For active-duty service members who are constantly moving to new locations, buying a home may not be high on their radar. But that mindset can lead them to overlook one of the greatest benefits the Department of Veterans Affairs offers: the home loan.
The VA loan program lets military service members and veterans buy homes at low interest rates and, in many cases, with no down payment. And while it might seem counterintuitive to buy a house somewhere you’ll only be for a few years, using the VA loan at each new duty station — or even every duty station — can be a strategic way to build wealth and create a steady income stream once military members move away.
Buying a home vs. renting at your duty station
Renting likely seems like the easiest route when making a PCS, but with the VA loan program, it’s not as clear a winner as you’d think.
“Many military buyers hear ‘rates are high’ and immediately assume homeownership is out of reach, but interest is 100% when you rent,” says Clint Jordan, an Air Force veteran, real estate agent and owner of the Mil-Estate real estate network. “You’re still making a monthly payment — you’re just paying someone else’s mortgage instead of building your own equity.”
With VA loans, military members and veterans can buy homes and build that equity without many of the challenges that come with traditional mortgage programs. They typically require no money down, offer low interest rates, and allow the seller to pay 100% of the buyer’s closing costs. They also require no mortgage insurance.
Buying real estate at a new duty station can help military members create steady revenue streams. They can buy a house, stay there until their next PCS, and then turn it into a rental once they leave.
Repeat that process at each station, and in a few years, they’ll have multiple rental properties, all churning out income at the same time.
“Homes near military bases typically maintain strong rental demand because service members are constantly rotating in and out,” Jordan says. “That creates a consistent pool of tenants around most major installations.”
And the mechanism that allows you to use this strategy is your basic allowance for housing (BAH).
Putting your housing allowance to work for you
BAH is a monthly allowance paid by the Department of Defense (DoD) to offset housing costs for service members who are not provided with military quarters. The amount paid is based on the member’s rank (or pay grade), the ZIP code where they’re located and whether they have dependents, and it is paid in addition to your base pay.
The DoD recalculates the BAH every year using local rental (not sales price) market and utility cost data across 299 military housing locations. Every time you move to a new duty station, your BAH will adjust to reflect any increase or decrease in housing costs.
According to Chris Birk, vice president of mortgage insight at Veterans United Home Loans, the military housing allowance “can be an incredibly valuable part of the homebuying equation for active duty service members.”
The main benefit of using BAH when buying a home is that it is tax-free income, and many lenders will base their lending decision on whether you have enough income to pay the debt. When properly verified, the untaxed nature of the housing allowance provides an underwriting advantage, allowing lenders to “gross up” that money, typically by 15% to 25%, to match the buying power that someone with a higher, taxable income might have.
For example, if your BAH is $2,500 and a 25% adjustment is applied, the lender will consider your gross adjusted income as $3,125 on the loan application. The higher income calculation reduces your debt-to-income ratio, which in turn can increase the loan amount you may qualify for.
|
Base Pay |
BAH |
Grossed Up BAH |
Total Income Used to Determine DTI |
|---|---|---|---|
|
$3,000 |
$2,500 |
$3,125 |
$6,125 |
Your BAH will change with every PCS. If you move to an area where housing costs are significantly higher than your previous location, your BAH will also be significantly higher, increasing your buying power even more.
Using your housing allowance can unlock more opportunities for service members, helping them turn those rental dollars into a faster track toward homeownership.
“That can mean more time to build equity, establish a financial foundation and potentially create wealth that benefits their families for generations,” Birk says.
Beware, however, that your basic housing allowance is meant to cover 95% of your housing costs, so you will need to have cash on hand for insurance, property taxes and other housing-related expenses.
Can you use VA loans to buy more than one home?
Many military members take this multiple-home-buying approach to PCS’ing — and even use the VA loan program to do it. According to a 2024 survey from Veterans United, 22% of active-duty homeowners have used their VA loan benefit to buy a home two or more times.
More recent data from Veterans United shows that over half of active-duty members currently own residential properties in addition to their primary home, with 85% saying the VA’s loan benefits have helped improve their financial position.
“I PCS’d six times during my Air Force career,” Jordan says. “Had someone truly explained this to me early on, I could have purchased homes at multiple duty stations and potentially had several rental properties today producing equity and passive income.”
Using a VA loan to buy multiple properties means understanding how your VA loan entitlement works and how much you can borrow without a down payment. Working through the second- or third-tier entitlement math with a lender ensures you stay within budget and make the right financial decision.
“It’s absolutely possible for service members to have more than one VA loan at the same time,” Birk says. “The question is often more about whether you will need to make a down payment. And even when buyers do need to make a down payment, that figure might be way less than what they would need for other loan types.”
You’ll also need to meet the VA’s occupancy rule. VA loans are for financing the purchase of your primary home, not investment properties. You may have to convert your VA loan to a conventional loan if you plan on keeping the property as a rental, so you need to ensure the rent payments cover the monthly expenses of the property you’re leaving behind.
When renting makes more sense than buying
Buying over renting at each duty station works well if you have a stable assignment lasting three or more years and your BAH covers most or all of your mortgage payments. You should also feel comfortable being a long-distance landlord if you decide to rent out the property once you leave.
On the other hand, several scenarios make renting the better choice. If you are on a short-term assignment, or if your mortgage costs far exceed your BAH allowance, buying won’t make sense.
You should also know that BAH can change between duty stations and is not a permanent benefit. If you PCS to a less expensive duty station, your BAH will decrease and may not be enough for you to qualify for a new loan.
Changes in your pay grade and number of dependents will also alter the math. Moving into military housing cuts your BAH off completely, as does being discharged or retiring from service. You’ll need to run the numbers based on your next duty station, new pay grade or changed status to see if the strategy still works or whether renting is the best choice.
