2023 military basic allowance for housing rates are out! Go see!
(iPhone users reading this on Facebook, you may need to open this page using the three dots instead of clicking through from Facebook. Not on an iPhone? Right-click, select “copy link address,” and put it into a new tab. I wish I could fix it but it seems to be either a Facebook issue or a DoD issue…)
Many areas have big increases, but there are always a few places where rates go down. So there’s some important to stuff to know about that.
BAH Rate Protection
The most important thing up front: Thanks to BAH rate protection, or the “grandfather clause,” you almost never lose money. As long as you stay in the same area, the only way your rate goes down is if you are demoted or have a change in dependency status.
If BAH rates fall in your area, you are grandfathered into the higher rate as long as you remain in the same geographic area.
Where Do These BAH Rates Come From?
BAH is designed to partially compensate military members for the cost of maintaining a home in lieu of living in military housing. Under the current formula, BAH is designed to cover 95% of rental costs for a house size tied to your pay grade, and average utility costs for that house.
The rates are calculated through a data- and math-intensive process. A contractor works with local installation housing offices to identify where people can reasonably live. These areas must be within a reasonable driving distance and must be safe. Then they pull together rental information, and use government data to calculate the cost of utilities.
Sometimes, the numbers that the data produces seem to make no sense, and seem either way too high or way too low for what it costs to live in that area. There are a couple of different reasons why that happens. Sometimes, the market is changing rapidly, and the process of determining BAH rates can’t keep up. Certainly, a geographic area may have widely varying housing costs. I’m sure sometimes there are just errors. And keep in mind that BAH rates are based on renting, not buying.
Housing Sizes and Types
In digging down, though, what I often find is that many families are choosing to live in a house of a larger or different style than the house that their BAH is based. Heck, we do…we almost always have. Only once did we live in a house of the size & type for my husband’s pay grade. And there’s nothing wrong with that. The beauty of BAH is that you get to choose your housing. But that choice is often the reason for the discrepancy between the BAH rate and the actual cost of housing.
Please leave me a comment telling me whether your BAH went up (or the rate went down but you’ll get the old rate.) And I’d love to know how rates feel for the area in which you live, based upon the size house you have chosen. I’m really curious to hear folks’ experiences.