Five Things You Need To Know About The New BAH Rates

Military families across the country are waiting anxiously to see what their Basic Allowance for Housing (BAH) rates will be in 2022. (The new bah rates are usually announced on or around 15 December.) With housing prices going up significantly in many areas, many have 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.

Rate protection DOES NOT apply to temporarily increased BAH received in certain locations in the last part of 2021. Those temporary rates are not used when considering rate protection.

BAH Rates Are Not Based On The Housing You Would 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.

BAH Is Calculated for Renting, Not Buying

The BAH formula is based upon rental prices, not the cost of a mortgage. The cost of buying a house includes a variety of factors that aren’t part of the BAH calculations. This includes the cost of buying, the amount of down payment, the opportunity cost of that down payment, the potential for appreciation or depreciation, and the cost of selling. Can you imagine the logistical nightmare of coming up with THOSE BAH rates

Rates are researched and calculated based on the costs of 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%.

You control how much of your actual costs are covered by BAH when you choose where you are going to live.