BAH Rate Differences Explained

Most service members understand the differences in BAH (Basic Allowance for Housing) rates based on different geographic regions and grades but what is less commonly known is why increase (or decrease) percentages vary by grade within the same zip code or housing area.

See the proposed 2018 Basic Allowance for Housing rates here.

To put it simply, BAH rates are determined by three components sourced from experts and statistical data:

  • Median current market rent
  • Average utilities (including electricity, heat, and water/sewer)
  • Average renter’s insurance.

Rental costs are collected on 6 BAH Standard Housing Profiles and applied to a grade:

BAH Six Standard Housing Profiles
Profile Grade With Dependents Grade Without Dependents
1 Bedroom Apartment E-1, E-2, E-3, E-4
2 Bedroom Apartment O-1
2 Bedroom Townhouse E-5 O-1E
3 Bedroom Townhouse E-6 O-3E
3 Bedroom Single Family Detached House W-3 O-6
4 Bedroom Single Family Detached House O-5

The Fiscal Year 2015 National Defense Authorization Act reduced BAH rates in two ways:

  • 1% Removed from BAH – Reduced housing rates on average one percent for service members.
  • Renter’s Insurance – Contributed an average of one percent to rates, was eliminated

 

The rental costs of these 6 housing profiles can increase or decrease at different rates within the same geographic area, and this results in different increases (or decreases) depending on the grade a soldier falls under.

Example

This example is intended to show differences in BAH rate increases (or decreases) within the same military housing area due to the calculations involved in determining BAH rates.  In this example, the cost of a 1 bedroom apartment in New York City shows a decrease year over year while a 3 bedroom townhouse shows an increase year over year.  This results in soldiers that fall under the 1 bedroom apartment calculation with a BAH decrease and soldier’s falling under the 3 bedroom townhouse calculation with a BAH increase.

 


Related Articles
2017 BAH (Basic Allowance for Housing) Rates 2016 BAH Rates By State and Local MHA
BAH Calculator BAH Rate Differences Explained
2016 Non-Locality BAH Rates Military Housing Area Names
Monthly Housing Allowance (MHA) for Post 9/11 GI Bill Post 9/11 GI Bill BAH Rate for Online Colleges

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