New BAH rates for 2011 have not been posted yet. But it is ancipated with the proposed low pay raises in play for the military in 2011 (less than 2.0%) the BAH rates may not increase. However if as pointed out you are looking at a promotion in the near future the BAH rate for the next grade in service can help you with your VA mortgage.
If you are relocating to Fort Belvoir, the Pentagon, Quantico or anywhere in the Military District of Washington in the near future give me call at 703-346-2213 to talk about your housing options while you are stationed in the area.
When calculating military income for VA home loan applications, current service members serving in the US have the Basic Allowance for Housing to consider as verifiable income on a VA loan application. Some military members apply for VA loans with a debt-to-income ratio skating the edge of what’s allowed according to VA requirements. How does a soldier, sailor, airman or marine make smart decisions to bring the debt-to-income ratio down and qualify for a VA mortgage? The VA’s debt-to-income ratio maximum is 41%. That means the VA borrower can’t owe more than 41% of their verifiable income if they want to qualify for a VA loan.
The first thing to do is examine debts and eliminate them wherever possible. This isn’t as daunting as it might seem at first if a military member keeps an eye on the future. Does the VA applicant have a re-enlistment bonus coming up that could be used to reduce the amount of debt? What about a raise based on time in service? Paying down a credit card over time with such a pay raise could be a huge help. The same goes for those about to get a raise because of an upcoming promotion.
Another factor to consider is how a promotion could affect the amount of BAH the military member is entitled to get. How does the debt to income ratio change? The BAH rate for a married Staff Sergeant in 2010 in one zip code comes out to $ 1689.00. That same sergeant getting a promotion to the next rank sees an increase of BAH to $ 1974.00. That’s a good increase that should be taken into account when making financial plans for that VA mortgage.
Keeping an eye on such pay increases and other factors can help with the timing of a VA loan application, not just the application itself. Would you rather wait the extra time until your promotion or time-in-service pay increases kick in and have a better chance of getting VA approval for your loan application? For some borrowers, this is a strategy that makes sense when trying to cut the debt-to-income ratio.
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Military Relocation Specialist serving military families relocating to and from the Pentagon, Fort Belvoir, Quantico MCB and all of the Military District of Washington installations.
Licensed in the Commonwealth of Virginia