Most active servicemembers are aware of what the Basic Allowance for Housing (BAH) is, and BAH doesn’t really apply to veterans, but if you’re considering joining the military or are an active servicemember looking for some more detailed information, this article is for you.
We will also be discussing the Monthly Housing Allowance (MHA) portion of the Post-9/11 GI Bill and how it is different from the BAH, since they are often confused. We will talk about what the BAH is, how it is calculated, and the differences between it and the MHA.
What Is the Basic Allowance for Housing (BAH)?
The Basic Allowance for Housing is exactly what it sounds like: it’s an additional monthly stipend that servicemembers receive to help pay for housing when military housing is not provided. The BAH applies to all servicemembers serving within the United States.
Those serving outside of the United States have access to the Overseas Housing Allowance instead. With that explained, we’ll discuss how the BAH is calculated as well as how much you might be able to get.
How It Is Calculated
The BAH is calculated based off a number of factors:
- Geographical Location – Since the cost of housing differs from area to area, the amount available through the BAH differs from area to area as well.
- Pay Grade – The higher your pay grade, the more you’ll have available to you through the BAH.
- Dependency Status – This greatly affects how much you can get through BAH. Those with dependents have access to more than those without. In fact, you could say that dependency status comes first, then geographic location, then pay grade.
The BAH is recalculated every year to match the average cost of housing in each area. Some years, the amount of BAH in a certain area is reduced, but if you’ve already been using it, your BAH rate will not go down because of individual rate protection which was instituted about 10 years ago. If the BAH rate for your area goes up, however, you can expect to see a slight bump in your paycheck.
BAH compensation rates go as low as $546 (for an E1 without dependents at Fort Chaffee/Fort Smith in Arkansas) and upwards of $5,000 for an O7 with dependents living in San Francisco. For most servicemembers, you can probably expect between $800 and $1,200 per month in most areas
The BAH does its best to take into account the average cost of utilities and renters insurance. It’s also based on the civilian rental market, not the housing purchase market.
If you’re looking at buying a house, you can still find a house with a payment low enough to keep it $0 out-of-pocket each month, or you can enjoy an absurdly low monthly payment since most of it is taken care of by the BAH.
The Difference Between the BAH and the MHA
A lot of people get these confused, including active servicemembers and veterans, so it’s important to clarify. The MHA, or the Monthly Housing Allowance, is part of the Post-9/11 GI Bill and only applies to servicemembers who are utilizing their GI Bill benefits. The rate of compensation for most users of the MHA is the same as the BAH for an E-5 with dependents, which in many cases is enough to completely cover your housing as you attend school.
There are a few exceptions to this, however. Those attending foreign schools are given a flat rate of $1,509, and those attending schools in US territories are given the OHA rate for an E-5 with dependents. Those doing purely online school are given $754.50 per month, and those attending half-time school or less are not eligible to receive any MHA.
So, to summarize, the BAH is available for any active-duty servicemembers here military-provided housing is not available, and the MHA is available to any servicemembers or veterans who are using their Post-9/11 GI Bill benefits to attend school full-time (or just more than half-time).
The amount that the BAH gets you depends a lot on where you are stationed, whether you have dependents, and your pay grade, and the MHA depends on where you’re going to school.
About Low VA Rates
Whether you’re using BAH or MHA, your veteran benefits go even further than to help you pay for housing. Eligible veterans can also take advantage of the VA loan, which allows for a lower down payment on a home, lower mortgage interest, and other perks.
We at Low VA Rates have helped veterans access this benefit for over 10 years. Contact us if you have questions or would like to get started on the home loan process.