Is Base Housing Free? How Military Housing Allowances Work

Military housing is a significant aspect of compensation for service members, structured to ensure they have access to suitable living arrangements. While the concept of “free” base housing might seem appealing, it is more accurately understood as a housing benefit covered through a specific allowance. Service members generally do not pay rent out-of-pocket in the same way civilians do when living in military-provided housing. This system aims to offset housing costs, whether a service member resides on a military installation or in the surrounding civilian community.

Understanding Basic Allowance for Housing (BAH)

The Basic Allowance for Housing (BAH) is a financial benefit for service members. It functions as a non-taxable allowance designed to help cover housing costs when government-provided housing is not available. BAH is intended to offset the cost of housing in local civilian markets. Unlike taxable income, BAH is exempt from federal and state income taxes, and it is also excluded from Social Security taxes.

Several factors determine a service member’s BAH rate, including duty station location, pay grade (rank), and whether they have dependents. BAH rates are set by surveying rental property costs in each geographic location, meaning rates in high-cost areas will be higher than in low-cost areas. The Department of Defense reviews and adjusts BAH rates annually, typically effective January 1, to reflect changes in local rental markets and utility costs.

BAH is not designed to cover all of a service member’s housing costs. Rates are based on the median cost of rent and utilities for comparable civilian housing, aiming to cover approximately 95% of estimated housing expenses. This approach allows service members flexibility in their housing choices while providing substantial financial assistance. BAH also includes a rate protection feature, meaning a service member’s BAH will not decrease due to market changes as long as their duty location, rank, and dependency status remain the same.

On-Base Housing Considerations

Service members living on-base find their housing costs are covered directly by their Basic Allowance for Housing (BAH). Their BAH is generally remitted directly to the housing provider, which can be a military housing office or a privatized housing company. This direct payment means service members usually do not have an out-of-pocket rent payment. The Military Housing Privatization Initiative (MHPI) has resulted in most family housing facilities being owned and managed by private companies under agreements with the Department of Defense.

Eligibility for on-base housing is determined by factors such as the service member’s rank, family size, and the availability of units. Single service members in lower pay grades, typically E-5 and below, are often required to live in barracks or dormitories, which are government-owned facilities. For family housing, applications are processed based on pay grade and bedroom requirements, with waiting lists varying by location.

While rent is generally covered by BAH, service members living on base may incur additional costs. Utilities, such as electricity and water, are often covered up to a certain amount, but usage exceeding that cap can result in out-of-pocket expenses. Residents are typically responsible for services like cable television, internet, and phone. Minor maintenance responsibilities may also fall to the resident, although major repairs and infrastructure upkeep are handled by the housing provider.

Off-Base Housing Considerations

Choosing to live off-base provides service members with greater flexibility and a wider range of housing options. When a service member opts for off-base housing, their full Basic Allowance for Housing (BAH) is paid directly to them as part of their regular compensation. This direct payment allows service members to manage their housing budget independently, covering rent or mortgage payments, utilities, and other associated costs.

Service members are responsible for finding their own housing, including securing a rental agreement or purchasing a home. If the cost of their chosen housing is less than their BAH, they can retain the difference, which can be used for other financial goals or savings. If housing costs exceed the BAH, the service member is responsible for covering the difference from personal funds.

Factors influencing the choice of off-base housing often include commute times to the duty station, proximity to schools or amenities, and personal preferences regarding neighborhood and housing style. Service members should consider the overall cost of living in the area, including utility expenses, which they will be fully responsible for. The Servicemembers’ Civil Relief Act (SCRA) provides important protections, allowing service members to terminate a lease under specific circumstances, such as receiving permanent change of station orders or deployment orders for 90 days or more.