KateHorrell

Helping Military Families Make The Most of Their Money

  • Home
  • About
  • Resources
  • Your Military Family’s Everything-You-Need Binder
  • Military Separation Checklist
  • Military Retirement Checklist

Five Things You Need To Know About The New BAH Rates

13 December 2022

This post may contain affiliate links, from which I may earn revenue to support this free site. All opinions are my own, and I only promote products that I use and love!

FacebookTweetPinEmail

Military families across the country are waiting anxiously to see what their Basic Allowance for Housing (BAH) rates will be in 2023. (The new bah rates are usually announced on or around 15 December.) With housing prices going up significantly in many areas, many have their fingers crossed for a big increase for next year. Here are some important things you need to know when you look at the new BAH rates.

It’s The Duty Station Zip Code

This may seem obvious, but it’s a big deal if you live in an area with multiple Military Housing Areas. For example, you may work in Suitland, Maryland, but live in Annapolis or Crofton. All three are in different MHA and have different BAH rates. Sometimes the difference is small, but sometimes it is dramatic. Be sure you’re using the duty station zip code for your BAH search.

This can also come into play if the family is living somewhere different from the service member. Unless an exception applies, BAH is based on the service member’s duty station. Exceptions may include unaccompanied tours, locations without resources for family members, families who are permitted to remain at a location for medical care, etc. If you are not sure if your family’s situation is an exception to the BAH-at-duty-location rule, you should find out.

BAH Rate Protection Means That You Won’t Lose Money

The Department of Defense has rate protection rules that ensure that you will receive the higher of the old rate or the new rate unless you move, are demoted, or have a change in dependency status.

BAH Rates Are Not Based On The Housing You Choose

Within the BAH formula, every rank is assigned a housing size and type, and the rates are calculated for the specified size and type. A lot of people live in housing that is larger than the size and type that is used in the BAH calculations for their rank. Heck, we’ve only once lived in a house that wasn’t bigger than the size tied to my husband’s rank.

One of the beautiful things about BAH is that you can choose to live wherever you want. Any savings or additional costs come back to you. While we may all agree that the housing standards aren’t appropriate for 2022, they are what they are. If you or I choose to in a property that is different, that’s our choice. It’s also our financial responsibility.

BAH Is Calculated for Renting, Not Buying

The BAH formula is based on rental prices, not the cost of a mortgage. There are several good reasons for this. I can’t even begin to rank them in order. One obvious reason is that there are too many variables to have a logical BAH rate based on home ownership.

The cost of a mortgage can vary dramatically based on not only the cost of the house. The monthly payment also includes:

  • the amount of your down payment
  • the interest rate of the loan
  • the cost of your insurance
  • the taxes
  • possibly other costs like homeowner’s association

Your sales price and/or mortgage value may or may not include some or all of the costs of purchasing the property. And the cost of your mortgage can’t factor in the opportunity cost of your down payment, the potential for appreciation or depreciation, and the costs of selling.

Can you imagine the logistical nightmare of coming up with THOSE BAH rates?

Regardless of how you feel about whether BAH should or should not be based on renting and/or buying, the rates ARE calculated on renting.

BAH Is Not Supposed To Cover All Your Costs

BAH is calculated on 95% of the determined actual costs of rent and utilities for the designated size and type of housing. The original BAH law says 80%, but over the years there have been adjustments. The formula has gone up to 100% and then back down to 95%. There is some talk of adjusting it back to 100%, but we shall see where these conversations go.

While BAH standards and rate calculations are not perfect, it is important to remember the value of BAH. There are very few other jobs where you get any housing allowance, much less a tax-free housing allowance. If you talk to your former-military friends, they’ll probably tell you that they miss BAH.

You are free to use this allowance towards the housing of your choice. You control how much of your actual costs are covered by BAH when you choose where you are going to live. There’s no right answer, simply the right answer for you and your family’s unique situation.

✕

Stay Informed!

Let me help you keep up-to-date on your military pay and benefits! Subscribe now for my newsy emails, which come about once every two weeks.

Success! Now check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

I don't like spam, and I won't send it to you., either. Unsubscribe at any time. Powered by ConvertKit
Kate
FacebookTweetPinEmail

2 Comments
Filed Under: Housing

Comments

  1. Ingrid says

    4 February 2022 at 5:15 pm

    Hi. I meet the 20/20/20 but I just visited my attorney for the 1st time to file for divorce and she told me that there is a new law or regulation that states that after a divorce, the spouse is not longer entitled to their ex-spouses’s military pension. Is this true? Where can I get additional information about this? If not true, I would like to provide her with the correct information…. Thank you!

    Reply
    • Kate Horrell says

      6 February 2022 at 10:17 pm

      Unless I’ve missed a momentous change in the law, this attorney is incorrect. I would ask her to show you the documentation or regulation showing this change. Here’s what DFAS shows currently: https://www.dfas.mil/Garnishment/usfspa/legal/

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Bloglovin
  • Email
  • Facebook
  • LinkedIn
  • Pinterest
  • Twitter

Search

WELCOME!

Hi! I'm Kate! Accredited Financial Counselor®, Navy spouse, and mom of four.

Here at the blog, I talk about the financial issues that affect military families - pay, allowances, and benefits. Plus college stuff, landlording, moving, taxes. We cover a little bit of everything.

My goal is to give you the tools to make the best decisions right now, so you'll be confidently prepared for whatever comes next - whether that's a PCS move, transition to civilian life, or retirement.

So grab a cup of coffee, tea, or whatever makes you happy, and let's get to know each other.

Home About Resources Contact/Media Privacy Policy
  • Bloglovin
  • Email
  • Facebook
  • LinkedIn
  • Pinterest
  • Twitter

Affiliate Disclosure

This site does contain advertising and affiliate links. If you click on an advertisement or link, I may be compensated. I only promote companies that I love and trust. Kings High Media/KateHorrell.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com

Disclaimer

Kate does not represent the Department of Defense, the Department of Veterans Affairs, or any government agency. This blog is strictly for informational and entertainment purposes only. The content on this site should not be considered professional financial or legal advice. I may receive compensation through affiliate or advertising relationships from products mentioned on this site. All reviews on this site represent the personal opinions of the author. All references to third party products, rates, and offers may change without notice.

©2022 Kate Horrell and Kings High Media. All Rights Reserved.
Site development by Olive & Ivy Design

Share this ArticleLike this article? Email it to a friend!

Email sent!