» 12 Month Occupancy
» Home Loans and Refinancing
» Policing Conditions Of Scheme
» Tax and Financial Implications Advice
» Transferring Between Permanent and Reserve Forces
» Breaks In Service
» Previous Defence Home Loan Schemes
» Subsidy Tiers
» Applying Tier Values To Your Home Loan
» Calculating Subsidised Loan Limits And Subsidies
» Timing of Subsidy Payments
» Lump Sum
» Length Of Entitlement
» Application by Eligible Partners
» Separation from the ADF
Conditions of Scheme
12 Month Occupancy
Q: I bought and occupied a home for 12 months prior to coming to this current post. Therefore, I believe I have met the 12 month occupancy rule and would like to know if I can access DHOAS for the home in my previous location?
A: No. The legislation states you can only receive DHOAS if you occupy the home that is subject to the DHOAS subsidy for 12 months from the time you start receiving your DHOAS payment.
Q: I would like to buy a home, or refinance an existing mortgage, then start accessing DHOAS. However, I may be posted within the next 12 months. Can I proceed?
A: If you have received your posting order and you know you will be relocating within the year then you cannot access DHOAS (except in some circumstances - please refer to the Defence Signal above).
The reason is that you know it will not be possible to comply with the conditions of the legislation.
The legislation states you are required to occupy the home for 12 months from the time you start receiving the DHOAS subsidy.
If you receive a posting order after taking out a DHOAS loan in good faith that you would have stayed for 12 months, then your DHOAS subsidy assistance can continue even though you've relocated.
Q: I live in Darwin but I own a home in Brisbane. I'm returning to Brisbane in six months time, and will reoccupy my home. Can I refinance and start accessing DHOAS now?
A: No. The legislation states you can only receive DHOAS if you occupy the home for 12 months from the time you start receiving your DHOAS subsidy.
Your home loan provider may allow you to refinance with their DHOAS home loan product now, however your subsidy payments will not commence until you have moved into the property.
Home Loans and Refinancing
Q: If I take out a $300,000 DHOAS loan, then deposit a lump sum of $100,000 or make extra payments into the loan to the value of $100,000, can I redraw the $100,000 and use it to buy a car or investment property?
A: Yes. Extra deposits you make above your minimum mortgage repayments, regardless of how much your DHOAS subsidy payments contribute to your loan, are yours to withdraw and use at your discretion.
Q: I currently own a home worth $400,000 and have a $100,000 mortgage. When I refinance with a DHOAS Home Loan Provider, I want to borrow more than $100,000 so I can receive a higher DHOAS subsidy. I intend to use the extra funds I borrow to make a lump sum deposit back into my DHOAS home loan, or use them for other purposes such as buying a car or investment property. Can I do this?
A: No. You will not be complying with the DHOAS legislation if you proceed with this arrangement.
The legislation states that DHOAS home loans can only be used for buying or building a home, buying land or renovating and extending your home, or to refinance a loan for one of these purposes.
DHOAS Home Loan Providers can only provide you with a DHOAS home loan that is greater than your existing mortgage if you are going to use the extra funds for extending or renovating your home.
The funds cannot be used to deposit back into your DHOAS home loan nor can they be used for other purposes such as investment properties, cars, boats or holidays.
Q: I would like to sell my house and buy a new one. How will this affect my subsidy?
A: If you have lived in the current house for 12 months or more you can transfer your subsidy entitlement to a new house by submitting a new application for a subsidy certificate.
Q: Who can I buy a house with?
A: Anyone, as long as you (or you and your partner) have 50% or more interest in the property
Q: If I buy a house with a non service member what effect will it have on my subsidy payment?
It will not have any effect on your subsidy amount as long you own 50% or more of the property.
If your mortgage is in separate loans (split) only your loan amount will be used to calculate your monthly subsidy payment.
Q: If I am separating from my spouse will this effect the subsidy payments?
A: It depends on whether you are moving out of the property. If you (and your family) move out in less than 12 months from drawdown of the loan your payments on that property will stop
Or, if ownership of the home goes to your wife, and you stop owning 50% or more interest in the house payment will stop on that property.
Policing Conditions of Scheme
Q: Who is policing the conditions of the Scheme?
A: Defence has responsibility for policing the conditions of the Scheme, and has established processes - including working with DVA and the Home Loan Providers - to ensure members comply with the legislation.
Remember it is your responsibility to ensure you understand and comply with the conditions of receiving DHOAS.
Q: What are the consequences of not complying with the conditions?
A: Possible consequences include:
- Cessation of subsidy payments
- Repayment of subsidy payments received, including from the sale of the property or an increase in the home loan
- Prevention from future access to the Scheme
- Disciplinary action or criminal prosecution
Q: How can I be sure I know what conditions apply to accessing DHOAS?
A: When you receive your Subsidy Certificate you are also sent a fact sheet called "About Your Subsidy". Your letter of approval advises to ensure you read this fact sheet.
It is important that you review the information carefully to understand the conditions of accessing DHOAS. There is also further information available on this website, under "What is DHOAS? Key Details".
Tax and Financial Implications Advice
Q: What are the tax implications of accessing DHOAS?
A: Defence will be liable for the payment of Fringe Benefits Tax (FBT) on subsidy payments to ADF members. However, as the DHOAS subsidy is an FBT reportable item, it will appear on your payment summary each financial year.
You will need to seek independent financial advice on the impact of this. We are unable to give you any other advice on taxation, and suggest you see your tax adviser or accountant.
Q: In addition to my own home, I own investment properties. Should I establish a larger mortgage over my own home so I can access higher DHOAS benefits or should I owe more on my investments to attract tax breaks?
A: DVA cannot provide any financial advice. If you are uncertain of the implications of taking out a DHOAS home loan and accessing the subsidy assistance, we would encourage you to seek independent financial advice.
Transfering Between Permanent and Reserve Forces
Q: What happens if I transfer from the Permanent ADF to the Reserves?
A: A transfer from the Permanent ADF to the Reserves will only be relevant to your DHOAS eligibility if you are still completing your qualifying period. That is, four years continuous service in the Permanent ADF or eight years continuous effective service in the Reserves.
Any time you've completed in the Permanent ADF will be doubled if you're counting the service towards the eight year Reserve qualifying period.
For example, if you have completed three years permanent service and then transferred to the Reserves, your completed effective service will be six years (towards your eight year qualifying period as a Reserve).
If you have passed your qualifying period then there is no effect, as after the qualifying period your service accrues at the same rate regardless of whether undertaking Permanent or Reserve service.
Q: What happens if I transfer between reserves and permanent?
A: Any time you've completed in the Reserves will be halved if you're counting the service towards the four year Permanent qualifying period for DHOAS.
For example, if you've completed seven years effective continuous Reserve service then transferred to the Permanent force, your completed effective service will be 3.5 years (towards your four year qualifying period).
If you have passed your qualifying period then there is no effect, as after the qualifying period your service accrues at the same rate regardless of whether undertaking Permanent or Reserve service.
Breaks In Service
Q: I've had a break in service and then rejoined the ADF. Will this affect my eligibility and entitlement to DHOAS?
A: Yes, a break in service can impact on your eligibility and entitlement to DHOAS. Please refer to Service Variables, Rejoining the ADF after a Break.
Previous Defence Home Loans Schemes
Q: If I am eligible for more than one scheme can I access more than one?
A: No, not at the same time. You must choose one scheme.
Q: If I have previously accessed DSHL or DHOS how will this effect me?
A: The legislation states that the length of time you have received a subsidy under a previous scheme will be deducted from the length of time you can receive assistance under the new scheme.
It will not impact on your eligible subsidy tier or on the amount of subsidy you receive, but on the length of time you can receive the DHOAS subsidy payments.
For example, you have completed 10 years of Permanent ADF service. If you subtract your four year qualifying period, you are left with six years of accrued subsidy entitlement under DHOAS.
You have received assistance from DHOS for five years, before switching to DHOAS.
This five year period of assistance from DHOS needs to be subtracted from your DHOAS entitlement of six years. This reduces your accrued subsidy period to one year.
Your previous assistance under DHOS will not affect your Subsidy Tier eligibility.
In this instance, because you have completed a total of 10 years of Permanent ADF service, you will receive your DHOAS benefits at the Tier 2 level (8 to 12 years of service).
When you have completed 12 years, you will become entitled to Tier 3 benefits (12+ years of service). The same principal applies for Reservists.
Please note: the maximum period of time you can receive assistance under the new Scheme is 20 years if you have not completed warlike service and up to 25 years if you have completed warlike service.
Therefore, if the period of time you've received help from one of the old schemes (DHOS or DSHL) exceeds your maximum entitlement to DHOAS of 20 or 25 years, then you will be unable to receive assistance under the new scheme (even if you continue serving in the ADF).
Subsidy Tiers
Q: What are the Subsidy Tiers?
A: There are three subsidy tiers. Each tier has a different Subsidised Loan Limit and monthly subsidy amounts. The tier values get higher as the tiers get higher.
You can access these higher benefits once you've completed certain service milestones.
This is to provide an incentive to members to remain in the ADF, in line with the Scheme's retention goals.
Table of Subsidy Tiers for 2010-11. These values apply to DHOAS assistance which commences after 1 July 2010. If your DHOAS assistance commenced prior to 1 July 2010, see 2009-10 Subsidy Tiers and if it commenced prior to 1 July 2009 see 2008-09 Subsidy Tiers.
| Tier Level | Maximum Loan Limit | Maximum Monthly Subsidy |
| Tier 1 | $197,773 | Up to $281 |
| Tier 2 | $296,659 | Up to $422 |
| Tier 3 | $395,546 | Up to $562 |
- Maximum Monthly Subsidy values are valid as at August 2010. The monthly subsidy payments fluctuate in line with interest rate changes.
Q: How do I work out my Tier level?
Your Tier level is based on the total number of years you have served (service milestones), as the table below shows.
Please note: every year of service you have completed counts towards your tier level. That is, you do not need to substract your DHOAS qualifying period from your years of service (ie four years for Permanent members, eight years for Reserve members.)
| Service Milestones | Eligibility |
| Permanent Members must complete at least: | 4 years to be eligible for Tier 1 8 years to be eligible for Tier 2 12 years to be eligible for Tier 3 |
| Reserve Members must complete at least*: | 8 years to be eligible for Tier 1 12 years to be eligible for Tier 2 16 years to be eligible for Tier 3 |
Applying Tier values to your DHOAS home Loan
Q: What happens if my home loan amount is more than the subsidised loan limit for my Tier?
A: You will receive the maximum subsidy amount that is relevant to your Tier, because the subsidised loan limit is the maximum amount that a subsidy can be calculated on. For 2010-11, they are:
Subsidy tier | Minimum Permanent service | Minimum Reserve service | Subsidised loan limit | Maximum monthly subsidy |
| 1 | 4 years | 8 years | $197,773 | Up to $281 |
| 2 | 8 years | 12 years | $296,659 | Up to $422 |
| 3 | 12 years | 16 years | $395,546 | Up to $562 |
- These values are based on the median interest rate that is valid as at August 2010. If the median interest rate reduces so too will your subsidy amount.
Q: What happens if my home loan is less than the subsidised loan limit in my Tier?
A: The monthly subsidy value will be manually calculated. The calculation is based on 37.5% of the interest incurred on your home loan amount over a 25 year period (irrespective of the period of your loan).
The actual interest rate of your home loan is not used. Instead, all DHOAS subsidies are calculated the same way using the same median interest rate.
The rate used is the median of Australian home lenders' interest rates (information is provided by CANNEX).
Q: Do my subsidy payments get recalculated as my home loan is reduced (and drops below the loan limit)?
A: No, the subsidised loan limit in your eligible tier and your loan balance at the time you received your first subsidy payment is used to determine your monthly payment value for the duration of your DHOAS assistance on that home loan, as long as you don't stop then restart the subsidy. In that case, your tier's subsidised loan limit and your home loan balance that are current at the time you restart your DHOAS subsidy will apply.
Once you have established your home loan and you're already in receipt of the DHOAS subsidy, changes to the subsidised loan limits or your home balance (such as from making a lump sum payment or additional repayments) will not impact on your monthly subsidy payments.
Subsidy tier
| Minimum Permanent service | Minimum Reserve service | Subsidised loan limit | Maximum monthly subsidy |
1 | 4 years | 8 years | $197,773 | Up to $281 |
2 | 8 years | 12 years | $296,659 | Up to $422 |
3 | 12 years | 16 years | $395,546 | Up to $562 |
** This table refers to 2010-11 Subsidy Tier values, applicable to DHOAS assistance which commences from or after July 2010. Subsidy values will fluctuate in line with changes in interest rates.
Q: How are the subsidised loan limits calculated?
A: The loan limit for each Tier is a percentage of the average house price (AHP), which is calculated by the Bureau of Statistics. As at 1 July 2010, the average house price is $494,432.
This determines the subsidised loan limits under each tier, as set out below:
40% of the AHP which is $197,773 (Tier 1 loan limit)
60% of the AHP which is $296,659 (Tier 2 loan limit)
80% of the AHP which is $395,546 (Tier 3 loan limit)
These subsidised loan limits are reviewed annually at the beginning of the financial year, based on any movements in the average house price. This ensures they remain relevant to the contemporary house market.
Q: Will my subsidy payments be re-assessed when the subsidised loan limits are adjusted annually?
A: No. The subsidised loan limits that were valid at the time you first accessed DHOAS on your home loan will apply as long as you receive a subsidy on that particular loan.
Therefore, if you are already in receipt of DHOAS subsidy payments, and the tier values change, the change in values will not apply to your subsidy payment calculation.
This is because the loan balance used to calculate your monthly subsidy amount is fixed from the beginning, and hence so are the Tier loan limit values.
This applies unless you stop your current DHOAS payments and then restart them at a later date. The new Subsidised Loan Limits will apply to your DHOAS assistance from the time your DHOAS payments are re-commenced.
Q: How are the monthly subsidy amounts calculated?
A: The monthly subsidy amounts are based on 37.5% of the interest incurred on the eligible subsidised loan amount over a 25 year period (irrespective of the period of your actual loan).
Therefore, DHOAS assistance is actually a subsidy on the costs of interest on a home loan.
The actual interest rate of your specific home loan is not used to calculate the subsidy. Instead, all DHOAS subsidies are calculated using Australia's current median interest rate.
The rate used is the current median of Australian home lenders' interest rates (information is provided by CANNEX).
This median interest rate will fluctuate with changes to Australian home loan interest rates. Therefore, your subsidy payments, which are calculated using this median interest rate, will also fluctuate.
For the purpose of determining the maximum subsidy amounts payable on the subsidised loan limits, the median interest rate used for DHOAS is capped at 8.95%.
Q: How do changes in the interest rate affect my payment?
A: It will only affect your payment if the median interest rate falls below the Scheme's capped interest rate of 8.95%.
If interest rates remain above the capped rate of 8.95% your monthly payment amount will not change. You will continue to receive the maximum subsidy payment in your eligible tier.
Where rates falls below the capped interest rate of 8.95% then the median interest rate will be used to calculate your subsidy amount.
Therefore, if interest rates goes down, then your monthly payment amount will go down accordingly. If interest rates then go up, your monthly payment will increase again (up to the capped amount).
Q: How is the "median interest rate" determined?
A: The "median interest rate" used to calculate your DHOAS subsidy is based on information provided by CANNEX. It is the median of interest rates used by Australian home lenders.
Q: When will the capped interest rate of 8.95% be reviewed?
A: The capped interest rate of 8.95% is contained in the DHOAS legislation, and will be reviewed if it's considered necessary to ensure the Scheme remains effective in the contemporary housing market.
Defence will be monitoring the progress of the Scheme and the appropriateness of the capped interest rate of 8.95% on the subsidy assistance provided to members.
Timing of Subsidy Payments
Q: When will I receive my first subsidy payment?
A: The payment of your first subsidy (or the lump sum) is not payable at the time of settlement.
Your DHOAS subsidy payments will commence after your Home Loan Provider advises DVA that you have drawn down your loan and we can start processing the payment.
Payments are made at the start of each month, and cover the month prior.
For example, if you draw down your loan in August, you will receive your first subsidy payment in early October. This will be for the month of September. DVA will send you a letter informing you of the subsidy arrangements.
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Lump Sum
Q: Who is eligible for a lump sum payment?
A: To be eligible to receive the lump sum payment, you must first complete the qualifying period for DHOAS (Permanent = 4 years, Reserves = 8 years).
Then, in addition to the qualifying period, you need to also accrue entitlement to DHOAS, which can be converted into a lump sum. You must also retain sufficient service credit to support on-going monthly DHOAS subsidy payments.
Permanent members accrue entitlement monthly. That means for every month of service you complete after the four year qualifying period, you accrue one month of entitlement to DHOAS.
Reserve members accrue entitlement per financial year. That means after you've completed the eight year qualifying period, you need to complete at least 20 days of Reserve service within the financial year to accrue one year of entitlement to DHOAS.
When you have accrued entitlement you can apply to convert it into a lump sum. For example, if you've accrued 12 months of entitlement (plus extra for ongoing monthly payments), you can convert this into a lump sum that is equivalent to 12 monthly subsidy payments.
You can convert up to a maximum of four years entitlement (48 months) into a lump sum payment.
The lump sum amount is calculated using the Tier 1 maximum subsidy amount, even if your eligible under a higher Tier. Therefore if you convert four years of entitlement, you will receive the equivalent of 48 payments at the maximum Tier 1 subsidy payment.
Because your lump sum is a payment of entitlement you've already accrued (for past service), you also receive your monthly DHOAS subsidy as long as you have a remaining Service Credit.
It does not impact on your eligible subsidy tier level nor does it reduce the amount of your monthly subsidy payments.
Your monthly subsidy payments will be paid at your eligible tier (which is determined by the total number of years you've been in the ADF).
Please note the lump sum is not paid before or on settlement of your property, and cannot be used as a deposit to purchase your house.
The lump sum, along with your first subsidy payment, is paid into your DHOAS home loan after it has been drawn down. Payments are made at the start of the month, for the month prior. For example, if you draw down your loan in August, you will receive your lump sum and first subsidy payment in October.
You will receive your monthly subsidy payments (on an eligible home loan) for as long as you remain in the ADF (up to a maximum of 20 years, or up to 25 years if you've completed war-like service).
You can also continue to receive DHOAS assistance after you separate from the ADF for as long as you have a Service Credit (up to a maximum of 20 or 25 years).
Q: Are there any conditions to the Lump Sum payment?
A: There are a number of conditions that must be satisfied for members to receive the lump sum. They include:
- You must retain sufficient service credit to support on-going monthly DHOAS subsidy payments.
- You must not have previously owned a home, either to live in or as an investment, whilst you've been in the ADF.
- There is a reasonable expectation you will continue to serve in the ADF for another 12 months.
- You (and/or your family) need to live in the home for at least 12 months from the time you access the lump sum.
- The lump sum will be paid into your DHOAS home loan, at the same time you receive your first DHOAS monthly subsidy payment.
- You can access the lump sum payment only once.
- You have not previously accessed DHOAS
Length of Entitlement
Q: I have done warlike service. Will this have an effect on my entitlement?
A: It will add additional years to your accrued subsidy period, as shown in the table below.
You can accrue up to a maximum of 20 years entitlement to DHOAS if you have not completed warlike service and up to 25 years entitlement if you have completed warlike service.
| Period, or total of the periods, or War Like Service performed | Additional years of Subsidy Assistance |
| Not more than 3 months | 2 years |
| More than 3 but not more than 6 months | 3 years |
| More than 6 but not more than 9 months | 4 years |
| More than 9 months | 5 years |
Application by Eligible Partners
Q: My partner is eligible can we both apply for subsidy certificates?
A: Yes. You must both submit separate applications.
Q: My partner and I are both ADF members eligible for DHOAS, and we're going to buy a home together. What is our combined DHOAS subsidy assistance?
Both eligible partners can access the DHOAS jointly on a single home loan, or separately.
The benefit is that as partners you can combine your subsidised loan limits so that more of your home loan attracts a DHOAS subsidy.
DVA advises you to seek independent financial advice to determine the best approach for your personal circumstances.
Depending on the size of your shared home loan, you need to consider whether you both access your subsidies on the one home loan.
If your home loan is very large and you can both receive substantial subsidies, you may consider pooling your entitlement.
If your home loan is quite small and you would each be expending your subsidy entitlement period receiving only small subsidies, you may wish to consider that only one of you accesses your entitlement and you save the other one for another loan in the future (understanding you need to meet the 12 month occupancy requirement).
Please note: if you delay accessing your entitlement and you separate from the ADF before you complete 20 years of service, your accrued entitlement will be paid at the Tier 1 level. This will occur even if you have been receiving the DHOAS subsidy at a higher level before you separated.
Separation from the ADF
Q: If I discharge, what happens?
If you have accrued entitlement to DHOAS when you leave the ADF, you will be able to receive DHOAS assistance for the period of your accrued entitlement, subsequent to separation.
However, the amount of the subsidy will depend on the length of service you have provided prior to separating.
If you have served less than 20 years, the subsidy will be payable at the Tier 1 level for the period of the remaining Service Credit.
If you have served for more than 20 years, the subsidy will be payable at the Tier 3 level for the period of the remaining Service Credit.
Q: When do I have to apply for DHOAS after I separate?
A: You can access only one Subsidy Certificate after you separate, which is valid for 12 months. You must apply for this certificate within two years after you separate or you will forfeit your entitlement (if you do not return to the ADF).
Q: I have been dishonourably discharged. Does this affect me?
A: It does not affect your eligibility or entitlement to DHOAS.
Q: If I pass away what happens to my subsidy?
A: Your entitlement passes to your surviving partner, as long as they continue to own 50% or greater interest in the subsidised property.
If you have already accessed your subsidy assistance then the subsidy payment will continue if the property is in joint ownership with your partner.
If you were not already in receipt of subsidy assistance then your surviving partner has up to two years from the date of discharge or date of death (whichever is earlier), to access the entitlement.
Your death does not have to be service related or during service for this to occur.