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Using Basic Allowance for Housing (BAH) for VA Loans

The Basic Allowance for Housing (BAH) is one of the most important military service allowances available. Its purpose is to offset the cost of housing for active service members who are not provided with government living facilities. Use of the military BAH is not limited to renting, and many service members put the income towards a home loan. In some situations, military housing allowance can cover the entirety of a monthly VA loan payment.

Learn how you can put your BAH toward your VA loan and make your homeownership goals a reality while active duty.

How Much Military Housing Allowance Can I Get?

The amount of BAH money you receive depends on a variety of factors, including your pay grade, location, and whether you have any dependents. If you live in a high cost-of-living area, you’ll receive significantly more BAH than those in low-cost areas, and this money can go toward VA loan payments, insurance, and utilities. A BAH Calculator like this one can be used to determine your specific housing allowance based on your pay grade and duty zip code (not where the residence is).

Although Military BAH rates are determined on a yearly basis, the Defense Department has put safeguards in place to ensure that the housing allowance rate does not decline from year to year. Your rate will not go down unless you experience a change in dependent status, a pay grade reduction, or you transfer to a lower cost-of-living area. This pay rate protection gives both lenders and service members confidence in BAH funding for the long term.

How the BAH Works for VA Loans

In order to verify your military housing allowance, lenders use your Leave and Earnings Statement (LES). Once it’s verified, your BAH funds are treated like any other income, with one key difference. Since these funds are nontaxable, and debt-to-income (DTI) ratio is calculated using pre-tax income, the lender will actually inflate the BAH amount to estimate what a pre-tax number would look like. This means you may qualify for a larger loan amount with your BAH funds than you would with the same amount in normal, taxable income.

Looking for information on VA loan eligibility and DTI? Check out our page on VA Loan Qualification Factors.

Sample BAH Rates

Let’s take a look at some examples of Basic Allowance for Housing rates to better understand how location, pay grade, and dependents affect the rate:

  • In 2019, a service member with an E-4 pay grade in Waco, TX would have a monthly allowance of $1,062 with dependents and $882 without
    • The same pay grade in San Diego would be allowed $2,535 with dependents and $1,995 without
  • Near Edwards AFB, a service member with an E-1 pay grade and dependents would have a monthly allowance of $1,761
    • A pay grade of O-7 or higher with dependents would be allowed $2,628 monthly

Put Your BAH Toward a VA Loan

If you’re looking to use your BAH for a VA home loan, our team at SoCal VA Homes is committed to providing superior service to active service members and Veterans alike. Whether you’re just looking for information or are ready to get the process started, we’re here to help. Contact us today!

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