Basic Allowance for Housing (BAH): What You Need to Know

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There are so many things to consider as you PCS and BAH is definitely one of the most important. However, understanding the BAH rate and how it’s calculated can be confusing. Read on for a guide to how the basic allowance for housing can help you and your family when you PCS to Colorado Springs.

What is BAH?

According to the Defense Travel Management Office (DTMO), basic allowance for housing is “a U.S.-based allowance that provides uniformed Service members equitable housing compensation based on housing costs in local housing markets when government quarters are no provided.” In other words, the purpose of the BAH is to ensure that fair housing allowances are provided to service members assigned to permanent duty regardless of where they are stationed within the 50 United States. Basic allowance for housing enables service members to live off-base comparably to their civilian counterparts.

How is Your BAH Calculated?

Your BAH is calculated by local area rental market data and varies by geographic duty station (zip code), rank and your dependent status. The cost of utilities in the area are also factored into the BAH amount you will receive.

The DTMO uses current and valid rental cost data from multiple sources to ensure that the BAH rates are reliable and accurate. They obtain current residential vacancies from local newspapers and real estate rental listings and contact apartment and real estate management companies to identify units for rental pricing. They also consult with real estate professionals to confirm market rental prices and obtain any additional data.

Why is BAH based on Rental and Not Mortgage Costs?

This question is probably one of the most common questions about basic allowance for housing, especially for those who want to buy versus rent. According to the DTMO, a homeowner’s mortgage payment is not a good indication of the economic cost of homeownership. To put it more simply, there are just too many variables to consider when it comes to a family’s mortgage payment.

Equity in the home, amount of down payment, interest rates, property tax and tax savings due to interest payments vary and are difficult to measure across the board. Therefore, BAH reflects current rental market conditions and not the individual and historical circumstances that surround mortgage loans.

BAH and Individual Choice

Another factor to remember when it comes to BAH is that you are free to make choices about where you live. According to the DTMO, BAH is not designed to cover all housing costs for all service members, especially since BAH is calculated using median rental costs. Your actual expenses may be higher or lower based on where you want to live.

For example, if you are PCSing to Colorado Springs, you and your family may want to live as close to your base as possible. In this situation, you may be willing to pay more out-of-pocket for a home that fits that bill. Or you as you explore the Pikes Peak region, you may find that you are willing to have a longer commute in order to purchase a larger and/or less expensive home. This may allow you to save some of your basic allowance for housing. The choice is truly yours!

For help finding the perfect home that suits your needs and makes the most out of your BAH, please contact Colorado Springs Military Homes. We’re here to help!

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janiehoward