» Overview
» Length of Service and Your Subsidy Tier
» Subsidised Loan Limits and Your Subsidy Amount
» Fluctuations in Monthly Subsidy Amounts
» Moving Up a Tier
» Timing of Subsidy Payments
» Home loan closure and final subsidy payment
» Impact of Separation on Your Subsidy Payment
» ALERT for Reserves: Effective Service Requirements
Your subsidy assistance
The amount of your monthly DHOAS subsidy is determined by the following factors:
- Your length of ADF service, which determines your eligible subsidy tier and subsidised loan limit.
- How much you borrow on a DHOAS home loan up to your subsidised loan limit, and the amount of your home loan balance at the time your first subsidy payment is calculated.
- If you are separated, how many years of service you completed before separating.
- Special conditions apply to DHOAS home loans taken out by partners who are both DHOAS-eligible or to multi-party loans where only one party is eligible for DHOAS.
Factors which can impact on the length of your subsidy assistance are:
- Previous years of access to the Defence Home Ownership Scheme or Defence Service Homes must be subtracted from your DHOAS entitlement.
- Extended breaks in service can impact on your eligibility and entitlement to DHOAS.
- Warlike service can extend your entitlement.
Factors which can result in changes to your monthly subsidy amount:
- Fluctuations in the median interest rate used to calculate your subsidy will result in changes in the amount of your monthly subsidy payments.
- Subsidised loan limits are reviewed annually, but any changes to the loan limits will only apply to new DHOAS payments.
- If for any reason your DHOAS subsidy payments cease, and then you receive a new subsidy certificate and your payments are restarted, the subsidised loan limits valid at the time your payments recommence will apply, as well as your current home loan balance.
Conditions or Change in Circumstances that can impact on your DHOAS subsidy payments:
- There are a range of conditions which must be met for you to start and continue receiving your DHOAS subsidy payments.
- There are number of events that could result in your payments being changed or ceased (see Change in Circumstances and Subsidy Ceasing Events).
If your payments are stopped then restarted:
- If for any reason your current DHOAS subsidy payments are ceased, and you need to reapply for another subsidy certificate to restart the payments, there are a range of factors that could impact on your eligibility and entitlement, and on the amount of your monthly subsidy payments.
- Your eligibility and entitlement is assessed on the current status of the DHOAS Act, policy, subsidised loan limits, subsidy values and of your ADF service that is valid at the time you apply for a new subsidy certificate, and when your subsidy payments restart.
- You are advised to contact DHOAS and discuss your plans before you make changes to the status of your DHOAS home loan that could impact on your DHOAS subsidy payments.
IMPORTANT NOTE
Your eligibility and entitlement to DHOAS can change significantly if your circumstances change. For example, if you separate from the ADF; your once-only, post-separation subsidy certificate expires after 12 months; or you do not complete effective service as a Reservist.
If you sought information about DHOAS some time ago and were advised at that time you were eligible for DHOAS or had a certain level of entitlement, please do not assume this advice remains valid if your circumstances have changed.
You are urged to speak again with a DHOAS assistant or to re-check this website to ensure your understanding of your eligibility and entitlement remains correct.
Length of service and your subsidy tier
You are eligible under one of three subsidy tiers. As you reach certain service milestones you move into a higher subsidy tier.
For Permanent members the minimum years of service for the three subsidy tiers are 4, 8 and 12 years of service. For Reservists it is 8, 12 and 16 years of service.
The higher your eligible tier, the greater your benefits under DHOAS.
These service milestones are based on the total number of years you have served in the ADF.
In this instance, you do not subtract your qualifying period for DHOAS: four years of consecutive service for Permanent members and eight years of effective service for Reservists.
For example, if you joined in 2000 and have served continuously in the Permanent ADF since then, you have completed eight years of service and you are eligible under Tier 2.
For example, if you joined the Reserves in 1992 and you have completed 16 years of service, you are eligible under Tier 3.
Table of service milestones and subsidy tiers: 2011-12
Subsidy tier | Minimum Permanent service | Minimum Reserve service | Subsidised loan limit | Maximum monthly subsidy |
| 1 | 4 years | 8 years | $203,239 | Up to $277 |
| 2 | 8 years | 12 years | $304,859 | Up to $416 |
| 3 | 12 years | 16 years | $406,478 | Up to $554 |
- This table shows the 2011-12 Subsidised Loan Limits. Your new subsidy will be calculated on these subsidised loan limits if your first payment period starts from or after July 2011. If your DHOAS assistance commenced before 1 July 2011, see 2010-11 Subsidy Tiers or before 1 July 2010, see 2009-10 Subsidy Tiers.
- Monthly subsidy values shown here are based on the current median interest rate, valid as at January 2012. These monthly subsidy values may change based on fluctuations in interest rates.
Your subsidised loan limit and subsidy payment
Your eligible tier determines your subsidised loan limit, which is the portion of your home loan that will attract a DHOAS subsidy.
Your monthly subsidy payment will depend on the amount you borrow up to your subsidised loan limit and the balance of your home loan at the time your first subsidy payment is calculated.
If you borrow an amount that is equal to or greater than the subsidised loan limit in your eligible tier, then you will be entitled to payment of your tier's maximum monthly subsidy.
For example, if you're eligible under Tier 2 and you borrow equal to or more than $304,859 (which is your maximum subsidised loan limit) you will receive the maximum subsidy payable of $416 per month (as at January 2012).
This is because the maximum monthly subsidy is calculated on the maximum subsidised loan limit, in each tier. In your case, this is $304,859.
If you borrow an amount that is less than your eligible loan limit then you will receive a subsidy that is calculated on the full amount of your loan. Your subsidy will be less than the maximum monthly subsidy payable, although it will represent a comparable proportion.
For example, if you are eligible under Tier 2 and you borrow $250,000, you will not receive the maximum payment in your tier level of $416. You would receive $341. This is the maximum subsidy payable on $250,000 (as at January 2012).
Please note: New subsidy payments are based on the subsidised loan limits that are valid at the time your DHOAS assistance commences.
If you are yet to start receiving DHOAS assistance, your subsidy payments will be calculated on the 2011-12 subsidised loan limits. You subsidy payments are calculated on the subsidised loan limits for the relevant financial year.
For example, if your DHOAS assistance started prior to 1 July 2011 (even if you received your first payment in July for the months of May and/or June), your subsidy payments are calculated on 2011-12 Subsidy Tiers and if it commenced prior to 1 July 2010, your subsidy payments are calculated on 2010-11 Subsidy Tiers.
**Please note: Your monthly subsidy payment will be calculated on the balance of your DHOAS home loan at the time of your first subsidy payment, not at the time you drew down your loan (even if you drew it down only a day or week or month earlier). You need to be mindful of this if you draw down your loan and then change your balance in any way before you receive your first subsidy payment. If you have drawndown a loan amount (eg $400,000) and then reduced this balance (eg down to $200,000) before your first subsidy payment commences, you will receive a subsidy payment that is calculated on the reduced loan balance.
Lump Sum
If you have have sufficient service credit, you may be entitled to convert up to four years of available entitlement into a lump sum. For further information, please see: Lump Sum Payment.
Payments for eligible partners and multi-party loans
Special arrangements are made for the payment of monthly subsidies on joint loans taken out by partners who are both DHOAS-eligible, and on loans that eligible members take out with other non-eligible parties. For further information, please see Payments on Eligible Partner and Mutli-Party Loans.
Fluctuations in monthly subsidy amounts
Your monthly payments will fluctuate in line with changes to the median interest rate used to calculate your subsidy (see How Subsidies are Calculated).
The median interest rate can change in line with changes in home lending interest rates - up to the capped rate of 8.95%.
This means if interest rates go up or down, your monthly subsidy will go up or down.
A decrease in the median interest rate results in a reduction in the maximum monthly subsidy values, and in the payments made into members' DHOAS home loans.
If interest rates go up again, so too will your subsidy payment - but the interest rate used can only go up to the capped rate of 8.95%.
Interest rates are NOT capped at the rate they are when you take out your loan. The median interest rate is capped at 8.95% for all DHOAS home loans, regardless of when they've been drawn down.
For a history of median interest rate fluctuations and changes to subsidy values since the Scheme commenced, please see: Table of Median Interest Rates and Subsidy Values since July 2008.
Annual review of Subsidised Loan Limits
Subsidised Loan Limits are reviewed at the end of each financial year, as required under the DHOAS Act, and amendments are made to the limit amounts based on changes to the Average House Price.
Changes to the loan limits do not affect your subsidy assistance if your DHOAS home loan is already established and you're currently in receipt of subsidy payments.
The reason for this is that while the value of the house that you are buying may increase, the principal value of your loan will not.
The Subsidised Loan Limits and the balance of your home loan, which are current in the month that your first subsidy payment covers, will remain applicable throughout the life of that home loan for the purpose of working out your DHOAS subsidy payments.
This applies unless you stop then restart your DHOAS assistance related to that home loan. In this case, the subsidised loan limits and home loan balance that are current at the time you restart your DHOAS subsidy payments will apply to determine your subsidy, not your original draw down loan amount or previous years' loan limits. This may result in receiving a smaller subsidy payment than you did prior to the halt in DHOAS.
Changes to your home loan balance
Even if the outstanding balance on your home loan drops below your eligible loan limit, you will continue to receive the subsidy payments based on your home loan balance at the time your received your first DHOAS payment.
If you make a lump sum payment into your account, and the balance drops below the maximum loan limit under your Tier, you will still continue to receive the subsidy payment based on your original loan amount at the time your DHOAS assistance commenced.
This continues to apply for the life of the DHOAS assistance on that home loan unless you stop then restart your DHOAS subsidy. In this case, the loan balance and subsidised loan limit that is current at the time you restart DHOAS assistance will apply in working out your DHOAS subsidy.
Eligible for higher tier
You become eligible for a higher subsidy tier once you complete key service milestones. For further information, please see: Moving Up A Tier.
Moving up a tier
Once you have completed the minimum specified number of years of ADF service, you will become entitled to receive the next higher DHOAS subsidy tier.
If you are receiving a DHOAS subsidy on a home loan the move up to a higher tier and access to subsidy payments on a higher subsidised loan limit will occur automatically when you have completed the necessary years of service.
If you have a current DHOAS loan, and are receiving a subsidy, the subsidised loan limits that were valid at the time you received your first DHOAS subsidy will be used to determine your subsidy for the duration of your DHOAS entitlement on that home loan. This is unless you stop then restart your DHOAS subsidy on that loan, in which case the subsidised loan limits (and your home loan balance) that are current at the tim you restart the subsidy will apply.
Whether or not you receive higher subsidy payments under your higher tier level will depend on the amount of your DHOAS home loan balance as at the time you received your first subsidy.
If your home loan is greater than the subsidised loan limit in your current tier, then your subsidy payments will increase when you move up to the higher tier.
If your original DHOAS loan is equal to or less than the subsidised loan limit in your current tier then moving up to a higher tier will not increase your subsidy payments. This is because you are already receiving a subsidy on the full amount of your home loan.
Example
You are a member of the Permanent ADF who has served for four years. You are entitled to receive DHOAS under Tier 1. The Tier 1 loan limit is $203,239 (2011-12 subsidised loan limit). and based on the current median interest rate, the maximum monthly subsidy under Tier 1 is $282 (as at December 2011).
You take out a home loan of $250,000. As this is over the maximum Tier 1 loan limit of $203,239, you are entitled to the monthly subsidy of $277.
After you complete another four years of Permanent service, you become entitled under Tier 2. The Tier 2 loan limit is $304,859. The maximum monthly subsidy under Tier 2 is $416 (as at January 2012). Given your home loan is $250,000 and less than the Tier 2 subsidised loan limit, you will not receive the current, maximum monthly subsidy of $416 payable under Tier 2.
However you will receive a higher subsidy. Your payment will be calculated on your $250,000 home loan, all of which is now eligible to attract a DHOAS subsidy. Your actual subsidy on the $250,000 loan will be $341 per month.
Please note: If your original home loan had been $203,239 or less, then your subsidy payment would remain at $277 or less (interest rate changes aside), even though you have become eligible under a higher tier.
This is because the benefit of moving up a tier is that your subsidised loan limit increases. This means more of your home loan can attract a subsidy.
However, if your home loan is not greater than the subsidised loan limit in your current tier, then it cannot attract a higher subsidy payment in a higher tier.
Timing of subsidy payments
You will receive your first DHOAS subsidy after your Home Loan Provider advises DVA that you have drawn down your loan and we process your payment.
Payments are made at the start of each month and cover the month or two months prior, depending on the timing of your loan drawdown.
For example, if you draw down your loan in August, you will receive your first subsidy payment in early October. This first payment will be for September, and depending on the actual date within the month that you draw down, it may also be for August.
If you draw down your loan prior to the 10th business day before the end of the month, your first payment will cover two months of subsidy.
For example, if you draw down your loan on 15 August, you will receive your first payment on 1 October, and it will include your subsidy for August and September.
If you draw down your loan on 22 August, you will receive your first payment on 1 October, but it will include your subsidy for September only.
Please note: You will not receive your first subsidy payment (and your DHOAS lump sum if you have selected that option) at the same time you settle your house, or at the same time your first housing loan repayment is due.
For details of your final subsidy payment on a closed DHAOS home loan, please see Loan closure and final subsidy payment.
Loan closure and final subsidy payment
If you close your DHOAS home loan, your final subsidy payment for that home loan will be paid into your account if it is still open on the day of that month's subsidy run.
If your home loan is closed before the subsidy run, DVA will send the subsidy payment to your Home Loan Provider, who will deposit it into another valid account that you hold with the Provider.
If you do not have another valid account with your Home Loan Provider, the final payment will be returned to Defence and that month of entitlement will be reinstated on to your accrued subsidy period.
Impact of separation on your subsidy tier
If you separate from the ADF your eligible subsidy tier level may change, and your subsidy payments may be reduced.
If you separate before you complete 20 years of service you will be paid your DHOAS assistance at tier 1 level (even if you were entitled to a higher tier while serving).
If you complete 20 or more years of service before separating, you can continue to receive your subsidy payments at tier 3 level.
For further details about the impact of leaving the Service on your DHOAS entitlement, and on accessing and using your one-only subsidy certificate post-separation, please see Separation from the ADF.
Reserve service and unintended separation
Reservists need to be cautious that they do not assume they are recognised as serving members for the purpose of DHOAS when they may actually be deemed discharged because they have not completed 'effective' service as defined under the Scheme.
Effective service as defined by DHOAS is at least 20 days of Reserve service within a financial year. If you don't complete these days of service you will be deemed to be separated for the purpose of DHOAS, and this could impact on your monthly subsidy payments.
This requirement to complete effective service applies to all Reservists, whether you are in the Standby, High Readiness or any other Reserve-type service.
If you do not complete the minimum required service, this could impact on your DHOAS eligibility and entitlement.
Members who separate before they complete 20 years of service will be paid their DHOAS assistance at the Tier 1 level. If you complete 20 years of service before discharging, you will receive your subsidy payments at the Tier 3 level.
If you restart effective ADF service after an extended break, and apply for DHOAS (or close an existing DHOAS loan and restart assistance), you may be deemed to be a rejoining member and your eligibility and entitlement will be determined based on the rejoining provisions. For further information, see Rejoining the ADF after a break.
Reserve service and subsidy payments
Reservists should be aware that you will not accrue a year of entitlement to DHOAS until you have actually completed the 20 days of Reserve service within the financial year (required for 'effective' service to accrue DHOAS entitlement).
Therefore, if your current DHOAS service credit is expended before you can complete the required service to accrue further entitlement, your subsidy payments will cease. The subsidy will not be paid in advance of you completing the effective service, on the assumption that this will occur alter in the year.
Your subsidy payments can resume once you complete the effective service, as long as all other DHOAS conditions can be met.
Please note that you do not have to wait until the end of the financial year to accrue the entitlement, if you complete the 20 days earlier in the year then you will be granted the additional DHOAS service credit at that date. For example, if your 20th day of Reserve service within the 2011-12 year is completed by 1 September 2011, you will accrue your one year of entitlement on 1 September 2011 (not 30 June 2012).