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In addition to base pay, Military members who are authorized to live off base receive a monthly basic allowance for housing (BAH) payment.

BAH rates are based on the local cost for rent, utilities, and renters insurance. Rates are increased with a cost-of-living adjustment (COLA) in high-cost areas. BAH rates fluctuate based on prevailing market rents; however, individual rate protection prevents the decrease of the BAH rate as long as the military member's status remains unchanged.

Rank determines both pay and BAH - the higher the rank the larger the housing allowance payment. BAH rates are adjusted based on location and number of dependents.

Why is this important? As you work with military prospects, knowledge of pay scales and local BAH rates will help you qualify buyers. Combining knowledge of property price ranges in your market area with information on local BAH rates, buyer's rank, and family size you can suggest properties that are a good fit with the buyer's price range. Basic knowledge of pay grades and BAH rates will help you identify a range of choices in a variety of neighborhoods.

BAH Benefits

• Tax-Free - Although military pay is subject to income tax withholding, BAH payments are received tax-free.
• Inflation protected - BAH rates are updated on a yearly basis.
• Individual rate protection - Although BAH rates fluctuate based on prevailing median market rents, individual rate protection prevents any decrease in the monthly allowance as long as the Military member's status remains unchanged. A change in status might be due to a Permanent Change of Station (PCS), reduction in pay grade, or change of independent status. When new BAH rates take effect at the duty station, rate protection guarantees that the service member will receive any published increase, but no decrease. BAH rates will be at least as much as on the date of reporting to the base.

Dual military married couples

If a dual military married couple does not have children, each spouse receives a single BAH rate. That means if one spouse is deployed and assigned to barracks, the stay-at-home spouse receives only the single BAH. If the couple has children, one spouse - usually the highest-ranking - receives the dependent BAH rate and the other receives the single rate. When figuring affordability for a dual military couple, a conservative approach would be to take only BAH payment into consideration. During their careers, Military members may be assigned to a variety of low to high-cost locations. When assigned to a base in a designated high-cost area, BAH Rates are adjusted for the cost of living. The COLA varies by pay grade, years of service, and dependents. CONUS COLA is a taxable supplemental allowance designed to help offset higher prices in specific locations that exceed the costs of average CONUS locations by 8% or more. The list is indexed with a supplement paid for each index point. Index points currently range from 1 to 11 points. The list of applicable locations is at www.defensetravel.dod.mil

Survivor's benefits

Dependents of military members who die in the line of duty may be permitted to remain in assigned government-owned housing free for 365 days after the member's death or continue to receive the housing allowance for that time.

• Recommendation: Take a few minutes and research the current pay chart and housing allowance rate for your Active Duty Buyer. They are very aware of this figure and will commonly use this as a house payment ceiling.