There are three main income entitlements listed on a Veteran’s paycheck stub, known as a “Leave & Earnings Statement” or LES.
The first one is the Base Pay and is easy to compute.
However the next two, BAS (Basic Allowance For Subsistence which is supposed to offset meal costs) and BAH (Basic Allowance For Housing) are non-taxable and therefore can be computed in such a way as to give the Veteran additional income to qualify for a home. This is known as “grossing up” and the common rule is to use 115% or even 125% of the face amount of BAS and BAH. To be more accurate however, the VA’s policy on grossing up involves adjusting the income upwards to a pre-tax or gross amount which, after deducting State & Federal Income taxes, equals the tax-exempt income. We then would use current Income Tax withholding tables to determine an amount by which to adjust the Veteran’s income.
If that amount were 115% for example, then a Veteran who’s LES shows $3,000/mo Base Pay, $300/mo BAS and $1,500/mo BAH , could be considered to have $3000 + $2,070/mo = $5070/mo qualifying income.