BAH Buy vs Rent Calculator: Make Your Housing Allowance Work Harder
Example: Monthly BAH rate: 2200 $ · Home purchase price: 320000 $ · Mortgage interest rate: 6.75 % · Annual property tax rate: 1.1 % · HOA / condo fee (monthly): 0 $ · Expected years at this duty station: 3 yrs · Expected annual home appreciation: 4 %/yr · Down payment (use 0 for VA loan): 0 %
| Buying advantage over renting (positive = buy wins) | $33,318 |
| Equity built by PCS date | $50,917 |
| Total monthly buy cost | $2,689 |
| BAH surplus/deficit vs buy costs (monthly) | $-489 |
| Net cost of buying (after equity) | $45,882 |
| Total rent paid (BAH out the door) | $79,200 |
Worked example
BAH of $2,200/month at a duty station where a $320,000 home carries a VA loan payment of $2,080/month (principal + interest at 6.75%, plus $293 property tax and $267 maintenance) — call it $2,640 total, just $440 over BAH. Over 3 years, BAH renting costs $79,200 with nothing to show. Buying costs $95,040 out-of-pocket, but appreciation at 4%/year plus principal paydown builds roughly $47,000 in equity, leaving a net buy cost of $48,040 — $31,160 cheaper than renting, even accounting for the $440 monthly gap you cover from pocket.
Frequently asked questions
What if I get PCS orders sooner than expected?
Short tours (under 2 years) rarely favor buying; closing costs alone (2–5% of the purchase price) require enough appreciation and principal paydown to break even. This calculator lets you shorten the expected years to see the tipping point — typically 2–3 years in most markets at current rates.
Should I rent the home out after PCS instead of selling?
Military landlording is a common wealth-building path. If you can rent the home for at or above the mortgage payment (PITI), you keep the appreciation and equity growth while someone else covers the mortgage. Factor in vacancy, maintenance, and property management costs (~10% of rent) before committing.
Does BAH change every year?
Yes. BAH rates are adjusted annually by DoD based on local rental market surveys. If rates rise, your housing allowance increases; if you own, your payment stays fixed — an additional advantage of locking in a mortgage at current rates.
Is BAH taxable income?
No. BAH (Basic Allowance for Housing) is not subject to federal or state income tax, which effectively increases its purchasing power compared to an equivalent taxable salary. This tool uses your raw BAH as the comparison baseline.