Having a Realistic Housing Budget Using Your Basic Allowance for Housing

It is December already, and you know what that means, right?!  Yep!  Time to wait for the new year’s Basic Allowance for Housing (BAH)  rates to be announced!  Wait, is that not what everyone thinks about when December rolls around?

The great debate over the Basic Allowance for Housing (BAH) designation of “how much house” is appropriate for each pay grade is a topic that is way above ours!  Some may think it is too much, too little, or just right, but the fact is – these are the rates that factor in when determining the size, style, and location of an active service member’s home.

Housing allowance rates are based on local median market rent and average household utilities (including electricity, heat, and water/sewer) in each military housing area. Knowing exactly what your housing allowance provides will help you determine exactly how much house you can afford. The Defense Department’s Basic Allowance for Housing breakdown is an excellent resource for determining coverage in every military housing market in the US.  

When searching for your next home, keep in mind that the housing allowances are determined at a 5% out-of-pocket rate, so searching for properties priced right at your BAH total could turn into a costly mistake if you miscalculate. Other out-of-pocket expenses to consider are monthly maintenance and upkeep to a yard, rental insurance premiums, and possibly a longer commute.  The cost of making the house suit your style, such as repainting, window coverings, furniture, linens, etc., also needs to be considered when creating your housing budget. While associated with housing, all of these expenses are not covered by the housing allowance. Still, they must be considered when determining how much over or under you’re willing to go when selecting a home within the means of your housing allowance. 

Always look at your monthly budget to determine how much extra you can comfortably afford before jumping into anything over your BAH. Take an honest account of your current debts and what lies ahead in your life. Will you need to purchase a new vehicle soon? Do you anticipate significant expenses like college tuition costs or eldercare for aging parents? Are you ahead or behind in saving for retirement? Creating a realistic budget will guide you to make the right housing decision for your family and possibly lead to more money in the bank. And who wouldn’t want that?  

We don’t always have the luxury of choosing our destination, but we do have the ability to decide how our journey plays out! If you have questions or if we can help in your journey, reach out to us anytime.

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