Basic Allowance for
Housing (BAH)
This BAH primer explains how the Department of Defense (DoD) determines
housing allowances for Uniformed service members stationed in the U.S.
The topics outlined in this primer are the most important aspects of the
program based on feedback from service members and military housing
offices during visits to installations throughout the country. The Department
welcomes comments on how this document can be more useful to both
members and housing officials.
BAH DATA
COLLECTION
AND RATE-
SETTING
PROCESS
OVERVIEW
CONTENTS
Purpose and Goal .......................................................................................................................................................... 1
Design of the Basic Allowance for Housing Program ..................................................................................................... 1
Individual Rate Protection ............................................................................................................................................. 2
Data Collection .............................................................................................................................................................. 2
Types of Data Collected ............................................................................................................................................ 2
Rental Data Sources and Validation .......................................................................................................................... 3
Utilities ...................................................................................................................................................................... 6
Quality Assurance .......................................................................................................................................................... 6
Step 1: Ensure each unit meets BAH Adequacy and Suitability Standards .............................................................. 6
Step 2: Exclude Data Collection in High-Crime Areas .............................................................................................. 6
Step 3: Target data collection to reflect Service Member Residency Patterns ........................................................ 6
Step 4: Use an income screening process to exclude areas where typical civilian incomes are not comparable to
service members’ incomes ....................................................................................................................................... 7
Tapping Local Expertise ................................................................................................................................................. 7
Individual Service Member Input.............................................................................................................................. 8
Rate Computations ........................................................................................................................................................ 8
Housing Profiles and Standards ................................................................................................................................ 8
BAH Housing Standards and Interpolation between Anchor Points ...................................................................... 10
Determining BAH Rates .......................................................................................................................................... 11
Annual BAH Rate Determination Timeline ............................................................................................................. 11
Absorption Rate/Service Member Cost-Sharing Component ................................................................................. 12
Frequently Asked Questions ........................................................................................................................................ 12
Does BAH cover all 100% of housing costs for every Service member? ................................................................. 12
Does BAH cover a Service member’s mortgage payments? ................................................................................... 13
How does the absorption (out of pocket) impact service members? .................................................................... 13
Why is BAH based on duty station rather than where service members live? ....................................................... 13
do BAH rates compensate for the same size and/or quality home a service member could qualify for on base? 14
What is the basis for defining MHA boundaries? ................................................................................................... 14
What method does DoD use to calculate BAH in locations that are not in an MHA? ............................................ 14
How are BAH Methods/Policies Reviewed? ........................................................................................................... 15
Obtaining More Information ....................................................................................................................................... 16
BAH Information Links ............................................................................................................................................ 16
BAH SERVICE REPRESENTATIVE Contact Information ............................................................................................. 16
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BASIC ALLOWANCE FOR HOUSING
PURPOSE AND GOAL
The Basic Allowance for Housing (BAH) is a fundamental component of the military compensation
package that pays approximately $25.6 billion in tax-free housing allowances each year to
approximately one million Service members nationwide. When government quarters are
unavailable, BAH rates serve as a form of compensation to help members find adequate rental
housing near their duty location. The BAH program is designed to compensate members for the
local median rental costs and the average cost of utilities for civilians with comparable incomes to
each military pay grade, thus private sector rental housing costs are the basis for computing BAH
rates. Distinct BAH rates are set for each permanent duty location, and service members’ BAH
payments are based on their geographic location, pay grade, and dependency status (whether or
not a member has dependents).
DESIGN OF THE BASIC ALLOWANCE FOR HOUSING PROGRAM
DoD and the Services designed the BAH program to track the market price of rental housing and
utility costs across the U.S., and set housing allowances to offset a large proportion of those costs.
1
The BAH program measures the cost of available, adequate rental housing in the local civilian
market each year rather than measuring the housing consumption patterns of Service members.
This method ensures BAH rates reflect and react to annual trends in rental markets, rather than to
changes in Service member preferences or other non-housing related factors.
2
BAH rates are also based exclusively on rental markets, not home purchase markets. While
members are free to use BAH for mortgage payments, BAH is not intended to track or reflect home
purchase markets as they are distinct markets that fluctuate on a variety of additional factors such
as individual credit history and interest rate changes. While rental and home purchase markets are
correlated, it is not a 1:1 relationship; the two markets may fluctuate at different times, and at
different rates, over a given period.
1
See FAQ, “Does BAH Cover 100% of Housing Costs for every Service member?” for more information about what proportion of
housing costs BAH is intended to cover.
2
The use of member-reported rents could lead to a downward spiral in allowances, as members trying to economize by renting
housing at prices below the given allowance drive down the allowance for all members. The BAH program avoids this by tracking actual
market rents. This method allows service members the freedom to rent below or above the allowance without negatively influencing
the accuracy of the allowance itself.
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INDIVIDUAL RATE PROTECTION
Housing costs can fluctuate significantly and unpredictably from year-to-year for any given housing
market based on demographic, economic, and housing construction trends. BAH rates are designed
to reflect those changes (both price spikes and valleys) to capture an accurate picture of true
market conditions; as such, BAH rates may fluctuate significantly from one year to the next.
3
After a service member arrives at a new duty station, individual BAH rate protection applies to
mitigate the effects of fluctuating housing costs. Individual rate protection allows members to
receive any new published BAH increase, and prevents a member from receiving a lower BAH rate
than the previous year, as long as the BAH eligibility status of a service member remains
unchanged. This ensures that members who have made long-term commitments in the form of a
lease or contract are not penalized when area housing costs decrease. Service members are entitled
to the BAH rates published 1 January or the amount of housing allowance they received on
31 December, whichever is larger. Rate protection continues unless the status of a service member
changes due to:
• Permanent Change of Station (PCS)
• Reduction in paygrade
• Change in dependency status.
The definition of change in status does not include promotions. If a service member is promoted,
and is in a location where the current published BAH rate for the new grade is lower than the BAH
amount received before, they continue to receive the higher BAH amount.
DATA COLLECTION
TYPES OF DATA COLLECTED
The BAH computation includes local price data for:
• Median local rental housing costs
• Average utility costs (including electricity, heating fuel, water, & sewer).
Annually, DoD collects nationwide rental housing cost data for approximately 300 military housing
areas (MHAs) across the United States, including Alaska and Hawaii, to ensure BAH reflects local
market condition changes. Data collection in MHAs (which represent housing market surrounding
major military installations or metropolitan areas and that typically house more than 100 active
BAH recipients) occurs during peak PCS season in the spring and summer when housing markets are
most active. Rental costs are collected for different types of rental units (i.e., apartments,
townhouses/duplexes, and single-family homes of varying bedroom sizes) called “housing profiles.”
3
Many commercial and government housing market estimation programs apply heavy data smoothing (using historical housing cost
data) to estimate long-term housing cost trends. This creates the common misperception that housing markets follow linear, upward
trends from year-to-year.
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The Department links the rental housing costs collected for each housing profile with different
levels of service members’ regular military compensation, based on the average housing choices for
civilians with similar incomes. The six standard housing profiles used for BAH are listed in the table
below. Further information about housing profile linkages is detailed in the “Housing Profiles and
Standards” section of the primer.
Housing Profile
Grade With
Dependents
Grade Without
Dependents
1 Bedroom Apartment
E-4
2 Bedroom Apartment
O-1
2 Bedroom Townhouse/Duplex
E-5
O-1E
3 Bedroom Townhouse/Duplex
E-6
O-3E
3 Bedroom Single Family Detached House
W-3
O-6
4 Bedroom Single Family Detached House
O-5
RENTAL DATA SOURCES AND VALIDATION
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Current, valid rental costs are essential to set accurate BAH rates. DoD uses data from a wide
variety of sources to provide a "checks and balances" approach to collecting the BAH data sample.
This includes verified, available residential vacancy listings from sources like online multiple listing
services (MLS), subscription-based commercial rental housing datasets, trusted web-based listing
platforms (e.g., Zillow, Trulia, etc…), real estate property management companies, and landlords.
DoD also consults with local real estate professionals in each MHA to confirm market rental prices
and obtain additional data. Where available, DoD contacts fort/post/base housing referral offices
and installation leadership to tap into local housing office knowledge and gain insights into the
concerns of our members.
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Each property collected and used in the annual BAH sample undergoes additional screening and
validation processes. Rental property data submitted from the above sources is confirmed by an
independent housing contractor.
4
The contractor validates the data by:
• Establishing the availability and location of each unit in the survey sample
• Verifying the current rental rates
• Identifying any utility inclusions in the rental rates
• Determining price differences for different lease terms (BAH uses a standard 12-month
lease price for its data collection)
To ensure BAH rates do not reflect the cost of housing unavailable to, or inadequate for service
members, DoD does not collect prices for the following types of housing units:
• Mobile homes
• Efficiency apartments
• Furnished units
• Income-subsidized complexes
• Age-restricted facilities
• Seasonal units
• Housing in high-crime neighborhoods
DoD aims to gather enough data to attain a 95% statistical confidence that the estimated median
rent is within 10% of the true median rent in the local market. This typically represents about 30 to
75 housing units per housing profile data sample in each MHA (there are six data samples per MHA,
each reflecting price trends of different market segments/housing profiles). The majority of MHAs
meet this target goal. In remote or low-housing stock MHAs that have few available rental
properties, the number of housing units collected for the sample is lower.
In these cases, DoD uses a number of methods to determine accurate BAH rates including rent
estimates (e.g., asking local landlords to price seasonal rental units as if their units were available
year round), and using housing cost trends throughout the MHA to estimate the cost of a specific
housing type (e.g., estimating the cost of 2-bedroom apartments using cost data for 1-bedroom
apartments and 2-bedroom townhomes). This enhanced process ensures data is collected in a
consistent manner across the entire United States, while allowing for flexibility in responding to the
unique challenges of remote or otherwise challenging markets.
5
4
The Department currently employs Robert D. Niehaus, Inc. (RDN) as the BAH data collection contractor. RDN has 37 years of
experience analyzing housing markets for the Uniformed Services, and other Federal and State agencies at approximately 250 locations
throughout the U.S., and 30 foreign locations. RDN has extensive experience in military housing market analysis, geospatial analysis,
quantitative economics, statistical programming, program management, demographic research, price indexes, and regional growth
impact analysis. RDN does not determine BAH policy. Any BAH policy inquiries should be directed, via your appropriate Service chain of
command.
5
The BAH program also has a number of additional methods to account for a lack of locally-available rental units, including expanding
the data collection window for select locations to maximize data collection efforts, incorporating verified Service member lease prices
to the BAH data sample, and conducting local surveys of Service member rental costs.
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UTILITIES
BAH utility cost data is reflective of current-year utility conditions nationwide. DoD uses data from
the U.S. Census Bureau’s American Community Survey to determine average expenditures for
utilities specific to each dwelling type in each MHA. All data is reflective of local housing conditions,
geography, and climate. This data is then escalated to current-year utility costs using Bureau of
Labor Statistics Consumer Price Index to accurately reflect any recent utility cost changes.
QUALITY ASSURANCE
The Department recognizes the importance of accurate BAH rates and optimizes efforts to obtain
maximum reliability at each step of the BAH data collection and rate-setting process.
For example, DoD uses a multi-tiered screening process, outlined in the steps below, when selecting
specific units for the BAH.
STEP 1: ENSURE EACH UNIT MEETS BAH ADEQUACY AND SUITABILITY STANDARDS
• Each unit must meet building code safety standards, is in good repair, etc…) and meet all
adequacy criteria outlined in the Data Sources and Verification section above
o Local military installation housing officials have full visibility on all BAH data and can
review and flag units that do not meet BAH’s high adequacy standards.
STEP 2: EXCLUDE DATA COLLECTION IN HIGH-CRIME AREAS
• BAH data reflects the cost to live in safe neighborhoods
o The BAH program automatically excludes any census tract with over 2X the national
average crime rate from data collection.
o Crime exclusions are based on the ESRI CrimeRisk dataset, which relies primarily on
Federal Bureau of Investigation (FBI) crime databases
Crime data are weighted by minimal federal sentencing guidelines to ensure
more serious crimes have a greater impact on crime risk assessment
STEP 3: TARGET DATA COLLECTION TO REFLECT SERVICE MEMBER RESIDENCY PATTERNS
• The Department targets rental data collection within an MHA to the set of ZIP codes in
which 90% of Service members assigned to the MHA live; these ZIP codes are collectively
called an “effective market area” (EMA).
o To construct the EMA boundaries, the BAH program sorts the ZIP codes in each MHA
by their distance from the weighted center of the MHAs’ duty station(s) and then
sequentially adds each of the next closest ZIP codes until the combined area
represents a minimum cumulative share (90%) of total residents in the MHA.
This method (starting with the duty station) ensures that data is collected
within a reasonable commuting distance of the installation.
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MHOs, relying on their local expertise, can collect rental data outside the
effective market area to supplement the contractor-led data collection
inside it.
The BAH data collection contractor is restricted from collecting data outside
of the effective market area to ensure BAH data is targeted to cover both: 1)
the areas where most members live, and 2) the areas closest to military duty
stations.
STEP 4: USE AN INCOME SCREENING PROCESS TO EXCLUDE AREAS WHERE TYPICAL CIVILIAN
INCOMES ARE NOT COMPARABLE TO SERVICE MEMBERS’ INCOMES
• The BAH program compares civilian salary equivalents to each pay grade’s Regular Military
Compensation, which consists of basic pay, average BAH, Basic Allowance for Subsistence
(BAS), and the tax advantage derived from BAH and BAS being untaxed.
o For example, a census tract filled with primarily subsidized housing would typically
be excluded from BAH data collection because the average household income would
fall well below the income ranges for military pay grades.
As another quality assurance step, DoD and the Services conduct on-site evaluations at select
locations each year (~20 MHAs). These reviews confirm the reliability and accuracy of the rental
data. During these visits, the Department also evaluates the criteria used for screening
neighborhoods and areas.
TAPPING LOCAL EXPERTISE
DoD and the Services value local expertise in the data collection process, and contact local military
housing offices (MHO) and command leadership at each installation to provide them the
opportunity to contribute to the BAH data collection effort.
Housing referral offices and installation leadership have the opportunity to:
• Provide local rental housing referrals
• Review and, if necessary, flag any rental properties collected by the contractor deemed
unsuitable for inclusion.
Most MHAs have existing primary and secondary MHOs (often representing the two largest military
installations in the local area, each with resources available to dedicate to the BAH data review
process). However, in some instances, a geographically isolated command (such as a recruiting
office or a Military Entrance Processing Station in a remote location) does not have a housing
referral office. If located within an MHA (typically, housing markets with a minimum of 100 active
BAH recipients assigned to the local area), these remote offices likely do not have the resources to
fully participate in the BAH data collection process and thus do not typically serve as an MHO for
the MHA.
If a remote office is located outside an MHA, BAH rates are determined through a process that links
similar cost counties (using Department of Housing and Urban Development data) throughout the
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country. This method uses BAH data collected within MHAs to set BAH rates for remote counties
with similar housing costs located outside of MHAs. Just like BAH rates for MHAs, BAH rates for
these locations (called County Cost Groups) are adjusted annually to keep pace with recent rental
housing market trends. See the FAQ, “What Method Does DoD Use to Calculate BAH in Locations
that are not in an MHA?” for further discussion of this rate determination process.
Any questions from geographically separated activities regarding BAH data collection should be
routed through a Service member’s chain of command (local finance office < installation
commander < BAH Regional Service Representative) to Service headquarters. Final approval for any
MHO requests is obtained from each Service’s Military Compensation office. (Refer to the
Obtaining More Information section for contact information.)
INDIVIDUAL SERVICE MEMBER INPUT
The BAH process does not require input from individual service members. Service members with
questions or issues regarding BAH rates should submit questions to their MHO or through their
Service chain of command. Housing offices are the best resources for BAH questions as they can
provide information quickly and efficiently, as well as escalate questions to the appropriate Service
representatives.
RATE COMPUTATIONS
HOUSING PROFILES AND STANDARDS
Per U.S. Code Title 37 § 403, BAH rates must be based on the housing costs of “civilians with
comparable income levels [to Service members] in the same area.” As such, DoD uses housing
standards that correlate to the average types of housing rented by civilians who earn similar
amounts to Service members in different pay grades. That is, the Department uses consistent
housing standards to link local housing costs to each distinct paygrade. Members are free to choose
where to live and in what type of dwelling, as well as how much to spend on housing, but BAH rates
are set based on typical housing choices of civilians with comparable incomes, and are not
determined by the housing choices or expenditures of Service members.
DoD determines standard profiles for each “anchor point” (which represents the linkage between a
housing profile and a given pay grade) as shown in the interpolation table below. For these anchor
point pay grades, the local median housing cost of that profile is equal to the local median housing
cost for the particular pay grade. Local median costs for all other pay grades (those that are not
anchor points) are determined by interpolating between the anchor points (i.e., a statistical ‘filling-
in’ of data between points along a trend line). To interpolate rates for non-anchor pay grades, the
Department calculates the difference between anchors and add a percentage of that difference to
the lower anchor rate.
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For example: From the housing standards table, an E-7 with dependents receives an allowance for a
3-bedroom townhouse (TH), plus 36% of the difference between the next lowest profile, a 3-
bedroom townhouse, and the next higher, a 3-bedroom single family dwelling (SFD). To calculate
the BAH for an E-7 with dependents, first identify the rate for the neighboring anchor points: the
E-6 with dependents and the W-3 with dependents. Second, calculate the dollar difference
between the two anchor points. Last, apply the specified percentage to the lower anchor point to
determine the dollar difference, which is added to the lower anchor point.
Description Formula Example
E-6 with dependents local housing cost (3br TH):
A
$1000
W-3 with dependents local housing cost (3br SFD): B $1200
Difference: C: B – A $1200 - $1000 = $200
36% of that difference: D: C x % $200 x .36 = $72
E-7 with dependents interpolation: A + D $1000 + $72 = $1072
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BAH HOUSING STANDARDS AND INTERPOLATION BETWEEN ANCHOR POINTS
With
Dependents
Determine cost difference
between anchors. Add % of
difference to anchor
Without
Dependents
Determine cost difference
between anchors. Add % of
difference to anchor
Grade
Housing
Type*
BAH Interpolation Grade
Housing
Type*
BAH Interpolation
E-1
2br
Midpoint of 2br APT and 2br
TH
1br APT
Same as E-4
E-2
2br
1br APT
Same as E-4
E-3
2br
1br APT
Same as E-4
E-4
2br
1br APT
Anchor
E-5
2br TH
Anchor
1br APT
67%
O-1
2br TH
11%
2br APT
Anchor
O-2
2br TH
98%
2br APT
7%
E-6
3br TH
Anchor
2br APT
31%
W-1
3br TH
1%
2br APT
53%
E-7
3br TH
36%
2br APT
83%
O-1E
3br TH
44%
2br TH
Anchor
W-2
3br TH
52%
2br TH
19%
E-8
3br TH
75%
2br TH
20%
O-2E
3br TH
93%
2br TH
44%
O-3
3br TH
98%
2br TH
51%
W-3
3br SFD
Anchor
2br TH
54%
E-9
3br SFD
16%
2br TH
64%
W-4
3br SFD
22%
3br TH
Anchor
O-3E
3br SFD
26%
3br TH
9%
W-5
3br SFD
48%
3br TH
40%
O-4
3br SFD
58%
3br TH
45%
O-5
4br SFD
Anchor
3br TH
63%
O-6
4br SFD
1%
3br SFD
Anchor
O-7
4br SFD
2%
3br SFD
2%
*br – Bedroom; APT – Apartment; TH – Townhouse/Duplex; SFD – Single Family Dwelling
The E-4 anchor points (both with and without dependents) represent the minimum housing
standard, and also apply to pay grades E-1 to E-3. As shown in the chart, all BAH rates for Service
members with dependents are based, at a minimum, on housing costs for multi-bedroom units. The
minimum standard for single service members means BAH rates are based, at a minimum, on costs
of 1-bedroom units (members are not expected to have roommates or live in excessively small units
like studio apartments).
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Additionally, any ‘without dependent’ BAH rate falling below 75% of the ‘with dependent’ rate for a
given MHA/pay grade is raised to 75% of the ‘with dependent’ rate.
6
DETERMINING BAH RATES
After rental and utility data are collected and median housing costs are calculated, DoD and the
Services:
• Review the local median housing costs for each MHA
• Apply data smoothing quality control procedures to mitigate sampling error or data
anomalies
• Evaluate MHA and profile-specific utility data
• Prescribe BAH rates based on data input and DoD housing standards policy.
To calculate BAH rates, the Department:
1) Determines the total housing costs (median rent + average utilities) for each MHA for all the
anchor points;
2) Calculates (using the Housing Standards table) a separate BAH rate for each of 27 distinct
pay grades that correspond to military ranks for members with and without dependents.
ANNUAL BAH RATE DETERMINATION TIMELINE
Task Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
MHO BAH Training Sessions
Data Collection (MHO and
Contractor)
DoD Housing Costs Quality
Review
Services Housing Costs
Review
DoD BAH Rate Calculation
Services Coordinate on Final
BAH Rates
DoD Approves Final BAH
Rates
BAH Rates Released
DoD Begins Paying New BAH
6
‘Without dependent’ rates are never lowered to meet the 75% threshold. If the ‘without dependent’ rate is > 75% of the ‘with
dependent’ rate, the ‘without dependent’ rate remains at the higher rate.
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ABSORPTION RATE/SERVICE MEMBER COST-SHARING COMPONENT
To balance the growth in compensation costs across all BAH stakeholders, the BAH program
incorporated a change in BAH rates in 2015.
Based on authority provided in the Fiscal Year (FY) 2015 and FY2016 National Defense Authorization
Acts, a one percent member cost-sharing element was reintroduced into the BAH rates in 2015. This
cost-sharing element increased by one percent annually (i.e., 2% in 2016, 3% in 2017, 4% in 2018)
until it was capped at 5% in 2019 where it remains. The cost-sharing element is administered by
using an absorption rate, which is computed to ensure members of a similar pay grade/dependency
status pay the same amount out-of-pocket regardless of their location. However, depending on
members’ actual housing choices, they may or may not actually have to pay out of pocket for their
housing. (Refer to the Frequently Asked Questions section for more information on the
implementation of these changes.)
DoD is committed to the preservation of a compensation and benefit structure that provides
members with a suitable and secure standard of living to sustain a trained, experienced, and ready
force now and in the future.
FREQUENTLY ASKED QUESTIONS
DOES BAH COVER ALL 100% OF HOUSING COSTS FOR EVERY SERVICE MEMBER?
A common misconception is that BAH is intended to cover all of a service member’s housing costs.
Originally, BAH law stated the allowance could cover no more than 80% of local housing costs. As
such, BAH rates were calculated such that the average service member was expected to pay at least
20% of housing expense out of pocket (e.g., from Basic Pay). In 2000, the Secretary of Defense
committed to reducing the planned average out-of-pocket expense for the median member to zero
by 2005. In 2015, the planned out-of-pocket expense was reintroduced to balance the growth in
military compensation costs across all BAH stakeholders (at a rate of 1% of national average costs
per grade). In 2022, this value is 5%.
Additionally, the out-of-pocket expense for a given individual may be higher or lower than the local
median cost, based on his/her choice of housing. For example, if a Service member chooses a
bigger or more costly residence than the median cost of local housing for civilians with similar
incomes, the member should expect to incur larger out-of-pocket expenses than the 5% cost-
sharing amount. The opposite is true as well, if a service member chooses to economize by renting
a smaller or less costly residence, a member can pocket any remaining BAH not used for housing
costs.
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DOES BAH COVER A SERVICE MEMBER’S MORTGAGE PAYMENTS?
While a member may choose to use BAH to make mortgage payments, the BAH program does not
consider mortgage or homeownership costs in BAH determination. BAH is designed to offset the
costs of housing that is available to most of these members when they PCS to a new duty station –
rental housing.
There is also a practical concern with using homeowner costs. Homeowners' monthly mortgage
payments do not necessarily relate directly to rental housing cost changes, as mortgage payments
are affected by non-housing cost related factors such as:
• Expected appreciation in the value of the residence
• Amount of down payment
• Opportunity costs of interest from down payments
• Settlement costs
• Tax savings due to the deduction of interest payments.
Mortgage costs are an inappropriate tool in determining an allowance designed to reflect rental
housing costs. In contrast, BAH reflects current rental market conditions, not the individual
circumstances surrounding mortgage loans.
HOW DOES THE ABSORPTION (OUT OF POCKET) IMPACT SERVICE MEMBERS?
The actual impact of the changes to BAH computations will vary depending on a member’s housing
choices. Members who rent a median-priced property will have to pay a small amount above their
BAH rate. Members who choose to economize in their housing choices may have all their housing
expenses covered by BAH. Some members, renting properties above the median price for the area,
have already been paying some housing costs out of pocket.
WHY IS BAH BASED ON DUTY STATION RATHER THAN WHERE SERVICE MEMBERS LIVE?
BAH compensates members for typical housing costs surrounding their duty station. Once the duty
station is known, the BAH is fixed, regardless of where the member chooses to live. If the location
of the member's residence were used as a basis for the entitlement, members who commute from
lower cost areas would have lower BAH rates, even though their commuting expenses were higher.
The BAH rate is determined by the duty station so that members may live near their duty location,
but they remain free to live where they choose. Actual member choices, remember, do not
influence the calculation of rates.
The opportunity for service members to choose their off-base housing is important to DoD. Each
member has the freedom to decide how to allocate his or her income (including the housing
allowance) without a penalty for deciding to conserve some dollars on rent to pay other expenses.
One such choice that members frequently make is to “trade-off” a longer commute to work for
either a larger or less expensive house in an outlying area. For example, two members assigned to a
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downtown duty station may make drastically different housing choices. One member may choose
to use all of his or her housing allowance to rent an apartment in the city, with a commute time of
only 10 minutes to the downtown duty station. The second member might prefer to rent a less
expensive 3-bedroom house in an outlying neighborhood and commute to that same downtown
duty station from 20 or 30 miles away. Both members are free to choose the situation that best
suits them.
DO BAH RATES COMPENSATE FOR THE SAME SIZE AND/OR QUALITY HOME A SERVICE MEMBER
COULD QUALIFY FOR ON BASE?
In some housing markets, government housing (especially privatized housing) exceeds typical local
community housing in quality, size, or both. In other cases, the average housing quality off-base
may exceed on-base housing standards significantly. Because BAH was designed to compensate
service member living off base in the local market economy, BAH reflects that off-base market, not
the particular amenities available in on-post housing.
A second contributing factor is that family size is the basis for on-base housing assignment. That is,
Services house families with more dependents in units with more bedrooms. The BAH approach is
based on comparing a member’s compensation with that of civilians who earn the same. Members
in higher pay grades receive BAH based on more bedrooms and larger dwelling types. The only
distinction is with or without dependents, not the number of dependents.
WHAT IS THE BASIS FOR DEFINING MHA BOUNDARIES?
MHAs were originally defined using the Defense Enrollment Eligibility Reporting System (DEERS)
data. DEERS data provided information on where members at each installation were living. This
created a data set that naturally excluded undesirable neighborhoods, which members had already
avoided and captured implicit housing preferences along factors such as school district, proximity to
entertainment areas, and commuting distance.
Because populations, neighborhoods, construction trends, crime rates, and housing conditions can
change over time, DoD continues to account for these factors by targeting annual data collection
within MHA boundaries to current service member residency patterns. The Department collects
data where members are actually living within each MHA. As such, MHA boundaries are considered
only as outer limits for where housing data can be collected for a given market. Just because a zip
code is included within an MHA boundary does not mean data is collected in that zip code.
WHAT METHOD DOES DOD USE TO CALCULATE BAH IN LOCATIONS THAT ARE NOT IN AN MHA?
BAH is defined for every location in the United States. Even though some locations may have small
numbers of active service members (e.g., Reserve Officer Training Corps detachments, recruiters,
small field stations), DoD still estimates local housing costs and determines BAH rates for these
locations (and for every zip code in the U.S.). Direct, DoD-led collection of rental data for all such
locations is not practical or efficient from a resource and manpower perspective. So, to determine
annual BAH rate adjustments in these situations, the Department groups all U.S. counties by
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housing cost, from lowest cost to highest cost, using Fair Market Rent data published annually by
the Department of Housing and Urban Development.
After pooling the data, the result is a set of counties with comparable housing costs called a County
Cost Group (CCG). There are 39 distinct CCGs, which allows for granular specificity in housing cost
groupings (i.e., counties are only grouped with counties with extremely similar average housing
costs).
CCGs include counties both within and outside of MHAs; therefore, CCGs serve as a direct data
crosswalk linking housing costs in areas where the DoD directly collects data (inside MHAs) to areas
where the DoD does not directly collect data (outside MHAs). BAH rates are calculated for each CCG
using the BAH data collected in MHAs linked to each CCG. This allows CCG BAH rates to fluctuate in
tune with housing market trends affecting similar housing markets across the country. Although
half the U.S. counties (about 1,500) receive CCG BAH rates, these counties contain less than 2
percent of military members eligible to receive BAH.
HOW ARE BAH METHODS/POLICIES REVIEWED?
A staff of economists at the Office of the Undersecretary of Defense for Personnel and Readiness
(P&R) study, evaluate, and update BAH methodologies and policies each year to ensure the BAH
program continues to keep pace with recent technological improvements, academic research, and
evidence-based best practices in the fields of housing cost estimation and compensation policy.
Policy changes are made in coordination with each of the Uniformed Service headquarters’
compensation chiefs and with approval from P&R leadership (and from congress, if the proposed
policy requires a statutory language change).
BAH methods are also frequently evaluated by audit agencies like the General Accountability Office
(GAO), reviewed by Congressional Armed Services Committees, and studied by independent
consultants to help the Department develop cutting-edge housing market estimation solutions (e.g.,
the White House-directed 14
th
Quadrennial Review of Military Compensation (QRMC) is currently
studying BAH as one of its research topics).
Service members with questions about BAH policy should direct all questions through their chain of
command to their Service compensation headquarters representative (contact information
available below).
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OBTAINING MORE INFORMATION
BAH INFORMATION LINKS
• For an overview of BAH, visit:
https://www.travel.dod.mil/Allowances/Basic-Allowance-for-Housing/
• Individual BAH rates are located using the BAH Calculator at:
https://www.travel.dod.mil/Allowances/Basic-Allowance-for-Housing/BAH-Rate-Lookup/
• Additional BAH Frequently Asked Questions are located at:
https://www.travel.dod.mil/Support/Frequently-Asked-Questions/#BAHFAQs
• To review the BAH regulations, refer to the DoD Financial Management Regulation, Volume
7A, Chapter 26 at:
https://comptroller.defense.gov/Portals/45/documents/fmr/Volume_07a.pdf
• To review the BAH Statute, refer to Title 37 USC § 403 at: http://uscode.house.gov
BAH SERVICE REPRESENTATIVE CONTACT INFORMATION
For issues regarding your BAH, contact your Service Compensation Representative THROUGH YOUR
CHAIN OF COMMAND (local finance office < installation commander < regional BAH Service
Representative < Headquarters BAH Service Compensation Representative).
Service
Office
COM Phone
DSN
Email
Air Force
AF/A1PA, Military
Compensation Policy
240-612-4354
612-4354
[email protected]
Army
DCS, G-1, Compensation
and Entitlements
703-692-5256
222-5256
usarmy.pentagon.hqda-dcs-
g-1.mbx.dape-
[email protected]
Coast Guard
U.S. Coast Guard (CG-
1332)
202-475-5398
N/A
[email protected]
Marine Corps
Manpower Plans and
Policy Division, Military
Policy Section
703-784-9386
278-9388
[email protected]
Navy
Pay and Policy
703-604-5477
664-4990
[email protected]