that time but I’ve only for the last 4 years. As stated in the article, one of the biggest barriers to ownership is the fact that we military transfer so often. In the submarine force, which I am in, the standard tours are 3-4 years. So for me, if I wasn’t sure of my ability to stay in the area it wasn’t worth the risk of owning and facing the possibility of transferring and… Read more »

Lizzy
Lizzy
9 years ago

It is a much better idea to rent cheaper, and bank the BAH. When I deployed I saved all my BAH (single, no kids) because you don’t have to keep paying rent while you’re deployed, if you can do something with your STUFF! I have a pretty solid down payment for a house when I get out of school, but I would NEVER buy a house knowing I would have to get rid of it in 1-4 years, but the exact timeframe is unknown.
Maybe JD can do an article on the GI Bill and the differences in it aswell.

aa
aa
9 years ago

My parents bought in at least 3 places because there wasn’t good rental options or whatever…. it worked out but they came very close to having an unsellable house when the last base we were on got put on the closing list (later taken off and is still open almost twenty years later) – its a chance that has to be taken – I doubt we will see as many closings at once as in the mid90s but its still always a possibility and with todays market I really wouldn’t suggest military buy if they can help it unless they’re… Read more »

Amanda
Amanda
9 years ago

I have to disagree with this article. While just looking at the BAH rates alone, it looks like a lot of money. But what about looking at the actual salary of that E-2 to E-8? The reason you get BAH is because your salary is barely enough to cover basic living expenses. We were in the military for 6 years and never lived in an area where our BAH would have allowed us to buy a house, and trust me, we looked. Add children into the mix and the constant moves (we lived in 6 places in 5 years) buying… Read more »

Jen
Jen
9 years ago

Is the article really suggesting that a person still in the service buy a house? I read it as saying that if you could live under your means, via this allowance, you could have enough for a nice downpayment/nest egg at the end.

I don’t think it’s talking about buying and selling houses every couple of years. That would seem not only odd, but contradictory to the recent postings about how JD would likely rent rather than own if he had it to do over again!

Lizzy
Lizzy
9 years ago
Reply to  Jen

Yes this article is really telling people in the military to use their BAH to buy a house. The author of this article pushes mortgages on military personal for a living. Which is what makes this article on Get Rich Slowly most disappointing, because it’s another place where people are assuming that the military is full of idiots, and push service members to spend all their money on something that most likely doesn’t pertain to their situation, and put them in debt. Although what this article is pushing isn’t what JD intended, what he intended and what came out of… Read more »

rb
rb
9 years ago

We were both in the mililtary for 20+ yrs. We were able to take advantage of the BAH and purchase homes. But we incur a great deal of risk in doing so. In 3.5 yrs we had orders to the other coast and either had to sell the house or rent it. We absolutely could not stay in that home. We became landlords for a few yrs, but were lucky the 3rd set of renters bought the house, making 100K before the housing market crashed. Another tax advantage is that we did not have to pay capital gains on the… Read more »

Laura
Laura
9 years ago

Having just gotten out of the military in the past month, I’m very aware of BAH and just how out of touch this article is. It makes sense, since it’s written by someone who works for Veteran United Home Loans. First, not everyone is entitled to receive BAH. It’s only guaranteed to those who are married or have children that live with them. Lower ranking singles usually do not receive BAH payments and cannot move off base. Second, as stated by many others, military life is very transient, and most people should not be in the position of dealing with… Read more »

Ellisa
Ellisa
9 years ago

My husband was in the AF for 4 years and spent all of that time at the same base, minus a few TDYs and longer deployments. After renting for a while and realizing that in our area, even the ‘cheap rentals’ are pretty much tied to military BAH (so it was impossible to bank the extra), my hubby decided to buy himself a starter home. Utilizing his VA loan, he was able to get a 1000 sq ft house on a half acre lot, which was perfect for his needs and since he owned the home he was building equity… Read more »

Hong
Hong
9 years ago

1) There is no such thing as an ex marine, only former marines.

2) BAH is an allowance. Although it is for housing, you can use it for anything you want. For that reason, I think you should separate the factors in buying a house (your personal situation, the local markets, etc…) with the BAH.

Kyle
Kyle
9 years ago

Interesting article, but it does not accurately portray the whole picture as many people here have addressed. Cost of living in contrast to base pay for soldiers is a huge issue. BAH assists in that. Additionally service members with families rely on the income to get by especially when a spouse is a stay at home spouse. A better article would have been any of the following money saving plans for service members which include NO risk (unlike purchasing a house): 1. Thrift savings plan vs. Roth IRA retirement 2. SDP (Savings Deployment Plan) which provides up to $10,000 that… Read more »

deecie
deecie
9 years ago

Great article! My husband and I are dual military and bought our first house 5 years ago w/14 yrs in service, expecting this to be out last duty station. Best laid plans…my spouse was promoted, and we now have order to HI – which is AWESOME, but…we have no plans to buy a house in such an expensive place,and have heard so many horror stories abt rental props. We are lucky to live in an area that hasn’t been hit nearly as hard as the rest of the country and are hopeful that we will be able to sell the… Read more »

Rhonda35
Rhonda35
9 years ago

As the wife of a retired USAF pilot, I can only speak from our experience with BAH. I see Birk’s point, however, I think he doesn’t have a full understanding of life in the military. In a utopian world, his plan is great. But, there are things he is not considering. BAH is not just for housing; it is an allowance meant to help with the cost of housing, utilities, etc. It’s supposed to be at current cost-of-living rates, but always seems to be a few years behind. Except for the first housing I shared with my husband (i.e. his… Read more »

Jan
Jan
9 years ago

I agree that the writer is pretty typical of a person who deals with the military, but has never really served and is not aware of what BAH is really for. The article should have been about the advantage to using a VA loan AFTER the service member separates. I don’t know what it is – but there has to be one. Personally, I am not aware of one person who has used a VA loan. My husband served 20 years in eleven locations. We attempted to rent below BAH- but that was not the norm since we, like a… Read more »

Jan
Jan
9 years ago

As for the “ex Marine” his father (is he the retired Marine?) probably qualifies for assistance if he did 20 years. He should be receiving his medical care for free and a pension. Something is off in that story. It would be worthwhile to look to the local VFW to help figure it out. Those people know their stuff!

Meg
Meg
9 years ago

In the Air Force, pretty much everyone can get BAH. If you live on base you won’t see it, if you move off base you will. The BAH my husband makes goes straight to base housing to cover the rent on our house and all the utilities. It’s nice because it’s just taken out and we never see it or have to worry about it. The ones who can make the most bank with BAH are single and move off-base into either a cheap apartment or with roommates. They can easily keep half of their BAH for whatever. We won’t… Read more »

Fish Finder
Fish Finder
9 years ago

To all those serving our country, past and present, “Thanks” from an old sailor.

Deserat
Deserat
9 years ago

I’d like to recommend a book just out by Doug Nordman that details early retirement using a military pension. It goes into detail about finances, saving, investment and emotional and mental transitions. Website for book is http://the-military-guide.com/author/themilitaryguide/ Most of your commenters here are spot on – very few people do well in the landlord role as they usually are moved fairly often and are remote landlords. One’s rank makes a huge difference as well regarding how disposable BAH really is. I myself am a Reservist who has spent early and mid-career on active duty. Husband is active duty and we… Read more »

Nords
Nords
9 years ago
Reply to  Deserat

Thanks, Deserat!

Here’s the post about “Rent or buy?” with BAH:

http://the-military-guide.com/2010/12/29/real-estate-rent-or-buy/

Perry
Perry
9 years ago

I’ve been off active duty and the military has added many quality of life initiatives since then, so my info may be dated. However, here are my thoughts on the article and some comments: 1) As far as this being a “nest egg” to be saved, BAH is only given to those who are currently renting. You had to show your lease/mortgage to get it, and if your payment was less than the BAH amount, you got half the difference. Also, in my day, if you deployed and stopped renting for the deployment, you were supposed to have lost BAH.… Read more »

Nords
Nords
9 years ago

JD, Thanks for asking! I think Emma, Laura, and Hong make very good points about using BAH as a tax-free savings benefit, not reflexively as a mortgage payment. BAH has improved dramatically over the last decade by rising to cover an “estimated 100% of housing costs” instead of the old 85% standard. However it doesn’t mean that military renters should fear ending up like Mr. Birk’s friend’s father. That’s such a simplistic example that it’s almost alarmist. While Mr. Birk’s math may be correct it ignores many other housing considerations, both financial & lifestyle. I’d say the most important issue… Read more »

Ross @ Go Be Rich
Ross @ Go Be Rich
9 years ago

It’s funny how there can be so many discrepancies between different branches of the military and all of the different statuses there are that military members can fall under. Personally, I work full-time in the Kansas Air National Guard, and as such, I’m almost 100% sure that I’ll never be deployed anywhere against my will. That’s not to say that it couldn’t happen, because it could, but considering this is one of the few places my job can take place, and the fact that my squadron has never deployed in their entire history, I’m fairly safe. I live in a… Read more »

Damsel
Damsel
9 years ago

My husband is active duty Army, E-4. We have two children. The tone of this post ticks me off. It seems to suggest that BAH is extra spending money, and that service members are rolling in dough but are too stupid to know it. I’d love more clarification on the following statement made by the author: “…using BAH to cover housing costs frees up income and other military pay for other needs, from debt repayment to investment.” This statement makes *no sense*. Base pay (what I’m assuming the author means by “income”) is never used to pay housing costs, unless… Read more »

John
John
9 years ago

JD,
While,the intent of your post is made with good intentions, it is way off kilter. If you look at how much someone just coming into the military makes, you will notice that BAH can potentially be more than their monthly paycheck. So if a new military member purchases a house and has to move and cannot find renters immediately… what are they going to do?

Everything in moderation. It would be more advisable to have a new military rent until they have a substantial savings account and then make the transition into slumlordism.

RM
RM
9 years ago

I spent 27 yeras on active duty in the Army, retiring in 1997 and I owned two homes during that time. One was for about a year and a half and I was lucky to be able to break even when I was transferred. The other I owned for the last 13 years I was on active duty. This was in the DC area and during those 13 years I was in 4 different assignments in the DC area. During that time I had commutes ranging from 54 miles to 6 miles daily. I even turned down a potentially career… Read more »

robin
robin
9 years ago

what a disappointment to read this clearly slanted post. taking advantage of memorial day as well. color me decidedly unimpressed. anyone who knows what they’re talking about knows how totally unrealistic the tone is here.

by all means, military finances are their own subtopic and absolutely have a place in personal finance discussion. but not cheap pitches like this. i feel slimed.

Kathy
Kathy
9 years ago

JD I’m surprised you let this article fly, especially with the line about low or no down payments mortgages. We tallied the family years of service one Thanksgiving, and collectively we have 100+ years so I feel qualified to speak on the subject. Investing is real estate is risky, and doing it just cause you are collecting BAH is foolish. If you have a substantial downpayment, if you know you can get a great property manager if transferred early, and if you could swing the mortgage payment out of your base pay if you had to, then maybe buying a… Read more »

Becky
Becky
9 years ago

Yes, jumping in to agree with everyone else. As a military officer who spent a year giving servicemembers personal legal advice (still in, just doing other things), I saw firsthand the DANGER of having the attitude toward BAH that is portrayed in this article. For one thing, BAH isn’t extra “free money.” It’s part of your paycheck, and without it, most people in the military wouldn’t be getting paid NEAR what they are worth. Whether you are living on base for free and not receiving BAH, or paying out of pocket for your own housing with BAH, the rest of… Read more »

Lynnette
Lynnette
9 years ago

I’m afraid I’m going to have to agree with several of the commenters here. As the spouse of an active-duty Army officer, I am highly disappointed to see an article of this nature here on Get Rich Slowly. This article is no better than the misinformation and half truths that are aimed towards service members by lenders on a daily basis. Is it really any surprise the director of content and communications for the nation’s leading dedicated VA-approved lender would be encouraging service members to buy a home? In my opinion, encouraging service members to purchase homes given the current… Read more »

Justin
Justin
9 years ago

Moving every 2-3 years is hard enough. Adding the stress of looking for a house to buy, then selling or renting out the house 2-3 years later? No thanks. I’m an offier in the services, and think it makes a lot more sense to just rent and bank some of the BAH. Buying a home is so overrated its ridiculous. Bubbles happen and the housing market drops like a rock. Maintenance costs tens of thousands of dollars over the lifetime of the home. Hardly anyone goes for 30 years without refinancing their mortgage, so they increase their monthly payments every… Read more »

J.D. Roth
J.D. Roth
9 years ago

Thanks, everyone, for your feedback. Your criticisms are valid. I should have vetted this piece more thoroughly before accepting it. I’ve added a disclaimer to the article.

If any of you want to supply a reader story or guest post with a more pragmatic picture of BAH based on your experience, I’d be happy to host it!

Lindsey
Lindsey
9 years ago
Reply to  J.D. Roth

I would be willing to share our military BAH experience. J.D., I sent you an email with particulars of our situation to see if it’s what you’re looking for.

Thanks for being willing to discuss this issue on the site and the opportunity to further explore it.

Becky
Becky
9 years ago
Reply to  J.D. Roth

Although this might be getting a bit in the weeds for your site, I would be interested to hear from someone who has carefully tracked their finances while living in base housing without receiving BAH and while living out in town and receiving the BAH.

I’ve always wondered which would be the better option financially, and whether it would make sense to live in base housing if I were ever given the opportunity.

Nords
Nords
9 years ago
Reply to  Becky

Becky, it’s tough to make an apples-to-apples comparison because the real estate markets are so different between areas. Even the market around the same base changes from year to year, and BAH rates can change as well with the DoD surveys. Having said that, living off-base was almost always more expensive because of the maintenance/repair costs (which were “free” on base). It’s also more difficult to find an off-base property of the equivalent quality to on-base housing… landlords understand BAH perfectly well and will attempt to match their rents to it. I think it’s easier for families to save money… Read more »

Nords
Nords
9 years ago
Reply to  J.D. Roth

J.D., I’ve sent you an e-mail. Thanks for bringing up this subject!

Ray
Ray
9 years ago

You obviously show how much you don’t know about the military. As others have said BAH covers more than just the house payment. It’s meant to cover all expenses related to housing, such as utilities, water, and then you have cable/sat, maint etc. Sure, in a perfect utopia, you would rent or buy a place far under BAH, but we are living in the real world. Imagine someone who used their BAH back in 2005/2006 to buy a home. Well now they are underwater just like everyone else. Don’t think of BAH as money to rent or buy a home.… Read more »

mapster
mapster
9 years ago

BAH is not free money. It is a way for the government to pay out less in retirement, since retirement is only a percentage of your basic pay. All the “tax free bonuses” are is a way to bring the military members income somewhat in line with the civilian sector so that military families are not living well below the poverty line, while saving the government money in the long run. We just got back late last night, after a 12 hour long drive one way, having spent our Memorial day weekend going back to “our house” that we purchased… Read more »

Lisa
Lisa
9 years ago
Reply to  mapster

Ugh! This is our first foray into long distance landlording. Only one snafu so far, a mother in law who had no heat because the kids closed all the vents in the house and the heat from the furnance triggered the auto shut off. So there I was with my tenants on vacation in Hawaii, their inlaws and kids without heat in our rental WA, and I’m in GA at our current duty station. Heating company called, $200 bill for stupidity. Well, after reading your story, I feel lucky.

Lisa
Lisa
9 years ago

BAH is not free money, although it is a nice thing that it is tax free. We have been in the Army for 14 years and the advantage of it depends on the housing market. We rented and bought during that time and watched everyone make money when they bought or everyone lose money when the bought. When we first entered the service, you had to report your rent. That lead to a downward spiral of BAH rates because everyone was trying to rent under BAH and the lower costs of renting (bad) places lowered the BAH. Now they do… Read more »

Dawn
Dawn
9 years ago

Um, there’s only one problem with trying to save BAH for a downpayment on a house. Basic pay for military members is not enough to cover your current housing costs (depending on rank of course). I was in the Navy for 4 years and I was stationed in Norfolk, VA. where the average rent is about $1000 for a 2 or 3 bedroom townhouse. My basic pay was only $1500. I had to use my BAH to cover the cost of my rent, which is what is is supposed to be used for. A typical family with children, 2 car… Read more »

Paul
Paul
9 years ago

I recently retired after 22 years in the Air Force. During that time I received a housing allowance for about 13 years. The Overseas Housing Allowance (OHA) is different from the Basic Allowance for Housing (BAH) in that if you find a place to rent that is below your OHA, you do not get to pocket the extra cash. So for seven of those 13 years, there was not extra housing money. I also spent on year living in base housing, so all my BAH went to the company that was managing the military housing for the area. During the… Read more »

Robbo
Robbo
9 years ago

We bought a house in Florida, lived there 3 years (our longest tour) and couldn’t sell it. Now we are unwilling landlords, and underwater at that. Since leaving Florida, we moved 3 times in 33 months. When you move like that, renting is the only reasonable option. Now we are in a high-income area with rising home prices: Northern Virginia. Our BAH covers the rent, but that’s because it’s a high-cost area. If we bought here, and then moved to another part of the country, our BAH would drop 30% or more. More than a month without a renter could… Read more »

Katie
Katie
9 years ago

I bought a house in 1998 utilizing the VA Loan program and my BAH. Take into account that in was 1998 around the Fort Sill, Oklahoma area. Take into account that my house, at the time, was listed at $36,500. (3 bedroom, 1 bath, 1 car garage – decent little starter home) My mortgage, taxes and insurance on this house was around $300-$400 (depends on the year and how the city decides how much I should pay in taxes) My base pay, after taxes, was $850 a month. BAH was $495 a month (if I am remembering correctly) Without BAH,… Read more »

Mike
Mike
9 years ago

Long time reader, first time poster (I think). Just came to add mine to the list of people saying this article is way off base. J.D., I like your blog and your guest posts are usually fair, but I am wondering if you checked out this advice. BAH is not enough to cover housing expenses off post for most members (especially young enlisted service members with children). This is true whether we are talking about renting or a mortgage. Most younger enlisted members are not going to have the great credit scores (yet) to get a decent rate. The smart… Read more »

Paul Morgan
Paul Morgan
8 years ago

Okay, some quick, very generalized, math here for military members considering buying a home the day they arrive at their new 3 year duty station: Home value: $150,000 Down payment: 0 Interest rate: 5% Monthly payment: $1,110 Loan duration: 15 years Year 1: $13,320 Paid $7,450 Equity Built $2,000 Taxes and Insurance $4,500 Closing Costs Year 2: $13,320 Paid $7,754 Equity Built $2,000 Taxes and Insurance Year 3: $13,320 Paid $8,069 Equity Built $2,000 Taxes and Insurance Total: $39,960 Paid $23,273 Equity Built $6,000 Taxes and Insurance $4,500 Closing Costs Equity remaining after 3 years: $12,773 Divided over 36 months:… Read more »

Jaime Herrera
Jaime Herrera
8 years ago

Can you use your BAH towards Roth IRA so you can use that money towards down payment for first home?

Vicki
Vicki
4 years ago
Reply to  Jaime Herrera

In answer to Jaime Herrera’s question:

You cannot use Roth IRA savings for a downpayment on a house that you intend to live in. It is what IRS called “prohibited transactions. Please go to some websites of ROth IRA custodians and read on the rules. You can use savings from a solo 401 K , or Sep IRA ( for self employed) or even traditional IRA but you may have to pay penalty for early withdrawal.

Bryan Miles
Bryan Miles
5 years ago

I wholeheartedly agree with this strategy. There are many reasons this can work in a service members favor. Of course you have to be somewhat selective in choosing houses that a)are attractive for you, b)are attractive to possibly rent, and c)in an area that is conducive to a renting population (pretty much any large operational or training base is good). The other good thing about this is that if you end up cycling back to that base, you have a place to live and by then BAH probably far outweighs your mortgage. Again, you have to be smart about it… Read more »

Geoff
Geoff
4 years ago

I am now out of the military. I wish I would have had this education on BAH back then. This information would have made a big difference.
thanks

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