For many service members, Basic Allowance for Housing (BAH) is a valuable financial resource that helps cover housing costs. But did you know that BAH can also be used to help you qualify for a veteran home loan? Whether you’re on active duty or transitioning to civilian life, understanding how lenders view BAH can improve your chances of securing a mortgage.
What Is Basic Allowance for Housing?
BAH is a monthly allowance provided to active-duty service members who live off base. The amount you receive depends on your rank, duty station, and whether you have dependents. Unlike basic pay, BAH is non-taxable, which means it carries significant purchasing power when used for homeownership.
How Lenders View BAH in a Mortgage Application
One of the biggest advantages of BAH is that lenders consider it as qualifying income when reviewing your veteran home loan application. This means it can be factored into your debt-to-income ratio (DTI), potentially helping you qualify for a higher loan amount.
To ensure BAH is included in your loan application, you’ll need to provide documentation, such as your most recent Leave and Earnings Statement (LES). A Leave and Earnings Statement (LES) is a monthly financial document provided to members of the U.S. military that outlines their pay, deductions, and leave balance. Your lender will review this statement to confirm your housing allowance amount.
Making the Most of Your BAH for Homeownership
Using BAH wisely can make your homeownership costs more affordable and sustainable. Here are some tips for maximizing your benefits:
- Consider Housing Costs– You may want to look for a home where your monthly mortgage payment, including taxes and insurance, fits within your BAH allowance to minimize out-of-pocket expenses.
- Long-Term Stability – If you expect to stay in one location for several years, using your veteran home loan and BAH to buy a home can be a great move. Being able to own your own home and build a community where you live could provide you with a sense of stability.
- Choose the Right Lender – Not all lenders know how to factor in BAH, so work with one experienced in VA loans to ensure you get the best financing options.
We’re Here to Help You Get the Most of Your Benefits
At Mortgage Solutions Financial, we specialize in helping service members and veterans use their benefits to achieve homeownership. If you receive BAH and want to explore your options with a veteran home loan, we’re here to guide you through the process. Contact us today to get started and make the most of your military benefits.
