The core difference in one sentence
BAH pays you a flat rate whether your rent is high or low; OHA reimburses the rent you actually pay, up to a cap. That single design choice shapes everything else about the two allowances, from how they are calculated to how you should shop for housing under each.
How BAH works, briefly
Stateside, your housing pay is a lookup, not a reimbursement. The Defense Department publishes annual tables by pay grade, dependent status, and military housing area, and you receive your row's number. In 2026, an E-5 with dependents in San Diego gets $3,975 a month. Rent a $3,200 apartment and you keep the $775 difference. Rent a $4,300 one and the extra $325 comes out of your pocket. The incentive is to shop under your rate.
How OHA works
Overseas, the system flips. You find a place, sign a lease, and report your actual rent. OHA pays that rent up to a maximum set for your pay grade, dependent status, and location, and the payment is made in local currency. If your rent is under the cap, your OHA is smaller; the leftover does not go to you. There is no financial reward for renting cheap, which removes the BAH-style incentive to shop below your number.
OHA also has a second component BAH lacks: a utility and recurring maintenance allowance, also capped by location and grade, recognizing that overseas utility costs can be steep and unpredictable.
Who gets which
The line is geographic. Duty stations in the continental United States, including Alaska and Hawaii, use BAH. Stations outside the continental US, Germany, Japan, Korea, Italy, and the rest, use OHA. The switch happens with your PCS: your BAH stops and your OHA computation starts based on your new lease.
One wrinkle: members on unaccompanied overseas tours whose families stay stateside can draw BAH for the family's location rather than OHA, since the family still needs stateside housing. Finance offices sort this out during out-processing, but it is worth raising before you sign anything.
Shopping strategy under each system
Under BAH, the math favors renting below your rate and banking the spread, because the payment does not move with your lease. Under OHA, the payment follows your rent up to the cap, so the rational move is to rent the best place you can at or under the cap rather than the cheapest place you can find. Different rules, different optimal behavior, and members who apply BAH habits to an OHA tour leave money on the table.
Run your stateside number
If your next tour is stateside, your number is a lookup away. The free BAH calculator uses the official 2026 tables by pay grade, dependents, and location, and its reverse mode shows how far your rate stretches against any rent. For the dependent rules that apply under either system, see BAH with dependents explained.