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Does BAH Actually Cover Housing Costs? Military Families Sound Off

by Becca Stewart - September 22nd, 2022

Does BAH Actually Cover Housing Costs? Military Families Sound Off

Last week, PCSgrades shared the following image on our social media pages:

Meme of guy with sign that reads: "BAH hasn't covered my rent in years. Change my mind."

We asked our followers, “Do you pay over BAH? If so, how much out of pocket?”

We thought the post would garner a few responses, but we were blown away when the post went viral. We received hundreds of thoughtful comments and helpful insights, most exposing serious financial hardships military families face.

Below, we’re sharing some of your comments and exploring whether basic allowance for housing (BAH) rates keep up with rising housing costs.

“We’ve literally never found a house that works for us under our BAH anywhere we’ve lived. From day one.” - Monica A.

“We have to probably pay over $1000 more wherever we go. BAH is a joke now. I don’t know any place that BAH actually covers all that it is supposed to - unless you want your solider and their family to live in the worst/highest crime rate neighborhoods. Even then, I don’t think BAH would cover it all.” - Stephanie S. 

What does BAH cover for military families?

There’s a common misconception that a service member’s BAH should cover all housing costs. That’s not the intention. Instead, the DoD expects BAH to cover about 95% of all housing costs, including utilities. Of course, depending on the service member’s duty station, house size, and neighborhood, they could pay much more than the estimated 5% out of pocket.

According to the responses on our social media pages, BAH is nowhere near covering 95% of housing-related costs for families living off base.

“Currently we pay about 800 over BAH, we have a 3-bedroom, 3-bath house. There is no base/base housing where we are stationed…When we were stationed in California, we actually were under BAH (3-bed, 3-bath home), and now we’re in a more “affordable” area, and we had to go over.” -Kristin E. via Facebook

“Don’t forget how insane the utilities have gotten in San Antonio. The most I paid for electricity was probably a bit over $300 last year. Same house and we’re now over $500 consistently, and I bought more blackout curtains between this summer and last to cover practically all my windows.” - Wendi D. via Facebook

How is BAH calculated?

The DoD examines BAH rates annually for more than 300 housing areas nationwide, including Hawaii and Alaska. BAH rates are calculated based on average rent and utility prices for apartments and housing in the local area. 

“We don’t [pay over our BAH] because we bought before everything blew up, BUT....the house next door (same age and size) just rented for twice what our mortgage is, and that would be $700 over BAH here.” - Theresa G.

Service members receive BAH according to what civilians with comparable incomes pay for housing near the military installation. Using that data, the service member’s BAH is determined by the geographic location, rank, and whether they have dependents.

Find current BAH rates here

The DoD updates those rates yearly, taking into account changes in housing and utility cost increases. BAH rates are based primarily on rental housing. They do not account for mortgage payments and closing costs associated with buying a home.

However, these annual reviews do not always keep up with rapidly changing housing costs, energy costs, cost of living, and inflation. Some locations may even see a decrease in BAH (though service members already on station continue to receive the higher BAH). In the past year, for instance, the Consumer Price Index (what we spend on basic necessities) rose more than 8%, but BAH rates will not rise enough to offset these increased expenses.

“With utilities, we are $600 over. DC is killing our budget, and my husband is an 05. We are super frugal where we can be, but this is just an expensive area.”  – jetsettingbees via Instagram

Our mortgage is about $800 over BAH, not to mention taxes and utilities and everything. We literally couldn’t find anything big enough in a safe area in the BAH price range. Virginia BAH is a joke. We got more in upstate NY, but everything costs just as much here, if not more. - Paige P. 

For a more detailed explanation of how the DoD calculates these costs, read the Office of Military Compensation Policy here

BAH rates for 2023 will increase

2021-2022 saw an incredible housing boom, with prices rising faster than we’ve seen in decades. Military families faced housing shortages, rising home prices, and escalating rents during the 2021 and 2022 PCS seasons. 

Congress approved a 5.1% increase in BAH rates for most military service members in fiscal year 2022. Still, these increases did not do enough to offset rising costs.

Though housing prices have started to stabilize, the cost of living and inflation remain high. Quite simply, BAH does not cover the intended 95% of housing costs in most markets – not by a long shot. 

“Wichita Fall: the median rent for a 3bed/2ba is $2100 for anything not run down, and BAH is $1100 for E5 w/dependents. I looked it up and you need to be O6/E9 to afford something decent here.” - Sarah D. 

“We live in base housing in San Diego because there’s no way we could afford to live off base. And now that the market got out of control, we’re going to be hard-pressed to find anything under BAH in the two moves the Navy is making us do in the next year. BAH is definitely not keeping up with market values.” -  Deanna D. 

Recognizing the financial strain on military families, Congress has proposed several initiatives to counteract rising costs. The proposed 2023 defense budget (passed by the House and awaiting approval by the Senate by October) includes:

  • A 4.6% pay raise for service members

  • An estimated 4.2% increase in BAH rates

  • A new “Basic Needs Allowance” for service members whose gross household income falls below 130% of the poverty line

  • Additional methods for examining housing costs and determining BAH rates 

Not all service members will see the 4.2% BAH increase; it’s entirely dependent on average rental prices in the local area. But as the defense budget indicates, DoD officials recognize that families are struggling, and they’re making strides to provide relief. 

“We’ve been paying out of pocket for years, but the current discrepancy between rent and BAH is untenable.” -Michelle F.

Your stories about 2022 BAH rates

With inflation at a 40-year high and the cost of living up an estimated 8% year over year, military families are struggling. If your responses to our social media posts were any indication, BAH doesn’t cover 95% of your housing and utility costs like it’s intended to do.

“Stationed in VA, PCSd mid-Covid and had to buy [because] rent was OUTRAGEOUS. To get a good school district and a safe neighborhood, our mortgage is $500 over BAH, and utilities are $500+ a month. All [affordable] housing options are riddled with mold or in neighborhoods with high crime rate and awful schools.” - Jessica O.

Of course, some military families make it work. We did receive some comments from military families whose BAH covers most or all of their housing expenses:

“We are under our BAH if [you’re] counting just rent prices. We live in an older home, though (built in 87) on an acre of land surrounded by retirees. If we had gotten comparable to what we would [have] gotten on base, we would be $2,000 plus over.” - Kristina F.

“We’re currently $600 less than monthly BAH for a nice rental in a beautiful area. Which is 100% not the norm right now, and we’re very fortunate…[Stationed in] Newport, Rhode Island. We got here in June and just really got lucky by stumbling across the house. Most are well over BAH.” - Mandie C. 

“We are currently right at BAH when you include all utilities, insurance, and taxes, $50-$100 less a month, depending on utilities. When we lived in Hawaii and NC, we were well under bah, pocketing an extra $500-$800 a month. However, it is just my spouse and [me], so we were able to live in smaller places and live below our means to save money.” - Sophie A.P.

“Nope, we would rather live in something smaller or ugly than pay over BAH for rent 20+ years, ten plus locations.” - Janene R. 

Will a more significant pay increase, additional allowances for some service members, and higher BAH rates provide the financial relief military families need? Only time will tell.

Thank you to all the military service members, spouses, and families who responded to our posts. Your comments and input paint a realistic picture of current life for military families.

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Becca Stewart

Becca Stewart is an Air Force Spouse, mother of two, freelance writer, and sufferer of Wanderlust. Originally from Colorado, she enjoys anything outdoors, especially if there’s snow involved. She is a travel fanatic, always looking for her next great adventure. As a full-time writer, Becca works closely with several nonprofit organizations and is a passionate advocate for human rights and military families. Learn more at writebecca.com.