2027 Military Pay Raise: President Sets 7-6-5 Plan, but Senate Bill Would Make It 3.6%
As of October 24, 2026, the President's plan says a 7%, 6% or 5% raise by grade takes effect January 1, 2027; Congress could still enact a different figure.
7-6-5
Raise by grade in the President's plan (E1–E5 / E6–O3 / O4 and up)
3.6%
Flat raise S. 4784 would set instead, if enacted
Jan 1, 2027
When the 2027 raise takes effect
Where it stands
Jun 15, 2026
Senate Armed Services reports S. 4784 with a 3.6% raise
Jul 22, 2026
House passes H.R. 8800 by 216-212
Aug 26, 2026
President sends a 1009(e) alternative pay plan to Congress
Oct 24, 2026Now
No FY2027 NDAA enacted; H.R. 8800 waits in the Senate
Jan 1, 2027
The 2027 basic pay raise takes effect
What happened
On August 26, 2026, the President sent Congress an alternative pay plan under 37 U.S.C. 1009(e). It sets the 2027 monthly basic pay increase for the Armed Forces at 7.0 percent for grades E1 to E5, 6.0 percent for grades E6 to O3 and 5.0 percent for grades O4 and above, subject to the pay caps in 37 U.S.C. 203. The letter says the adjustments shall take effect on January 1, 2027. The Congressional Research Service puts the automatic formula raise for 2027 at 3.6%.
Where it stands
Congress could still set a different number. S. 4784, the Senate Armed Services Committee's defense bill reported June 15, 2026, would waive the section 1009 adjustment and raise basic pay 3.6% on January 1, 2027. It has not passed the Senate. The House passed its bill, H.R. 8800, by 216-212 on July 22, 2026; that text contains no section setting a basic pay rate. As of October 24, 2026, neither bill has had any action after September 14, and no FY2027 NDAA has been enacted.
Who it affects
Active-duty service members buying or refinancing with a VA loan.
What it could mean for a home loan
For an active-duty borrower, VA's rules require a Leave and Earnings Statement (LES) in place of an employment verification, and count only income expected to continue. A housing allowance can count as continuing income with your commanding officer's written authorization for off-base housing. Your pay and allowances feed both your debt-to-income ratio and residual income, and today's LES shows 2026 pay.
What to do now
Run your numbers on the pay in your current LES. If you are near the line on residual income, ask your lender whether and when it would use 2027 pay figures. Our active-duty VA loan guide covers how lenders read your LES and BAH.
✦ Ask about this dispatch
What does this mean for you?
Answers come only from this dispatch and our guides, with sources you can check.
Primary sources
- 1GovInfo: House Document 119-189, the President's alternative plan for pay adjustments (August 26, 2026)
- 2Congress.gov: S. 4784, FY2027 National Defense Authorization Act (Senate), actions and text
- 3GovInfo: S. 4784 as reported to the Senate, Sec. 602 (Fiscal year 2027 increase in military basic pay)
- 4Congress.gov: H.R. 8800, FY2027 National Defense Authorization Act (House), actions and text
- 5Congressional Research Service: FY2027 NDAA: Military Basic Pay Raise Proposal (IN12706, July 14, 2026)
- 637 U.S.C. 1009: Adjustments of monthly basic pay
- 738 CFR 36.4340: Underwriting standards, processing procedures, lender responsibility, and lender certification
What does this change for you?
A VA-experienced specialist can tell you in one conversation. No SSN. No credit pull.