Make smarter financial decisions by understanding your LES inside and out. Have you ever looked at your Military Leave and Earnings Statement (LES) and thought, “What does all this even mean?”
Whether you’re a first-time homebuyer calculating your purchasing power, a seasoned investor reviewing rental income opportunities, or a real estate agent assisting military clients, understanding the LES is critical. Misreading or misunderstanding this document can lead to budgeting errors, incorrect mortgage applications, or missed financial opportunities.
In this article, we’ll break down the most common mistakes people make when reading a military LES—and how to avoid them. By the end, you’ll know how to interpret your LES accurately and use it as a tool to support smarter real estate and financial decisions.
What Is a Military LES and Why It Matters in Real Estate
The Leave and Earnings Statement (LES) is a monthly statement issued to military service members that details their pay, entitlements, deductions, and leave information.
Why it matters in real estate:
- Loan Prequalification: Lenders use your LES to determine your debt-to-income (DTI) ratio.
- Proof of Income: It serves as your income documentation, especially for VA loans.
- Budgeting: Helps homebuyers understand monthly take-home pay and affordability.
Top 7 Common Mistakes to Avoid When Reading Your LES
1. Ignoring the Difference Between Gross Pay and Net Pay
Mistake: Confusing gross pay with take-home pay can drastically overstate your buying power.
Example:
- Gross Pay: $5,500
- Deductions (taxes, insurance, TSP, SGLI): $1,800
- Net Pay: $3,700
If you base your home budget on $5,500, you’re at risk of overextending financially.
Pro Tip: Use the “Entitlements” column for gross income and “Pay Summary” for net pay. Focus on the net when estimating your monthly budget.
2. Misunderstanding BAH (Basic Allowance for Housing)
Mistake: Assuming BAH is permanent or the same for all duty stations.
- BAH is location-based and rank-dependent.
- It may not be included if you live in base housing or move to a lower-cost area.
Example:
- An E-5 in San Diego: BAH ~$3,000/month
- An E-5 in Kansas City: BAH ~$1,500/month
This can significantly affect your real estate budget or rental income potential.
Pro Tip: Use the official BAH calculator before estimating affordability or investment income.
3. Overlooking Special Pays and Bonuses as Recurring Income
Mistake: Treating hazard pay, deployment bonuses, or reenlistment bonuses as consistent monthly income.
Example:
- You may see an extra $1,000 in “Special Pays” this month but that doesn’t mean you’ll see it every month.
- Lenders typically only consider consistent, recurring income for mortgage qualification.
Pro Tip: Confirm with your lender whether special pays are factored into your loan eligibility.
4. Ignoring the Impact of Deductions
Mistake: Overlooking deductions like:
- TSP Contributions (Thrift Savings Plan)
- SGLI (Service Members Group Life Insurance)
- Allotments (such as car loans or child support)
These reduce your net income and affect how much house you can afford.
Pro Tip: Review the “Deductions” column carefully. Use a home affordability calculator that factors in net income for more accurate results.
5. Not Checking Leave Balances or Use-or-Lose Days
Mistake: Ignoring the “Leave Balance” section, especially near fiscal year-end.
Unused leave could:
- Affect payout at separation
- Influence your leave schedule, which can impact PCS moves or closing timelines
Pro Tip: Plan your homebuying or PCS timeline around your leave availability.
6. Missing Debt Obligations Listed in Allotments
Mistake: Failing to realize that automatic allotments may include debts (such as car payments, child support, or voluntary deductions).
Lenders may count these toward your DTI ratio.
Pro Tip: Highlight all recurring allotments and verify with your loan officer whether they count as liabilities.
7. Misreading the Remarks Section
Mistake: Skipping over the “Remarks” section at the bottom of your LES.
This section often includes:
- Pending changes to pay
- Tax updates
- Reenlistment information
- Discrepancy notices
Missing this info could mean overlooking critical updates that impact your finances.
Pro Tip: Scan the “Remarks” section monthly to stay on top of changes and avoid surprises.
Sample LES Breakdown for Real Estate Use
Let’s take a sample monthly LES for an E-6 stationed in Norfolk, VA:
Component |
Amount |
| Base Pay | $3,700 |
| BAH | $2,100 |
| BAS (Sustenance) | $450 |
| Special Pay (Sea) | $150 |
| Gross Pay | $6,400 |
| Deductions (Tax, SGLI) | -$1,900 |
| Net Pay | $4,500 |
Buying Power Consideration:
- Mortgage pre-approval will typically use Base Pay + BAH + BAS, not special pays.
- Lenders will subtract all listed deductions/allotments when calculating affordability.
Why Real Estate Professionals Should Master the LES
If you’re a real estate agent or lender working with military families:
- Speak their language: Understanding LES shows professionalism and builds trust.
- Speed up the loan process: Accurately interpreting income helps streamline VA loan approvals.
- Provide tailored advice: Explain how changing stations or deployment may affect entitlements like BAH.
Check out our guide to VA Loan Eligibility and Requirements to support your military clients further.
Actionable Tips for Better LES Management
- Review your LES monthly—especially after a PCS, promotion, or tax season.
- Highlight irregular or one-time entitlements so you don’t include them in long-term budgets.
- Cross-check leave balances during big moves or homebuying periods.
- Use online tools like myPay or BAH calculators to validate figures.
- Work with a VA-experienced lender or Realtor who understands how LES factors into loan pre-approvals.
Conclusion: Master Your LES, Master Your Finances
Understanding your military LES isn’t just about knowing what you earn—it’s about empowering your financial decisions.
By avoiding these common mistakes, you can:
- Get accurate mortgage estimates
- Avoid overextending your budget
- Maximize your housing benefits
- Plan confidently for PCS moves and long-term investments
Next Steps:
- Use a VA Loan Calculator to assess your buying power.
- Contact a real estate professional familiar with military finances to get personalized advice.
- Revisit your LES today and start budgeting with clarity
