I was at a really great military spouse event a few years ago and someone mentioned that the military’s Basic Allowance for Housing (military BAH) doesn’t always cover the cost of housing. It’s true that a lot of military families spend more than their BAH on housing. I hear things like this all the time, something along the lines of “I don’t know who makes up these numbers” or “BAH isn’t enough” or “they keep cutting BAH even while housing costs have gone up.” And it’s absolutely true that in many markets, BAH isn’t going to cover the housing that folks want to live in. But as I listened to this discussion, I realized that the primary problem isn’t that the numbers are made up (they’re not,) or that BAH isn’t “enough” (it does exactly what it is supposed to do), or that BAH drops while housing costs increase (yes, there has been a tiny cut to BAH overall, but not enough to create this widespread problem.) The primary problem is that the BAH housing allowance is based on people living in housing of a size and type that isn’t in step with what people choose to live in. BAH isn’t meant to cover your housing costs based on where you choose to live. It’s meant to provide a monetary allowance to cover the cost of living in a certain size and type of unit, based on rank and dependency status. How you choose to spend that money is up to you.
As a preface to this, you have to really understand how BAH works. It’s anything but random. A private company is contracted to gather housing and utility costs from around 300 Military Housing Areas. They collect data in the summer and use housing listings, talk to management companies, consult with real estate professionals, and work with the local housing office(s). They identify neighborhoods where the average income is similar to the total military compensation of a service member who would be eligible for that unit, and they pick houses that are geographically representative of the market as a whole. They work with local area installations to ensure that they’ve eliminated unsafe areas. They don’t use data for anything that isn’t a true apartment or house – no mobile homes, no age-restricted neighborhoods, seasonal units, furnished units, income-restricted housing, or efficiencies.
The utility portion of the equation is determined using data provided by the annual American Community Survey conducted by the Bureau of the Census.
This data is then applied to the formula to determine the actual housing costs for each housing type. Based upon the changes to the law, the service member then gets 95% of that calculated amount.
The Housing Standards
Here’s where I think the actual problem lies. From the BAH Primer, “The Services have agreed to housing standards that allow members to receive a BAH that correlates to what civilians who earn comparable amounts would pay for housing. That is, we use housing standards to link housing costs with a particular paygrade.” This makes total sense, right? You have to base housing costs on something, and so there is a list of how much your BAH should be able to pay for, based upon rank and dependency status. The problem is that this standard figures BAH based on smaller properties than the average service member expects to be able to afford.
Here’s the list for service members with dependents, but first let me explain it a little. The second column is the size and type of housing that the military has determined that folks of a similar total income typically inhabit. The third column is how the exact cost is calculated. If your rank doesn’t rate one of the “anchor point” size houses, they take the lower housing type/size and the next housing type/size and figure out the difference. They then adjust the allowance to be the percentage between the two types/sizes.
For Example
Let’s say you or your spouse are an E-7. The housing rate for an E-7 with dependents is 36% between 3 bedroom townhouse and 3 bedroom single-family house. In your location, a 3 bedroom townhouse is determined to rent for $1500 per month, and a 3 bedroom single-family home is determined to rent for $2,000 per month. An E-7 would receive $1680 per month for BAH. That’s the amount of 3 bedroom townhouse rent ($1500) plus 36% of the difference (.36 X $500) between a 3 bedroom townhouse and a three bedroom single-family home.
Does that make sense?
With Dependents Housing Standards
| Grade | Housing Type | BAH Interpolation |
|---|---|---|
| E-1 | 2br | Midpoint of 2br APT and 2br TH |
| E-2 | 2br | Midpoint of 2br APT and 2br TH |
| E-3 | 2br | Midpoint of 2br APT and 2br TH |
| E-4 | 2br | Midpoint of 2br APT and 2br TH |
| E-5 | 2br TH | Anchor |
| O-1 | 2br TH | 11% of the way between a 2br TH and a 3br TH |
| O-2 | 2br TH | 98% of the way between a 2br TH and a 3br TH |
| E-6 | 3br TH | Anchor |
| W-1 | 3br TH | 1% of the way between a 3br TH and a 3br SFH |
| E-7 | 3br TH | 36% of the way between a 3br TH and a 3br SFH |
| O-1E | 3br TH | 44% of the way between a 3br TH and a 3br SFH |
| W-2 | 3br TH | 52% of the way between a 3br TH and a 3br SFH |
| E-8 | 3br TH | 75% of the way between a 3br TH and a 3br SFH |
| O-2E | 3br TH | 93% of the way between a 3br TH and a 3br SFH |
| O-3 | 3br TH | 98% of the way between a 3br TH and a 3br SFH |
| W-3 | 3br SFH | Anchor |
| E-9 | 3br SFH | 16% of the way between a 3br SFH and a 4br SFH |
| W-4 | 3br SFH | 22% of the way between a 3br SFH and a 4br SFH |
| O-3E | 3br SFH | 26% of the way between a 3br SFH and a 4br SFH |
| W-5 | 3br SFH | 48% of the way between a 3br SFH and a 4br SFH |
| O-4 | 3br SFH | 58% of the way between a 3br SFH and a 4br SFH |
| O-5 | 4br SFH | Anchor |
| O-6 | 4br SFH | 1% |
| O-7 | 4br SFA | 2% |
These Housing Standards Are Out of Sync With Today’s Military Force
Do you notice anything interesting about this list? Look at the housing standard listed for your service member’s rank. Do you actually live in a home that fits in the standard? We don’t. In over 20 years, we’ve only lived in housing “at our standard” one time, and that was only because we were moving back from overseas and it was easier to move into a house that we already owned even though it was way smaller than we were used to and it was pretty darn small for our family at the time.
Maybe the problem isn’t the BAH process or formula, maybe the problem is the housing standards.
As far as I know, the current military BAH housing standards were set when the current BAH formula was put into place in the 1990s. I think they were probably outdated then, and are even more outdated now. Today’s families, military or not, generally expect to live in larger houses than their grandparents did. Heck, my grandparents lived in 1200 square feet with four kids. I live in 3400 square feet with four kids. (Yes, my house is ridiculous. But I can’t very well make it smaller and we do use all of it.)
Whether the military BAH standards are right or wrong, though, isn’t the issue here. The issue is that families are frustrated, and that’s just not great for business.
From a personal side, you can reduce frustration by understanding that BAH isn’t meant to cover the cost of whatever type of housing you choose. It is meant to provide a monetary contribution towards that cost, and that allowance is based on a housing standard that is tied to rank and dependency status. What you do with your BAH is totally up to you. You can buy an RV and put most of your BAH in the bank, or you can whoop it up in a posh house in a high-end neighborhood. You have freedom of choice, but your housing allowance is going to be based on those standards.
From the military’s perspective, they might want to consider how the BAH standards are impacting their long-term goals. As the military looks to retain a qualified, all-volunteer force for the next 10, 20, or 40 years, they need to address the issues that are upsetting military families, and housing allowances are a constant subject of frustration.
What do you think? Do the current housing standards meet your expectation of appropriate housing for your service member’s rank? Have you lived in housing that aligns with these standards?
I think people should be grateful for what they get. Civilian jobs dont get a housing allowance they have to use their paychecks. Live within your means or by what the military gives you. Imagine not having BAH at all.
Housing allowance is part of the pay package, it is based on where we are stationed. If housing allowance doesnt cover basic housing, then it cuts into basic pay. Our military members work overtime and work holidays without receiving any extra pay and for less than somepeople make working at McDonalds. My husband has served for over 20 years and only makes 56k in base pay. He worked 66 hours this week.
Well if you work for a job that sends you around the world they do pay you a generous amount of money for housing
Well if the military was earning civilian paychecks by the hour for basic pay, then they truly wouldn’t need BAH to cover any housing expenses. Working over 60 hours a week would cover everything at $20-$25 per hour.
If BAH wasn’t a thing, the actual base pay would have to go up. The military doesn’t want to do that because then people’s retirements would be looking a whole lot better. The government is the biggest benefactor of having BAH.
Second the comment above: I think people should be grateful for what they get. Civilian jobs dont get a housing allowance they have to use their paychecks. Live within your means or by what the military gives you. Imagine not having BAH at all. We survived when it was 80-85% BAH covered costs as a junior enlisted/officer family and actually did better with our finances.
2.Plus, would you rather have a higher base pay or higher BAH? You cannot have it all! Plus robbing Paul to pay Peter makes it worse.
On the flip side, can you imagine what would happen to retention if military service members did not receive BAH? Not because they are ungrateful, but for a lot of junior folks, BAH is a very large percentage of their total military compensation. An E-5 making less than $3000 a month literally would not be able to be stationed somewhere like the Pentagon. Heck, even for my rather senior husband, BAH makes up 22% of his total compensation. And that’s a serious consideration when those civilian jobs are beckoning.
It’s still an all-volunteer force, and I think we all want it to remain that way.
It’s time for BAH calculations to be updated. There’s no reason an officer family of 4 needs a house bigger than an enlisted family of 4 – so why do they get more in BAH? Rank does not equal bigger housing needs.
Your right, it is outdated. The without dependent and with dependent rate differentiation should be re-looked. One reader commented its part of “compensation” and I agree, BAH is considered part of a members overall compensation. Tell me what organization, outside the military, pays you based on your dependent status whether it be one or ten? A single member works the same hours, performs at the same level and does the exact same job but can make hundreds of dollars less a month. Equal pay for equal work. The BAH conversation is much bigger…and should be normalized.
To the folks saying BAH shouldn’t be given, it’s something servicemembers should be “grateful” for, etc.: When you’re in the military you don’t have the same opportunity costs as civilians, you don’t have the privilege of choosing what housing markets you live, for how long, or have the ability to multiply your retirement savings by buying a home and staying in it. Every move costs money, time, effort, disruption in your spouse’s income opportunities, civilian retirement plan, etc. If anything, comparable salaries for civilian jobs have far higher upsides and bring with them the ability to benefit from labor protections that military service waives. Aside from the historical reasons housing and food are covered as part of service, in an all-volunteer military, you are competing with civilian employment. For college graduates, that wage gap and opportunity gap are (generally) much wider than for folks without an undergraduate degree, or graduate degree. If anything, the military should recalculate BAH in terms of losses in the housing market servicemembers experience because they are unable to stay in place and build equity. In some markets, that’s negligible, but, for our family, we’re leaving a huge amount of potential equity because of the West Coast housing market versus where most of these military bases are located. Adding in all the future medical care costs that are potentially waiting for us after my spouse finishes his infantry career and not having that home equity to rely on will cost us in ways the pension won’t compensate compared to civilian opportunities. Civilian contractors doing the work of our infantry are paid 6-figure salaries, have much fancier health plans and their retirement benefits packages are insane. Not to mention per diem, etc. when they work overseas. There’s no comparison. Our military are undercompensated based solely on what we pay civilian contractors for the same job and BAH/BAS don’t even begin to bridge that gap.
Agreed well said!
Excellent article…I think you summed it up brilliantly, and decoded what most of us have suspected …that there is a gap between the military’s expectation for the type of house a typical family of 5 in the mid level ranks ‘should’ inhabit (3 Br TH) vs. the family’s expectation (4br SFH). It has been our experience that it has all worked out somehow, and we’ve generally been very happy with our afforded dwelling. However, because as another commenter mentioned, because of loss of potential equity due to so many mandatory moves (making the purchase and upkeep of a home long- term enough to build equity nearly impossible and/or impractical) it would be *nice* if the military accounted for that by offering to pay a BAH that covered at *least* 100% of the estimated housing cost for the area. And while I’m on the subject, if ON-base housing rates reflected accurately the actual market value of the surrounding area, and only deducted a fair market amount from your BAH instead of the entire amount, it would be much more enticing to me to live on base. As of right now, I’d rather live anywhere else on principle.