Wanna use your BAH to buy a house? Well, there’s a few things you need to know, and I’m going to be discussing them right now...
Hey everyone! Welcome back to my channel! I’m Jodie Cordell, the Savvy Agent, with Spence Properties here in Crestview, Florida. If this is your first time here, please click the subscribe button under this video. And don’t forget to click the bell so that you get notifications every time I put out a new video. I put out a new video every Wednesday!
So, let’s get right down to it! If you’re active duty, you get a monthly allowance for housing, known as BAH. The cool thing about your BAH is you get it if you live on base or off. There are a lot of benefits to living on base, but there is a lot to know about living off base, and specifically buying a home off base that I want to share with you. Just in case you weren’t aware, you can use your BAH that you’re getting every month to actually buy a house. And it’s actually designed to help you even after you leave the military. So, let’s talk about the benefits of using your BAH to buy a house!
1. Your BAH could easily cover your entire mortgage payment! The Emerald Coast has a relatively low cost of living. With current BAH levels starting at close to $1400 per month without dependents and reaching nearly $2500 per month at the top ranks with dependents, you have a lot of options for buying a home in this area! The Emerald Coast is very military friendly with 3 military bases in the area – Eglin AFB, Duke Field and Hurlburt Field. Most rental properties will cost more per month because landlords set the rent at the BAH levels. So, it really could save you a lot of money each month using your BAH to buy instead of rent!
2. VA loans come with the $0 down payment feature. This is a great part of the VA Loan program that helps our military members buy a home without having to save up a huge amount of money for the down payment. Now, this doesn’t include your EMD or any closing costs you may have to pay, but you can buy a home with a lot less money than most people with your VA benefit. In this area, you can probably count on needing about 3% of the purchase price for closing costs. Sometimes the seller agrees to pay them, but you can’t always count on that. And you might need to have a little extra for inspections and appraisers. You may get that back at closing, but some need payment up front before they do the work. Your EMD, or earnest money deposit, will most likely run you about $1000. So, altogether, you can probably bank on needing between 3 to 5% of the purchase price to buy a home. But you still save so much money in the long term by not throwing your money away by paying rent.
3. No PMI, or Private Mortgage Insurance to pay each month. Since VA loans, like FDA loans, are insured by the government, they are not charged mortgage insurance like regular conventional loans are. This is just another fee that is waived for military using their VA benefits that saves them money. Which brings me to my next point!
4. You will OWN the home! Meaning you are building equity that you’ll be able to take with you later or borrow against. Equity is the amount of your home that you own after you take out the mortgage amount you still owe. So every year you’re growing your money. It’s like putting money into a savings that continues to grow every year. And the even better part is, your home is increasing in value every year, which ALSO increases your equity! And you’re doing it all with the government’s money! This is a beautiful thing! It’s one of those really cool benefits of being in the military. But, sadly, so many don’t take advantage of it right away. Including me and my husband! We didn’t buy a house until he RETIRED! Guess what he doesn’t get after retirement...BAH! If we had bought a house while he was still active duty, we could have built equity with the BAH and then we could have taken that equity with us after he retired.
5. Live wherever you want! You have the freedom to choose where you want to live. Want to live near the beach? Nicer neighborhood? Close to specific schools? It’s totally up to you! You get to choose where you live and how much you want to spend on your home. If you spend more than the VA allotment, you can choose to make up the difference as long as you qualify for the loan amount.
6. Build wealth! If you sell your home and you make a profit from it, you get to keep all of it! After living in your home for 1 year, you can rent it and still use your VA benefit to buy another home. You just have to make sure you’re still within your benefit allotment amount. Now, with the increases that have been put in place this year, that can really raise the bar for how much house you can afford. This year the new allotment tops out at $510,400. That will buy a lot of house! So, if you live in it for 5 years then decide to sell it and you make a profit from the sale, you get to keep all of that money! You don’t have to pay it back.
So, buying a house with your BAH may seem scary, but there are so many benefits to doing it. Get a good realtor to help you go through the process and it will not seem nearly as scary with them holding your hand all the way through it. If you’re thinking of moving to the Emerald Coast, reach out to me with any questions you may have about the process of using your BAH to buy your first home. I will be more than happy to help! And be sure to grab my FREE Relocation Guide! I’ll leave the link in the description under this video. I hope this answers some questions about using your BAH to buy a home. If you liked this video, be sure to give me a thumbs up and drop me a comment below! If you have questions about how to get started using your BAH to buy a home, drop those in the comments below, as well! I will gladly answer those for you.
Oh, and if you liked this video, be sure to check out this video over here!
Thank you so much for watching. Again, my name is Jodie Cordell with Spence Properties. And I’ll see you on the next video.