What is BAH?
Basic Allowance for Housing (BAH) is a Department of Defense (DoD) program designed to offset housing costs for DoD and Coast Guard members who live off-base on the economy. In layman's terms - it is part of an active-duty member’s paycheck to assist with the cost of housing. It is calculated based on the zip code of the duty station, the member’s pay grade, and if they have dependents or not.
Note BAH does not increase with each additional dependent. A service member gets the same BAH if they have a spouse compared to if they have a spouse and four kids.
BAH is designed to reflect the market price of rental housing. However, the BAH rate changes only once per year. So, if the market suddenly shifts, BAH will not account for the shift until the next year.
What does BAH cover?
BAH is designed to cover 95% of the average rental cost for a residence plus the average cost of utilities based on the rank of the member. BAH is NOT designed to cover, nor does it consider, mortgage costs.
How is BAH calculated?
BAH is calculated annually, with the process starting in the spring. In computing BAH, the DoD includes the local data for rental housing and utilities (electricity, heating fuel, water, and sewage).
BAH rates are calculated based on the Military Housing Area (MHA). There are approximately 300 MHAs across the US, including Hawaii, Alaska, and Puerto Rico. Each MHA contains a set of Zip Codes.
The DoD collects data from each MHA for apartments, townhouses/duplexes, and single-family rentals with varying numbers of bedrooms. The DoD uses housing offices, rental housing datasets, landlords, and real estate property management companies to compile and verify the rental data.
To ensure BAH rates reflect the housing market that is suitable for service members, the BAH collection process does not include rates for:
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Mobile Homes
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Efficiency apartments
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Furnished units
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Income-subsidized complexes
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Age-restricted facilities
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Seasonal units
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Housing in high-crime neighborhoods.
The DoD uses the Bureau of Census’s American Community Survey, which is conducted annually, to determine the average cost of utilities for each of the specific dwelling types in the MHA.
Once all the information is gathered, the DoD verifies the information with local housing offices and then calculates the BAH rate based on the total housing cost (median rent and average utilities) for each rank. You can find a detailed description and example calculations of BAH calculation here.
Will my BAH go down?
No. BAH rates are protected. As long as you maintain uninterrupted eligibility to receive BAH, your rate will not go down if the BAH rate for your area goes down. That means if the BAH rate for 2021 was $2,000 and the rate for 2022 is $1,900, you will still receive the BAH rate of $2,000 until PCS.
Note, if your dependency status changes (from with-dependent to without-dependent, or vice versa), your housing allowance is determined by your new dependency status and the then current BAH allowances for your grade.
For more information, check out the following links: