Tips for Staying Under Your Basic Allowance for Housing

A Basic Allowance for Housing, or BAH, is a nontaxable allowance paid to servicemembers to help cover their housing costs when government housing is neither provided nor available. It varies based upon location, the servicemember’s pay grade, and dependency status, and is based upon local, civilian housing costs.

BAH is not intended to cover 100% of a family’s housing costs – there is a servicemember cost-sharing element built into the allowance. This amounts to 5% of the average housing cost (variable with pay grade). In 2024, a servicemember is expected to put between $84 and $194 toward their own housing costs each month. Further, BAH rates are based upon the median rental costs in an area (not overall housing costs), so servicemembers who choose to purchase a home instead of renting may find that BAH doesn’t cover all of their housing expenses.

BAH rates vary significantly between different bases and locations. A military family who lives in San Diego, California, which has a higher cost of living, will receive a higher BAH each month than a family who is stationed in Leavenworth, Kansas. Similarly, a servicemember with dependents will receive a higher allowance than a servicemember without dependents (because, for example, a single servicemember requires fewer bedrooms and bathrooms in their home than a family of four).

When shopping around for housing, servicemembers and their families would do well to consider the following:

• What do you want BAH to cover? Are you going to use it to cover the base amount of rent or mortgage only? Would you prefer to stretch your BAH to cover your base rent or mortgage and utilities? What about gas and transportation? Some families want to keep all costs of living contained within their BAH amount, while others are only interested in subsidizing their rent. This is an individual choice, and you should consider your household income (e.g., an additional working spouse) and your spending plan (e.g., educational costs, debt repayments) when deciding what your BAH should cover. Further, look into the local housing market. It may be harder to fit everything under the umbrella of BAH in higher cost of living areas, even with correspondingly high BAH, than in cheaper areas, as utilities, transit, and food are likely to be more expensive as well.
• What can you sacrifice to keep your costs down? Do you have to have a backyard and a neighborhood pool? Do you really need that extra bathroom? Consider what you might like in a home for its convenience or wow factor, and then think about what you truly need. If you have a dog, you may genuinely need the backyard, but if you have a cat, you may be able to settle for an apartment with a balcony. Is a fitness center on site actually that important when you’re able to work out on your installation? Are you willing to drive a little further to get to work to save money, or do you have to live within 10 minutes of your gate? These questions can help you narrow down your search, and cutting the extras can save a good amount of money each month. Once you’ve narrowed down your needs, you can search local listings to determine your expected monthly payment.
• What does the math say? After you have looked up your BAH and know your budget, you need to factor in other living expenses. What do you expect to pay for utilities each month? According to Forbes and the Bureau of Labor Statistics’ Consumer Expenditure Survey, Americans spend an average of $429 per month on utilities. What do you expect to pay for extra amenities? Depending on your BAH and the cost of living in your area, you may not be able to fit these additional costs into your BAH-only budget. This could be a sign that you’re aiming too high with your housing, and it might be time to reassess those housing wants versus those housing needs.
• Can you afford to buy? Given all the extras that come with buying a house (including a down payment, homeowner’s insurance, upfront closing costs, and interest), you may find that renting is a more feasible option than buying. Paying less for a monthly rental can help you save for a down payment further down the line. Remember, BAH doesn’t exist to help you purchase a home (though many families use it that way). It exists to help you find an appropriate place to live for the duration of your time at a particular installation. Further, if you PCS after buying a home, you may find that you have a hard time maintaining both your mortgage payments and your new housing costs at the same time. If you cannot find a renter for the home you own when you PCS, you may find that you have to sell, which can be a headache to handle while you’re moving and your monthly income is shifting.

Housing is the highest line item in many families’ spending plans, but servicemembers are given a helping hand by the Department of Defense in the form of BAH. This monthly allowance helps subsidize the cost of housing, regardless of duty station – and many families find that the entirety of their rent and their utility payments are covered by the allowance. For those who have trouble sticking to a spending plan, there are a few ways to stretch BAH:

• Forgo extras. Again, think about what you want versus what you actually need in a home and don’t overspend on extras.
• Factor in utilities when looking at the monthly cost of housing. In other words, subtract approximately $400 from the BAH total and use the smaller number as a starting point when apartment or house hunting.
• Account for one-time costs. Many apartment complexes charge an annual amenity fee or an application fee, and these costs must be paid for by the servicemember. To avoid digging into your own pockets, divide these costs by the length of the lease so that they can be properly accounted for in your monthly spending plan.
• Consider proximity to the installation. A shorter commute often means more expensive housing.
• Ask for discounts. Many agencies will give discounts if an applicant agrees to a rental agreement that lasts longer than the standard year. It also never hurts to ask for a military discount!
• Don’t forget safety. Just because something is cheap doesn’t mean that it’s safe. Instead of trying to pocket extra BAH for other purposes, try to find a home that fits your budget in a safe neighborhood.

If you need help understanding your BAH, determining what you can afford, or crafting a spending plan, Navy Mutual’s Education Team can help. They can be reached at 888-298-4442 or by filling out this form.