As an active duty service member, you’re probably aware that you’re eligible for a basic allowance for housing (BAH). But do you know that your BAH can be used to help you get a VA mortgage? Although it’s not specifically designed for mortgages, it’s incredibly helpful for anyone considering buying or refinancing a home by helping to defray the costs of a mortgage.Briefly, BAH is a non-taxable, monthly payment given to eligible service members when government housing isn’t available. The amount you receive depends on your location, pay grade and whether or not you have dependents. Compensation is determined by taking a number of factors into consideration; however, it largely depends on the rental data of the area in current rental market conditions. Additionally, your BAH includes rate protection. This means if your current BAH rate is less than last year’s, you’ll stay at your current rate – provided that your location, rank and dependency status stays the same. Conversely, if BAH rates rise, you’ll receive the higher rate. So, how does your BAH help you get a mortgage? It acts as verifiable and reliable income that helps to reduce your debt-to-income ratio. Keeping a low debt-to-income ratio is a key factor that’s used in underwriting when determining your qualifications for a mortgage At the beginning of the year, the Department of Defense released the 2013 BAH rates which showed an average of 3.8% increase. This can help lower the costs of your monthly mortgage payment, if not eliminate them entirely – especially if you have a VA Loan that does not require a down payment and allows you to refinance your home up to 100%. With education and proper financial planning, buying a new home or refinancing your current one with the benefits of the VA loan and Basic Allowance for Housing programs can be incredibly easy. Before you get started, make sure you speak with a mortgage lender – like Quicken Loans – who has a dedicated team of Home Loan Experts that know the ins and outs of VA loans, and understands how the BAH can help you achieve the dream of homeownership.
Basic Allowance for Housing Helps You Get A Loan
© Copyright 2021 Quicken Loans. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
You May Also Like
VA Loan Topics
Get the Military Insider Newsletter
Give me more benefit content and other military content to my inbox.
By signing up, you agree to our Privacy Notice.
Thank you for subscribing!
View more newsletters on our Subscriptions page.
One last step.
Verify your free subscription by following the instructions in the email sent to:
Pay News & Advice
- The VA Is Offering Two New Mortgage Relief Programs for Those Impacted by COVID
- Combat Injuries Can Destroy Family Finances. This Bill Could Help Change That
- Know Your Rights and the Landlord Can’t Rip You Off
- There's a New Wave of Scammers Targeting VA Home Loans
- How to Easily Max Out Your Retirement Savings