While all veterans are eligible for government housing, some of them miss out on it. To help cover for the deficit, the government offers the veterans allowance in the form of basic allowance for housing (BAH). The amount of BAH is set annually at the start of every federal government fiscal year.
There is no specific amount for the BAH, except it varies depending on location, seniority, and the number of dependents. Veterans who have served longer and those who stay in larger cities tend to receive more substantial amounts.
The use of BAH is quite flexible such that you can use it on expenses other than for housing. This works better when you stay in a cheaper house than the BAH amount. Otherwise, if you stay in more expensive homes, then you will top up the deficit from out of pocket. This does not mean you have to move houses every time there is a change in the BAH rates.
The allowance comes with rate protection rates. It applies that you can keep your current rates when the overall value goes down, yet the current rental market remains the same. An increase in BAH rates comes with an improvement in your rates.
Your military service can also determine how much you receive for the BAH. The fulltime military personnel qualify for 100% of the amount. The amount then reduces with lesser commitment, with those serving less than half the time most likely to forfeit the fund.
Taking a Mortgage Using BAH
BAH comes in handy for the beneficiaries looking to purchase a house using a VA home loan. The main VA home loan benefit is that it allows for zero down payments on the mortgage. For those receiving the BAH, you can easily use it to reduce the number of monthly repayments or eliminate the full fees.
The other way BAH improves your chances of taking a mortgage is by reducing your income-expense ratio. Most financial institutions seek lower-earning to expenditure ratio as an assurance of the ability to make the repayments.
The only concern that comes with purchasing a house using the BAH is the mobility of veterans. Military personnel are prone to transfers, at times even moving to foreign countries. Before you take a mortgage for your house, look into the ease of sale. Go for a high-value home that will find many buyers or tenants at the right price in case you are moving.
BAH is one of the most reliable income sources ever for military members. It does not limit your access to other benefits and support. It also does not come with restrictions; hence you can plan your finances accordingly. Ultimately, it complements the VA home loans to allow for reduced mortgage repayment plans. Talk to your mortgage lender to determine their provisions for BAH eligible personnel. In most cases, they would verify your earning statements and seek verification that you will be receiving the funding for the foreseeable future.