Key words: military/income/allowance/ tax-exempt income

 

Military personnel may be entitled to different types of pay in addition to their base pay. Flight or hazard pay, rations, clothing allowance, quarters' allowance, and proficiency pay are acceptable sources of stable income. While all pays are taxable, most allowances are tax-exempt. The primary allowances for most individuals are BAS and BAH, which are tax-exempt. So even the allowance income would not be listed on W-2 form, it may be considered as qualifying income if documented and likely to continue for the next three years.

 

Income paid to military reservists while they are satisfying their reserve obligations also is acceptable if it satisfies the same stability and continuity tests applied to secondary employment.

 

Military Income

Military base (basic) pay

A Borrower who is a member of the United States Armed Forces in active duty.

History of receipt: For borrowers who are active-duty members of the United States Armed Forces, a history of military employment is not required for the employment to be considered stable.

Military entitlements

A Borrower who is a member of the United States Armed Forces may receive pay entitlements such as BAS and BAH.

History of receipt: A history of receipt is not required for the income to be considered stable

Continuance: Must be likely to continue for at least the next three years

Calculation: Current fixed monthly amount

Military Reserve and National Guard income

The Reserve Income Replacement Program pays National Guard and reserve members mobilized for extended or frequent periods the difference between their monthly civilian pre-mobilization income and their current total monthly military compensation.

History of receipt: One year

Continuance: Must be likely to continue for at least the next three years

Calculation: 12-month average

 

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