How To Use BAH To Plan Your Fayetteville Home Budget

Planning a move to Fayetteville and wondering how far your BAH will go? You’re not alone. When you turn BAH into a clear monthly plan, you can shop with confidence and avoid surprise costs. In this guide, you’ll learn how lenders treat BAH, how to plug in Fayetteville-specific costs, and how to convert your allowance into a safe monthly mortgage target with examples. Let’s dive in.

What BAH covers and why it helps

BAH is a tax-free allowance meant to offset your housing costs. It is based on your pay grade, dependency status, and the location tied to your duty ZIP code. You can use it for rent or for a home purchase, including mortgage principal and interest, taxes, insurance, utilities, HOA dues, or savings.

You can look up your rate by pay grade and ZIP on the Defense Travel Management Office’s official page. Use the DoD’s tool to find your rate for the Fayetteville area by ZIP code and status when you start planning your budget. For current rules and rates, check the DoD’s Basic Allowance for Housing page on the Defense Travel Management Office site.

How lenders view BAH

Many lenders count BAH as effective income when it is documented on your LES or recent pay stubs. Ask your lender how many months of BAH they will average and what proof they need. Also confirm whether they count BAH as full income or apply any discount and how it fits into their debt-to-income limits.

Loan programs handle BAH differently. With VA loans, underwriters commonly include BAH as income and follow residual income rules. VA loans do not have PMI, though most borrowers pay a funding fee unless exempt. You can review program details on the U.S. Department of Veterans Affairs home loan page. Conventional and FHA loans may also count BAH if it is stable and documented, but debt-to-income limits can be stricter. For a plain-English overview of DTI considerations, see the Consumer Financial Protection Bureau’s guidance.

Questions to ask your lender early

• What documentation of BAH do you need and for how many months?
• Do you count BAH as full qualifying income?
• What are your front-end and back-end DTI limits?
• Can I qualify for a payment higher than BAH if I combine other income?

Fayetteville cost inputs to budget

To build a realistic housing number, add the local costs below to your principal and interest.

Property taxes in Cumberland County

Cumberland County and the City of Fayetteville set their own tax rates, expressed as a rate per $100 of assessed value. Your lender will usually escrow this into your monthly payment. To estimate, multiply the assessed value by the current tax rate to get an annual amount, then divide by 12.

Check current rates, assessed values, and billing details on the Cumberland County Tax Administration site. If the home is inside Fayetteville city limits, municipal taxes will also apply. Assessed values can differ from list prices, so review the property’s tax card or ask your agent to pull recent bills.

Homeowners insurance

Premiums vary with home value, construction, age, and claim history. The best approach is to request quotes from two to three local agents and ask if the policy includes replacement cost, liability, and wind coverage. If a property is in a designated flood zone, flood insurance may be required by the lender. You can verify flood zones using the FEMA Flood Map Service Center.

HOA and condo fees

Some neighborhoods include HOA or condo dues that cover amenities or exterior maintenance. Ask for current HOA budgets, reserve studies, and any special assessments. Add the monthly fee to your housing total.

Utilities and municipal services

Plan for electricity, water and sewer, possible natural gas or propane, trash or solid waste, and internet. Fayetteville Public Works Commission publishes rates and average bill information. You can review local providers and typical costs on the Fayetteville PWC website.

For the most accurate picture, ask the seller for 12 months of utility bills to see seasonal swings. As a general illustration only, utilities for a 3-bedroom single-family home might range from about $150 to $350 per month depending on usage and season.

Maintenance and repair reserves

Set aside a reserve for ongoing upkeep. A common rule of thumb is 1 to 2 percent of the home price per year, divided by 12 for a monthly amount. Older homes or homes with larger lots, pools, or older systems may need a higher reserve.

Closing costs and funding fees

Keep one-time costs in view, especially during a PCS. VA loans do not have PMI, but most borrowers pay a funding fee that depends on down payment and usage. You can review the VA program and funding fee details on the VA home loan page. Conventional and FHA closing costs vary, so request an early estimate from your lender.

Turn BAH into a monthly budget

Here is a simple worksheet to create a safe target payment:

1. Document your monthly BAH from your LES or the DoD BAH table. Remember, BAH is tax-free.
2. Set a target. Many advisors suggest using 80 to 90 percent of BAH for housing to leave room for savings and variable costs. Adjust if you are combining income.
3. Estimate monthly property tax. Take the annual tax amount and divide by 12.
4. Estimate monthly homeowners insurance. Take the annual premium and divide by 12.
5. Add HOA or condo dues if applicable.
6. Add utilities for electricity, water and sewer, internet, and trash.
7. Add a monthly maintenance reserve using the 1 to 2 percent rule.
8. Subtract items in steps 3 to 7 from your target to find what is left for principal and interest.
9. Ask your lender or use a calculator to convert that principal and interest number into a maximum loan amount at today’s rate and your preferred term.

Worked examples using hypothetical numbers

These scenarios are for illustration only. Replace the figures with your BAH and local quotes.

Example A: Single enlisted, BAH $1,700

• Target at 90 percent: $1,530 per month
• Monthly property tax: $150
• Monthly insurance: $80
• HOA: $0
• Utilities: $200
• Maintenance reserve: $100
• Non-P&I subtotal: $530
• Available for principal and interest: $1,530 minus $530 = $1,000
• At a 6 percent, 30-year fixed rate, $1,000 in P&I roughly supports a loan near $167,000. Ask your lender for an exact figure at current rates.

Example B: Officer or co-borrower, BAH $2,500

• Target at 90 percent: $2,250 per month
• Non-P&I subtotal: $800
• Available for principal and interest: $1,450
• At 6 percent, 30-year fixed, $1,450 in P&I supports a loan near $242,000. Confirm with your lender using up-to-date rates.

PCS timing and preparation

If you can, start conversations with a lender 3 to 6 months before your PCS. Having an LES and recent pay stubs ready helps document BAH quickly. Pre-approval strengthens your offers when inventory is tight.

If you rent first while you explore neighborhoods, keep a clean record of rent payments. Lenders may ask for a housing history when you switch to buying.

VA loan tips for service members

VA underwriting includes a residual income test that ensures there is enough income left after debts and housing to cover living expenses. Your lender will use the VA’s tables based on county and family size. There is no PMI with VA loans, which can improve buying power compared to some conventional options. Most borrowers pay a funding fee unless exempt. You can learn more on the VA home loans page.

Buffers and safeguards for your plan

Aim to keep an emergency fund of at least three months of total expenses. During a PCS or when facing job changes in the household, six months can offer extra peace of mind. Most lenders escrow taxes and insurance, so verify how much will be added to your monthly payment.

Because BAH can change with duty station or rank, avoid stretching to 100 percent. Build a cushion so a future change does not strain your budget.

Local checks before you write an offer

Confirm whether the property is inside Fayetteville city limits or in unincorporated Cumberland County, since municipal taxes and services may differ. Review comparable property tax bills, HOA documents, and the seller’s utility history. If there is any flood risk, review the FEMA Flood Map Service Center to see if flood insurance will be required.

For current rates, assessed values, and local utility information, use these resources:

• Cumberland County Tax Administration
• Fayetteville Public Works Commission
• Defense Travel Management Office BAH page
• VA home loans
• CFPB on DTI and qualification

Ready to put your BAH to work with a Fayetteville-focused plan and a neighborhood strategy that fits your timeline? Reach out to Stacey Prevette for a free consult, a custom budget worksheet, and on-the-ground guidance for your move.

FAQs

How do I find my BAH for Fayetteville?

• Use the official DoD BAH lookup by entering your duty ZIP code, pay grade, and dependency status on the Defense Travel Management Office site.

Can I use 100 percent of BAH for my mortgage?

• You can, but many advisors suggest capping housing at 80 to 90 percent of BAH to leave room for savings, seasonal utilities, and unplanned expenses.

Does the VA count BAH as income for a loan?

• VA underwriters commonly include BAH as effective income when it is documented on your LES or pay stubs, and they also apply residual income rules; see the VA home loans page for program details.

How do Fayetteville property taxes affect my payment?

• Your lender will likely escrow property taxes into the monthly payment; estimate annual taxes using assessed value and the county and city rates, then divide by 12. Check details on the Cumberland County Tax site.

What utilities should I budget with Fayetteville PWC?

• Plan for electricity, water and sewer, and internet, and ask the seller for 12 months of bills to capture seasonal swings; you can also review rates and typical bills on the Fayetteville PWC website.