What's the difference between BAH and actual mortgage costs?

BAH, the Basic Allowance for Housing, is a monthly amount set by the Department of Defense based on your duty location, rank, and whether you have dependents. It's not tied to what any specific house costs, so your actual payment can be lower or higher than BAH. Your monthly payment is made up of principal, interest, property taxes, and homeowners insurance, and in Texas, property taxes are a major part of it, so budget for them carefully. Many lenders consider allowances like BAH as part of your income, but confirm with your lender how they'll count yours. I help families set a comfortable monthly number first, then look for homes at that number. Going over BAH is a bad idea. Many younger service members treat BAH as spending money and don't set it aside for the house payment, and it rarely covers utilities, so my rule of thumb is to aim for a mortgage payment about 20% below BAH.