How subsidies are calculated
Subsidised loan limits
The subsidised loan limit is the maximum portion of the amount you borrow which will attract a DHOAS subsidy.
The Average House Price (AHP) is used as the primary index to calculate the subsidised loan limits under the three tiers.
As at 1 July 2011, the AHP was $508,098. This figure is used to determine the 2011-12 Subsidy Tier values.
- For Tier 1, the subsidised loan limit is 40% of the Average House Price
- For Tier 2, it is 60% of the Average House Price
- For Tier 3, it is 80% of the Average House Price
As required under the DHOAS Act, the subsidised loan limits are reviewed annually based on any changes to the AHP. The AHP is determined as at 1 July of each year and remains in force to 30 June of the following year.
Calculation of the AHP is based on information obtained from the Australian Bureau of Statistics (ABS).
A change in the AHP results in a change in the maximum monthly subsidy values (but does not impact on existing DHOAS subsidy recipients - see below).
Average Housing Price Changes
The AHP as at 1 July 2011 was $508,098. This figure is used to determine the 2011-12 subsidy tier values.
The AHP as at 1 July 2010 was $494,432. This figure was used to determine the 2010-11 subsidy tier values.
The AHP as at 1 July 2009 was $429,073.
The AHP as at 1 July 2008 was $467,897.
Annual review of subsidised loan limits
Whereas the subsidised loan limits are reviewed annually, based on changes to the Average House Price, this does not affect your subsidy assistance if your DHOAS home loan is already established and you are in receipt of subsidy payments.
The reason for this is that while the value of the house that you are buying may increase or decrease, the principal value of your loan will not.
Changes to the loan limits do not affect your subsidy assistance if your DHOAS home loan is already established and you are 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 determining your DHOAS subsidy payments.
This applies unless you stop then restart your DHOAS subsidy 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 drawdown 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.
The subsidised loan limits for 2011-12 are used to calculate your DHOAS subsidy if your first payment period is from or after 1 July 2011. They do not apply to subsidies that were first paid in July 2011 but covered the payment periods of May or June 2011. In this case, your subsidy is calculated on 2010-11 Subsidy Tiers.
Calculating monthly subsidy values
Median Interest Rate
DHOAS assistance is a subsidy on the interest expenses incurred on a mortgage.
A DHOAS subsidy represents 37.5% of the median interest expense incurred on the subsidised portion of your DHOAS home loan, repayable over 25 years (regardless of how long your actual home loan period is).
The basis used to calculate the interest incurred on the loan is the median interest rate of Owner Occupied Standard Variable Home Loans available from major home loan providers, as advised by CANNEX (AUST) Pty Ltd.
The median interest rate used for calculating DHOAS subsidy values is capped at 8.95%.
Given the median interest rate can fluctuate, in line with changes to the interest rates of Australian lenders, your monthly DHOAS subsidy payment amounts can also fluctuate.
This means your monthly subsidy payments can go down if interest rates decrease, and they can go up if interest rates increase (only 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 have been drawn down.
Table: Subsidised Loan Limits and Subsidy Tier Values - Based on Current AHP
| Subsidy tier | % of AHP (currently $508,098) | Maximum loan limit* | Maximum subsidy value = 37.5% of interest expense on a loan equal to the subsidised loan limit, over 25 years |
| Tier 1 | 40% | =$203,239 | =$277 |
| Tier 2 | 60% | =$304,859 | =$416 |
| Tier 3 | 80% | =$406,478 | =$554 |
- This table shows the 2011-12 Subsidised Loan Limits. Your new subsidy will be calculated on these subsidised loan limits if your DHOAS assistance commenced from or after July 2011. If your DHOAS subsidy started before 1 July 2011, see 2010-11 Subsidy Tiers, before 1 July 2010 see 2009-10 Subsidy Tiers..
- Monthly subsidy values shown here are calculated on the January 2012 median interest rate. These monthly subsidy values may change based on fluctuations in interest rates.
Monthly subsidy values
DVA reviews the median interest rate used to calculate the DHOAS subsidies on the 10th last business day of each month.
If the rate changes, the subsidy payment deposited into your DHOAS home loan the following month will change.
You can calculate the median rate yourself by reviewing the list of standard variable home loan interest rates listed at www.cannex.com.au and identifying the media interest rate.
This can be done with the Excel formula 'Median', or by listing the rates from the lowest to the highest and selecting the interest rate positioned in the middle.
$80,000 Subsidised Loan Limit
If you are a DHOS-entitled member who met the exceptional circumstances criteria as a DHOS-entitled member, your subsidy is calculated in the same way but based on an $80,000 subsidised loan limit. As at January 2012, the maximum monthly subsidy payment on $80,000 is $109.17