How Much Rent Can You Afford?

Person using a calculator to calculate

Post from MilitaryByOwner

As a military member or family looking for a home to rent, you have some choices to make. The first will be deciding whether you rent a home on or off base. If you live on base, your expenses and paying rent will be pretty straightforward, as your Basic Allowance for Housing (BAH) will cover your housing costs.

But if you're looking for a home or apartment off the military installation, how can you determine how much rent you can afford? Here are a few tips to help you set your renting budget.

1. Lay out the big picture of your finances.

Before determining how much you can spend on housing, get a complete picture of your financial situation. Budget calculators like the one from Mint can help you determine how much you're spending and what's available for housing.

2. Understand what your Basic Allowance for Housing covers.

The BAH is meant to help cover your cost for housing, but not all of it in most cases.

From Tips for Living Within Your BAH :

"Your BAH isn't intended to cover 100% of your housing expenses -- 95% is more accurate. That leaves the remaining 5% coming from the remainder of your paycheck. Is 5% a lot? As far as percentages are concerned, no. But depending on where you live, you might find that 5% equates to several hundred dollars -- a crucial thing to keep in mind as you start drafting your budget to stay within your new BAH rate."

3. It's recommended to limit your housing expenses to no more than 30% of your gross monthly income, meaning before taxes are deducted.

Here's an example of the 30% rule: $2,800/month of income before taxes allows for an $840 rent payment. Use a percentage calculator or simple math to determine how much of your total monthly income 30% (i.e., your rent payment) would be.

4. Consider expenses not included in your rent: rental application fees, utilities, water, sewer, gas, electricity, laundry and so on.

Depending on where you live, utilities could be higher than you expect, especially in higher cost-of-living areas like Los Angeles. Be sure to check sites like Best to help estimate the cost of living in your new location. Then add the cost of utilities to your house-hunting budget.

You might be entitled to receive a Dislocation Allowance (DLA), which partially reimburses a service member for moving expenses.

5. Factor in commuting costs.

You may find a rental home farther out that's much less expensive than one closer to the base. But don't forget to factor in gas or the cost of public transportation in your monthly budget.

6. Renting a home overseas comes with different challenges ... and expenses.

When you're stationed overseas, you'll receive an Overseas Housing Allowance (OHA). Your OHA has three separate components: a rental allowance, utility and recurring maintenance allowance, and a Move-in Housing Allowance (MIHA).

Just like BAH, OHA is based upon location, rank and dependents. Utilities and other expenses when living overseas may be handled quite differently than what you're accustomed to, including "estimated usage" utility payments vs. metered usage. See What to Expect When Renting a Home Overseas for more details.

7. Don't forget security and pet deposits.

Other expenses you'll need to consider are pet deposits and security deposits. (These vary from state to state but can be equal to two months' rent. Some states have no cap on how large a security deposit can be.) In the case of a pet deposit, or "pet rent," some function the same as a security deposit, which means they'll be refunded when you move out if the property is left in the same condition as when you move in. But some pet deposits are nonrefundable, so be sure you know which type it is before you sign the lease.

Wherever you live, taking into account your monthly expenses, setting a realistic budget and weighing the pros and cons of living on or off base will be important considerations.

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