The Australian Defence Force Home Loan Scheme

Rates and Fees verified correct on October 21st, 2016

If you are in the armed forces you may qualify for the Australian Defence Force (ADF) Home Loans scheme

The Australian Defence Force home loan

Anyone who is an eligible member of the Australian Defence Force (ADF) might have the opportunity of taking out an interest-rate subsidised home loan. Referred to as the Australian Defence Force Home Ownership Assistance Scheme (DHOAS), this programme replaced other housing schemes that were available to ADF members in 2010.

If you are a soldier in the army, an electronic warfare sailor in the navy or an air traffic officer in the air force and are stationed overseas, you are likely receiving some great benefits and allowances. However, the question is whether or not these classify as income that can be used to help you get a home loan. Please continue reading to find out.

Rates last updated October 21st, 2016
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Product nameInterest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
NAB Defence Force Home Loan - Variable Rate
A discounted home loan for any current or previous serving member of the Defence Force.
4.45% 4.58% $0 $395 p.a. 95% Go to site More info
NAB Defence Force Home Loan - 1 Year Fixed Rate
Current and former serving members of the Australian Defence Force can lock in 1 year fixed rate.
3.99% 4.54% $0 $395 p.a. 95% Go to site More info
NAB Defence Force Home Loan - 2 Year Fixed Rate
Lock in 2 years fixed with no application fee for Defence members.
3.75% 4.46% $0 $395 p.a. 95% Go to site More info
NAB Defence Force Home Loan - 3 Year Fixed Rate
Get a competitive 3 year fixed rate with the option to pay interest only repayments.
3.89% 4.44% $0 $395 p.a. 95% Go to site More info
NAB Defence Force Home Loan - 4 Year Fixed Rate
Fix your rate for 4 years and have the option to pay up $20,000 in additional repayments.
3.99% 4.43% $0 $395 p.a. 95% Go to site More info
NAB Defence Force Home Loan - 5 Year Fixed Rate
Need to plan your budget long term lock in your rate for 5 years.
4.59% 4.64% $0 $395 p.a. 95% Go to site More info

Am I eligible for a Defence Force Home Loan?

There are certain eligibility criteria you need to fulfil to be able to apply and qualify for a Defence Force home loan. You need to fulfil the following to be eligible:

  • You must have served in the ADF within the last two years;
  • You must complete a minimum qualifying period or, in certain situations, foreign service;
  • Accrue DHOAS entitlement, also referred to as Service Credit, which is done by completing effective service;
  • You must meet the other conditions the scheme imposes.

Qualifying the members

Permanent members:

If you are a permanent member, the minimum qualifying period is four consecutive years and you start accruing a minimum service credit after a month of service.

As a permanent member, you accrue service credit on a monthly basis and for every month served after the four year qualifying period, you will accrue one month of entitlement to the scheme, or a year for every calendar year you serve. The maximum is 20 years in regular circumstances, or 25 years if you served during wartime.

Reserve members:

For reserve members, things are slightly different. Firstly, you require eight years of service to qualify, where each year of service represents 20 days of paid service during one financial year. Once you’ve qualified you will accrue one year of subsidy entitlement for every financial year during which you complete 20 days of service.

However, reservists also have the option of shortening the qualifying period by serving full-time for more than a continuous six month period during one financial year. This is equivalent to two years out of your eight-year qualifying period. The continuous full-time service allowance is not applicable once the qualifying period has been completed.

What if I have taken a break?

If you take a break from the ADF for a year or more before the qualifying period is up, then you will need to restart the procedure from the moment you return, regardless of whether you are a permanent member or a reservist.

There are certain factors that can affect your eligibility for the Defence Force home loan subsidy, including switching from a permanent member to a reservist, taking a break from service and then returning, separating from the ADF as well as overseas service. This is why it is important to review your particular situation to see if there are any variables that could affect whether or not you are eligible.

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Which banks offer Defence Force home loans?

The only lenders approved to offer Defence Force home loans are the following:

Do I need a deposit for a Defence Force Home Loan?

Most lenders require a deposit equivalent to 5% of the purchase price of the property. However, you might be entitled to assistance via the Home Purchase Assistance Scheme (HPAS) and the First Home Owners Grant (FHOG). So, while you have to put down at least 5% plus the cost of stamp duty and other legal expenses on any home loan in Australia if you don’t have a guarantor, if you take advantage of these programmes, you could purchase a property for up to $340,000 in Queensland and NSW without having to use any of your own funds.

If you need to borrow the full purchase price or more, the only way you can do that is with a Guarantor No Deposit Defence Force Home Loan. In other words, you need a guarantor to borrow 100% of the purchase price or more since all no-deposit home loans were pulled from the market by lenders in 2009.

Guarantor No-Deposit Defence Force Home Loans tend to differ quite a bit from one lender to the next, but the principles are the same. In other words, you will need a guarantor, which is usually a close family member, who will sign an agreement stating they will cover the cost of the loan if you default. This way you will be able to borrow the full amount you need to purchase the property and, in some cases, a little extra to cover the transaction costs such as stamp duty and conveyancing fees you may be subject to.

Do I need a deposit
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How much can you borrow?

If you work for the Australian military, are earning a nice income and have been in service for a lengthy period of time, you might be eligible to take out a home loan that covers between 90% to 95% of the purchase price of the property.

Don’t worry if the lender tells you that your current income is insufficient to cover the loan because there are ways to make sure your allowances and benefits are taken into account.
Read on to find out how.

Defence Force home loan subsidies are granted in three tiers based on the number of years you have served. The longer the time frame, the higher the tier you qualify for and the higher the value of the subsidy.

The table below shows tier levels with corresponding numbers of service years for permanent and reserve members.

Tier LevelPermanent Member (Service Yrs)Reserve Member (Service Yrs)

Each tier determines the maximum amount you can borrow as a Defence Force home loan, with this cap being reviewed on July 1st of every year. The subsidy is determined for the current financial year based on the average home price of the previous year, which means that subsidy values for 2012 – 2013 are based on the average house price determined on July 1st, 2012, namely $483,440. While these annual modifications impact the maximum monthly subsidy amounts, those who are already receiving subsidies and have an established loan are unaffected.

So, the tier you qualify for determines how much you can borrow under the Defence Force home loan scheme and how much interest will be subsidised every month.

The monthly subsidy payment is equivalent to 37.5% of the median interest expense on the portion of the loan that is being subsidised, calculated over a 25 year period, regardless of what the duration of your loan actually is.

The rate used for this calculation is not the interest rate on your home loan but is calculated as the median rate of Owner Occupied Standard Variable Home Loans offered by the major home loan providers. In other words, the actual interest you are paying will in no way impact your subsidy. However, as rates climb or drop, your subsidy will follow suit as the median changes to reflect these fluctuations. However, there is an 8.95% cap so your subsidy payments will not exceed this interest rate ceiling, regardless of how much the rates increase.

The following table uses the average home price valid for Defence Force home loans taken out before July 2013 and the February, 2013 median interest rate to determine the maximum loan limit and maximum monthly subsidy value.

Tier LevelEntitled Value As a Percentage of the Average Home Price ($483,440)Maximum Loan AmountMaximum monthly subsidy on interest payments
Tier 140%$193,376$225
Tier 260%$290,064$338
Tier 380%$386,752$451

So, if you qualify for Tier 2 and you take out a home loan equivalent or greater than $290,064, you are entitled to a maximum subsidy of $338 per month. However, if you borrow less than the maximum loan, the subsidy will be smaller, equivalent the median interest rate calculated on the loan value over a 25 year period. So, if you borrow $190,000, then your maximum subsidy will be $221 per month, calculated using a 6% median interest rate valid as of February, 2013.

If you wish to work out the figures on your own, you can calculate the median rate by going to and checking the list of standard variable home loan interest rates. The median can be calculated by using the “Median” formula in Excel or by sorting the rates from lowest to highest and finding the middle position, which will represent the median rate. If there are an odd number of entries, then simply pick the number that falls in the middle. If there are an even number of entries, then calculate the average of the two numbers in the middle.

Calculating Your Median

Calculation formula for an ODD series number

In an odd series of entries, you can calculate the middle position by dividing the number of entries by 2 and adding 1.

N = x/2 +1

Where N is the position and x represents the number of entries in the series.
Thus, if there are 15 entries in our list, then N would be 15/2 + 1, or 8.

Calculation formula for an EVEN series number

In an even series of entries, determining the two positions is a matter of dividing the number of entries by 2, which will give you the first position and then using the previous formula to determine the second number.

So, to determine the median interest rate as of March 2013, CANNEX has 518 entries, which means we need to average the rates at positions 259 and 260 after they have been sorted from lowest to highest. In this case, it’s simply because both positions feature a rate of 5.77%, meaning that the median rate is 5.77%. However, if position 259 features a rate of 5.64% and position 260 featured a rate of 5.76%, then we would add them together and divide the result by two to give us an average of 5.7%.

So, coming back to the level of the subsidy you can get, if you borrow the maximum loan amount for your tier or more, you will get the maximum allowable subsidy and no more. If you borrow less than the maximum loan amount, the level of your subsidy will drop according to the amount you borrow.

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What are the Defence Force Home Loan tiers?

As previously mentioned, there are three Defence Force Home Loan tiers according to the number of years you have been in service.

  • TIER ONE - Served for at least four years as permanent members of the ADF and eight years as reservists.
  • TIER TWO - Served for at least eight years as permanent members and 12 years as reservists.
  • TIER THREE - Have served for at least 12 years as a permanent member and 16 as a reserve member.

What does the Defence Force Home Loan tier mean?

The Defence Force Home Loan tier represents the maximum amount of money you can borrow for which a certain percentage of the applicable interest rate will be subsidised. The ceiling of the loan value is calculated as a percentage of the average home price (AHP) for the previous year, which is reviewed on July 1st every year.

What Does the Defence Force Home Loan tier mean?

So, for tier one members the maximum limit is up to 40% of the AHP, tier two members 60% and tier three members 80%. This is not the limit in terms of how much you can borrow but the maximum amount for which you will receive a subsidy.

For example, last year’s AHP – valid until July 1st, 2012 – was $508,098. The following table shows how much you could have received as a subsidy, had you taken a loan out prior to this date.

140%$203,239Up to $277

TierPercentage of AHPMax Loan AmountMax Subsidy Amount
260%$304,859Up to $416
380%$406,478UP to $554
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How do banks view my allowances?

Most service men and women get some nice benefits and allowances to help pay the costs they may incur if they are posted overseas. However, some banks aren’t willing to take these allowances into account, whether because they don’t understand them or simply because they feel it’s too risky. The problem is that this can significantly limit you in terms of how much money you can borrow.

Why won’t the banks accept my rental allowance?

Defence Housing Australia subsidises rent on a monthly basis, while military personnel receive their paycheque every two weeks, which makes things complicated for certain banks. Thus, some lenders refuse to include rental allowance because they simply don’t understand how these allowances work and prefer to blame it on their conservative lending policies rather than claim they don’t have a clue.

The good news is that we know banks that might be willing to include your rental allowance.

How about my army allowances?

If you work for the Australian Defence Force, you could be eligible for various allowances. The problem is that not all lenders are willing to take them into consideration. You will find that:

  • Defence Service Accommodation subsidy : If you are living on an army base, you might be receiving a subsidy to live in Defence Housing Authority lodgings. There are lenders who are willing to take this allowance into account.
  • Private rental allowance : If you are living in accommodation you rented privately, you might be receiving a rental allowance to cover the cost of your lodgings, in part or in full. The problem is that banks have different policies, which means that some will consider it and some won’t.
  • Uniform allowance : Most banks will accept an allowance given to cover the cost of your clothing and uniforms, if you are receiving one.

Will the banks include my lump sum payments?

Military personnel receive various lump sum payments from the government, but, unfortunately, not all lenders are willing to consider these payments when determining the maximum loan amount you are eligible for.

Thus, if you have returned from combat overseas, having served as a soldier, you might receive a significant lump sum payment for services rendered. Since this type of payment is generally tax free, most banks will not consider them in their assessment.

Conversely, if you have received a bonus for work done for the Department of Defence while posted at an overseas base, some banks will take these amounts into consideration but it will depend on whether or not this is a regular payment.

considerations for military income

Is your military income ongoing?

Due to the fact that bonuses or one-off lump sum payments aren’t accurate reflections of how much you earn every year, most lenders tend to be rather reticent in taking these amounts into consideration when assessing your application.

This also applies to money you earn overseas because you might have a salary for the duration of your positing that is higher than what you earn back home. So, you might be posted abroad for 6 months, time in which you are earning $25,000 per month when you factor in your salary, allowances and benefits. However, once you get home, you go back to earning your regular $82,000 per year. For this reason, lenders aren’t too happy about including allowances and bonuses when calculating your ability to service the loan.

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Can I apply for any military purchase schemes or subsidies?

As a member of the Australian Defence Force, there are two schemes that you can apply for, namely the Defence Home Ownership Assistance Scheme (DHOAS) and the Home Purchase Assistance Scheme (HPAS).

The DHOAS is open to those are currently serving or have served in the military. It provides monthly subsidies to help current and former service men and women pay off their home loans. The amount of time you served will determine whether or not you qualify for this scheme as well as the amount of the monthly subsidy you receive.

The HPAS helps ADF members pay the costs of taking out a home loan, including the application process, stamp duty and conveyancing costs. Thus, members receive a one-off lump sum payment that is taxable. You will most likely be eligible if you intend to occupy the property as your principal place of residence. Since the grant is taxable and currently stands at $16,949 (as at 01/01/2011). Depending on your income, the after tax amount would be between $11,000 - $12,000.

You could be eligible for both but to check whether or not you qualify for either of these schemes, please get in touch with the Australian Defence Force

Which lenders will approve my loan?

The secret to getting your home loan approved is to apply with the right lender. This is because not all of the major lenders are willing to provide Defence Force members with a home loan under the DHOAS scheme.

However, there are certain lenders willing to include the Defence Force scheme you are eligible for when assessing the amount you can borrow. In other words, by applying with the right lender, not only do you increase your chances of getting your loan approved but you might even be able to borrow more money under better terms and conditions.

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Can I apply for a home loan from overseas?

If you want to apply for a home loan from overseas, you may be able to but it depends on whether you are stationed at a base or in combat. Thus, if you are working at a military base, regardless of your position, you can apply for a home loan. All paperwork can be sent to you via mail or if you are on a naval ship, via fax or email through a secure connection. Note, in this case most banks will not accept a Power of Attorney because your location is known and you can fill out all the necessary documents.

However, if you are in combat and are part of a covert military operation or on a tour, you can’t give out your location for security reasons. In this case, most lenders will accept a power of attorney.

applying from overseas

Do I need to certify the documents?

Since Australian barracks are considered to be Australian soil, there is no need for you to go to a consulate or embassy. So, if you are stationed at an Australian base, even if it’s overseas, there’s no need to certify the documents.

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Government's initiative with Defence Housing loans

You might be able to qualify for a Defence Housing loan if you are a member of the ADF and have a high rank and salary. Defence Housing loans are a great way for ADF personnel a great way to purchase their first home because they are available at a very attractive interest rate. This loan, which was initiated by the government, can be obtained through the Defence Housing credit union. The latter signed an agreement with a major lender to be able to offer such a great loan option to ADF personnel.

Government's initiative with home loan

Can I get a second mortgage on my Defence Housing loan?

There are some major banks that are willing to let you take out a second mortgage on your Defence Housing loan and we can guide you in the right direction. You could borrow as much as 95% of the value of your home. Send an online enquiry to learn what you need to do to get a second mortgage from one of the major banks.

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Remember: Your defence force department may have a path to the home loan scheme

Australian Defence Force members perform various duties and have different roles meant to build and provide support for essential infrastructure. Thus, some officers might take part in actual military operations while others might be in supporting roles such as health care, hospitality or system monitoring.

If you have been recruited to go into combat, develop intelligence or play a supporting role for the armed forces, you could be part of the army, navy or air force.
In other words, the ADF is made up of more than soldiers, sailors and pilots. There are people employed by the ADF, in Australia and overseas, who perform other roles, such as offering legal help to installing military equipment.

People who have qualifications and experience in the following fields are usually employed by the ADF to work on bases:

  • Human resources
  • Law
  • Engineering
  • Planning and management
  • Engineering
  • Environmental Science

Thus, regardless of the role you perform or the ADF department you work for, you might be eligible for the home loan scheme as long as you fulfil the eligibility criteria.

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Frequently asked questions

Q: I purchased and lived in a property for 12 months before starting my current post, so I think I am in compliance with the 12 month occupancy rule. I want to find out if I can use the DHOAS for the property from my previous post.

A: You cannot use the DHOAS for the property from your previous location because the law states you can only receive a subsidy for a home under this scheme if the property being subsidised is one you will live in for at least 12 months from when you start receiving the DHOAS payment.

Q: I may be posted within the following 12 months but would like to purchase a home or refinance my current mortgage. Is this possible?

A:You cannot access the DHOAS if you know you will be moving within the year because you will not be able to fulfil the conditions of the legislation stating that you need to occupy the property for at least 12 months after receiving your first DHOAS payment.

However, if you took out a loan in good faith, thinking you would be able to stay for 12 months but then received a posting order, you can still receive the subsidy even if you have moved.

Q: I live in Brisbane but own a home in Sydney and I’ll be moving back into the property in about four months. Is it possible for me to refinance my loan and take advantage of the DHOAS at present?

A: No because the law states that you can only receive subsidies under this scheme if you live on the property for 12 months after receiving your first subsidy payment. While your lender might permit you to refinance using their Defence Force home loan now, you will only start receiving subsidy payments once you have moved back in.

Q: If I take out a $250,000 home loan under the DHOAS but then make a lump sum payment of $50,000 or make additional payments towards the capital of the loan worth the same amount, is it possible to redraw the $50,000 to purchase an investment property or a car?

A: Yes. Regardless of how much you receive in DHOAS subsidy payments, any payments you make above the required monthly mortgage repayments can be withdrawn and used for anything you choose.

Q: I own a property that is worth $350,000 and have a $120,000 mortgage. I would like to refinance with a lender who offers DHOAS home loans and to take out more than $120,000 so that I can get more in subsidy payments every month. I plan to use the additional money to make a lump sum payment towards my DHOAS loan or for other purposes like the purchase of a car. Is this permitted?

A: This is something you cannot do because you won’t be in compliance with the DHOAS legislation. The latter states that DHOAS loans can only be used to purchase or build a home, to purchase land or renovate and increase the size of your home, or to refinance an existing loan to achieve the same goals.

The only situation in which you can get a loan larger than your existing mortgage is if the additional funds will be used to renovate the property or to enlarge it. The additional money can’t be used for any other purpose.

Q: I want to buy a new house and sell the one I currently own. Will my subsidy be affected in any way?

A: When you close the loan on the property you currently own by selling it, any arrangements you have will be terminated. To get subsidy payments for the new property, you will need a new DHOAS loan. In other words, you will need to apply to DVA for a new subsidy certificate, which means you will have to meet all the terms and conditions valid at the time of your application to qualify.

It’s important to take into account that a variety of factors could affect your eligibility for DHOAS and your entitlements. Thus, you might not qualify for the same conditions as you previously did. A change in your ADF service status, long breaks in your service, separation from the ADF and changes to the DHOAS Act and legislation are only a few of the variables you need to consider.

The new subsidy certificate will provide the proof of your degree of eligibility for DHOAS. The lender will need to see the certificate and they will let the DVA know when your new loan is drawn down. As soon as you meet all the necessary conditions, one of which is occupying the home for 12 months from when payment starts, the subsidy payments will begin.

Before you decide to change the conditions of your current DHOAS arrangement, it would be wise to check the DHOAS website to see whether there have been any changes and if your change in status will impact your eligibility in any way.

Q: Who can I purchase a house with?

A: You can buy a house with anyone you choose as long as you, or you along with your partner, have at least a 50% stake in the home being purchased.

Q: If I purchase a house with another person and that person is not a service member, will it impact my subsidy payments in any way?

A: As long as you own at least 50% of the property, this will have no impact on the subsidy payments you will receive. If the property has been purchased with separate or split loans, the subsidy payments will be calculated only on the amount you borrowed.

Q: If I am getting a divorce, will my subsidy payments be affected?

A: If you and your family move out of the property before 12 months have passed from when the loan was drawn down, you will no longer receive payments for that particular property.

The payments will also stop if your spouse becomes the main stakeholder and you no longer own 50% or more of the property.

Q: Who is in charge of enforcing the conditions of the scheme?

A: It is the Department of Defence’s responsibility to police the terms and conditions of the scheme. Thus, processes have been established, amongst which is working with DVA and the lenders, to make sure members are in compliance with the legislation.

It is your responsibility as the borrower to make sure that you fully understand the conditions of getting DHOAS and to ensure that you are in full compliance with the terms and conditions of this scheme.

Q: What happens if someone isn’t in compliance with the conditions?

A: There are a number of consequences, including the following:

  • The subsidy payments stop;
  • The person in question will have to repay all the amounts they received as subsidies, which could involve selling the property or increasing the amount borrowed;
  • Being forbidden to access the scheme in the future;
  • Criminal prosecution or disciplinary action.

Q: What’s the best way to ensure I am fully aware of the applicable conditions to get into DHOAS?

A: When you get your subsidy certificate, you will also receive a factsheet entitled “About Your Subsidy”, which you should read and spend time getting familiar with all the conditions involved in the DHOAS. Further information is available on the DHOAS website.

Q: How will accessing DHOAS impact my taxes?

A: The Fringe Benefits Tax (FBT) on the subsidy payments made to ADF members is the responsibility of the Department of Defence. It will still appear on your annual payment summary because the DHOAS subsidy is a reportable item. To determine how it will affect your taxes, you will need to get independent financial advice.

Q: I also own investment properties, besides my own home. Should I take out a larger mortgage on my personal home so I can get higher DHOAS benefits or is it a better idea to owe more money on my investment properties so I can get tax breaks?

A: Your best option is to get professional financial advice to answer this question.

Q: What will happen if I move from permanent ADF service and become a reservist?

A: This transfer will only impact your DHOAS eligibility if you haven’t yet completed the qualifying period, which is four years of continuous service as a permanent member and eight years of effective service as a reservist.

The period you’ve already completed as a permanent member will be doubled once you switch over to the reserves if you are counting it towards the qualifying period required for reservists.

In other words, if you’ve completed two years as a permanent member, it will count as four years when you switch over. If you’ve already completed your qualifying period, there will be no effect because your service will accrue at the same rate after the qualifying period.

Q: What happens if I switch to permanent ADF service from being a reservist?

A: Any time you have completed as part of the qualifying period while in the reserves will be cut in half. So, if you have completed six years of effective continuous service in the Reserves, it will count as three years towards the four year qualifying period required of permanent members. Otherwise, if you’ve already completed your time, then there is no effect.

Q: Will my eligibility and entitlement to DHOAS be affected if I’ve had a break in service and then reenlisted?

A: A break in service can affect you. More information is available on the relevant DHOAS page, namely Rejoining the ADF After a Break.

Q: Can I access more than one scheme if I qualify?

A: No, you cannot access more than one scheme at the same time. You have to choose one.

Q: How will I be affected if I’ve accessed DSHL or DHOS previously?

A: The amount of time you can receive help for under the new scheme will be shorter by the duration of the period for which you received help under the previous scheme. It will not affect the tier you are eligible for or the size of the subsidy you receive but it will affect how long you can receive these payments for.

For example, you have ten years of permanent ADF service under your belt. After deducting the four year qualifying period, you are left with six years for which you are entitled to receive subsidy payments under the new scheme.

Another example is that if you have received subsidies under the DHOS for five years before switching over to the DHOAS, this period will be deducted from the six years you could receive subsidies for, leaving you with one year.

However, your tier level eligibility will not be impacted by the assistance you received under DHOS. Thus, having completed ten years of permanent ADF service, you qualify for tier 2. Once you complete 12 years, you will qualify for tier 3 subsidies. The same applies if you are in the reserves.

Keep in mind that the maximum timeframe you can receive subsidies for is 20 years if you have not completed warlike service and 25 years if you have. Thus, if the timeframe you received assistance for under the old schemes is longer than that permissible by the new scheme, you won’t be able to access DHOAS, even if you continue to serve.

Q: What are the DHOAS tiers?

A: There are three tiers, with each tier having a different maximum loan amount you can receive subsidies for and a maximum subsidy amount. The higher the tier, the higher the value of the loan and subsidy amounts. You move from one tier to the next by completing a certain number of years of service. The goal is to provide members with a good reason to continue their ADF service.

The following table shows the tier levels, maximum loan amounts and maximum subsidies for February 2013. The subsidies change according to the fluctuation of the median interest rate on home loans.

Tier LevelMaximum Loan LimitMaximum Monthly Subsidy
Tier 1$193, 376Up to $225
Tier 2$290,064Up to $338
Tier 3$386,752Up to $451

Q: How do figure out what tier level I’m in?

A: The tier level you are eligible for depends on the number of years of service you have completed. Every year completed counts towards your tier level, so the four-year (or eight-year for the reserves) qualifying period does not need to be subtracted from the total. The table below reveals the service years you must have completed to access the different tier levels.

Service MilestonesEligibility
Permanent members must have completed a minimum of:4 years for Tier 1 eligibility
8 years for Tier 2 eligibility
12 years for Tier 3 eligibility
Reservists must have completed a minimum of:8 years for Tier 1 eligibility
12 years for Tier 2 eligibility
16 years for Tier 3 eligibility

Q: What happens if I’m borrowing more than the maximum subsidised loan amount for my tier?

A: You will get the maximum subsidy amount regardless of how much you are borrowing because the maximum loan limit is the highest amount you can receive a subsidy for. The following values are valid until July 1st, 2013.

Subsidy TierMinimum Permanent ServiceMinimum Reserve ServiceMax Subsidised Loan AmountMax Monthly Subsidy
Tier 14 years8 years$193,376Up to $225
Tier 28 years12 years$290,064Up to $338
Tier 312 years16 years$386,752Up to $451

Q: What if I borrow less than the maximum subsidised loan amount for my tier?

A: The monthly subsidy you receive will be calculated according to the amount you borrow. The amount is calculated as 37.5% of the total interest on the loan amount over a 25 year period, regardless of how long you took the loan out for. The interest rate used for this calculation is not the actual interest on your loan but the median rate of all Australian home lenders based on the figures CANNEX provides.

Q: As I pay back my loan and the principal drops, will my subsidy payments be recalculated, especially after the loan drops below the limit?

A: No, your monthly subsidy payment is determined based on your tier and your loan amount when you received the first payment and is valid for the entire duration of DHOAS assistance you are eligible for, as long as you don’t stop and restart the subsidy. If you do, the balance you owe on your home loan at the time of restarting DHOAS assistance will apply.

So, once your home loan has been established and you’ve received your first subsidy payment, any changes to the principal of your home loan will not affect the subsidy you receive every month.

Q: How is the maximum subsidised loan amount calculated?

A: The maximum loan amount for each tier is calculated as a percentage of the average house price. The latter is worked out by the Bureau of Statistics and on July 1st, 2012, the AHP was $483,440.

Thus, the maximum subsidised loan amounts for each tier are as follows:

  • 40% of AHP for tier 1, namely $193,376
  • 60% of AHP for tier 2, namely $290,064
  • 80% of AHP for tier 3, namely $386,752

At the beginning of each financial year, these amounts are revised according to the new average house price. The goal is to ensure they continue to remain current based on what’s happening in the property market.

Q: When the maximum loan amounts are recalculated every year, will the new figures affect my subsidy payments?

A: No. The figures that were applicable when you first took out your home loan and accessed DHOAS will continue to apply as long as you are receiving subsidy payments for that particular loan. In other words, if the maximum subsidised loan amounts for each tier change, they won’t affect how your subsidy payment is calculated because the loan balance on which the subsidy is calculated is fixed from the start and so are the maximum loan amounts for each tier.

However, if you stop the subsidy payments you are receiving and want to restart them later, the new amounts will be applicable.

Q: How are the subsidy payments calculated?

A: The monthly subsidies are calculated as 37.5% of the interest cost of the maximum loan amount that is eligible to be subsidised according to your tier for a total loan duration of 25 years, regardless of the actual period of your loan. Thus, DHOAS actually subsidises the interest costs of your loan, up to a point.

It’s important to note that the median interest rate of all standard variable rate home loans is used, rather than the actual interest rate of your home loan. Since this rate fluctuates as lenders change their rates, your subsidy payments will also change accordingly. However, there is a cap at 8.95% so if the median rate climbs any higher than that, you will still get subsidies calculated according to this cap.

Q: How will my payment change if interest rates fluctuate?

A: Your payment will only be affected if the median interest rate drops below the 8.95% cap. If rates stay above this cap, then your payment will stay the same, meaning you will receive the maximum subsidy according to the tier you are eligible for.

If rates fall below 8.95% then your monthly subsidy payments will be calculated according to the median rate. So, if rates drop, the monthly payment you receive will drop too. If rates go back up, the payment you get will go up too until the 8.95% cap is reached.

Q: How is the median interest rate determined?

A: The median interest rate is determined according to the rate provided by CANNEX and represents the median of the rates offered by Australian lenders on home loans.

Q: When will there be a review of the cap of 8.95% on the interest rate?

This cap is part of the DHOAS legislation and will only be reviewed when it is considered to be necessary to ensure this scheme remains effective under the contemporary conditions of the property market.

The Department of Defence will monitor the situation to determine when and if the rate cap needs to be reviewed and changed.

Q: When will I get the first subsidy payment?

A: You won’t receive your first subsidy or the lump sum when the loan is settled. The DHOAS payments will start once the lender informs DVA that your loan has been drawn down, at which time processing of your payment will begin.

You will receive payments at the beginning of every month for the previous month.

So, if you draw down you loan in October, your first payment will arrive at the beginning of December and will be for November. You will receive a letter from DVA that contains all the arrangements pertinent to your subsidy.

Q: Who can receive lump sum payments?

A: The first condition to qualify to receive a lump sum payment is the completion of the DHOAS qualifying period, which is four years for permanent members and eight years for reserve members.

Additionally, you need to build up DHOAS entitlement, which can be paid out as a lump sum, as long as you still have enough service credit to cover on-going monthly payments.

Permanent members accumulate service credit monthly, which means that you get one month of entitlement for every year of service after the qualifying period. On the other hand, reservists accrue service credit every financial year, during which at least 20 days of reserve service must be completed to receive the equivalent of one year of entitlement to subsidy payments.

Once you’ve accumulated entitlement, you can request lump sum payment for the equivalent period. So, if you have built up 12 months of entitlement as a permanent member, as well as some extra so you can continue to receive monthly payments you can request a lump sum payment equivalent to 12 months of subsidies.

The maximum lump sum you can receive is the equivalent of 48 months or four years of monthly subsidy payments. However, it’s important to note that the lump sum is calculated using tier 1 subsidies, even if you qualify for a higher tier. So, you will receive 48 times the maximum subsidy payment from tier 1.

But since the lump sum is for service credit you’ve already accumulated, i.e. for service completed already, you will also get monthly subsidy payments as long as you still have entitlement accrued. It has no bearing on the tier you are eligible for nor will it reduce the amount you can receive in subsidy payments, as they will be made according to the tier you are eligible for.

It’s important to note that this lump sum can’t be used as a deposit on a property since it will not be paid on settlement or before your loan is settled. Like your monthly subsidy payments, it will be paid after the loan has been drawn down, more specifically at the beginning of the month for the previous month. You will continue to receive subsidy payments as long as you are an ADF member but for a maximum of 20 years or, for personnel who have completed warlike service, 25 years. You can also continue to receive DHOAS help after separation from the ADF until your service credit runs out.

Q: What are the conditions if I want a lump sum payment?

A: Certain conditions need to be met for you to get the lump sum payment. Some of these are:

  • You need to have enough service credit remaining for monthly subsidy payments to continue
  • This must be the first property you will own as an ADF member. You are permitted to own a stake in a non-residential property but must not have owned a home to live in or as an investment while you have been in the service of the ADF;
  • The lump sum will only be paid out once the subsidy certificate is issued to the person making the request, which serves as the basis for the request. This to make sure that a person who purchased a property previously, even if they have only owned one home, cannot receive the lump sum
  • It is expected, quite reasonably, that you will continue to serve for at least another 12 months in the ADF;
  • You or your family need to live in the property for a minimum of 12 months from when you receive the lump sum;
  • You will get the lump sum at the same time the first subsidy payment is made, after the loan has been drawn down;
  • The lump sum payment is a feature that can only be used once;
  • This is your first time accessing DHOAS.

Q: Considering that I’ve performed warlike service, how will my entitlement be affected?

A: You will receive extra years for the subsidy period you’ve already accumulated. The table below shows you how. Keep in mind that you can only get DHOAS assistance for a maximum of 20 years and 25 years for warlike service.

Total Duration of Warlike Service PerformedAdditional Number of Years for DHOAS Assistance
Less than 3 months2 years
More than 3 months but less than 63 years
More than 6 months but less than 94 years
More than 9 months5 years

Q: Can my partner and I apply for subsidy certificates if he or she is eligible?

A: Yes, but you each have to submit an application separate from the other.

Q: My partner and I are going to purchase a house together and we both qualify for DHOAS. How much will our subsidy payments be?

A: You can both access DHOAS together, on a single loan, or separately. The advantage is that the maximum subsidised loan limits for both of you can be combined, so that a larger portion of the loan will be covered by the DHOAS.

DVA recommends that you get independent financial advice to help you understand all the facts and to figure out what the best solution is for your particular situation. You will have to take into account the size of the shared home loan and whether or not you can both get subsidies for a single loan. If the loan is quite big and you can both receive significant subsidy payments, you might consider combining your service credit.

Conversely, if the loan is relatively small and you’d both be using up service credit to receive small subsidy payment, you might opt for only one of you to access DHOAS while the other saves up their service credit for another loan you might take out in the future, keeping in mind you need to spend at least 12 months in the property after receiving your first subsidy payment.

Keep in mind that if you wait to access DHOAS and you separate from the ADF before finishing 20 years of service, whatever service credit you have accumulated will only be paid as tier 1, regardless of what the value of your subsidy was prior to separation.

Q: What takes place if I discharge?

A: You will still be able to receive help after separation for a period equivalent to the amount of service credit you have accumulated. The subsidy amount will vary according to how long you serve before separation. Thus, if you served for less than 20 years, you will receive subsidy payments according to tier 1 values. If you have served more than 20 years, you will qualify for tier 3 payments for the remainder of your service credit.

Q: After separation, when must I apply for DHOAS?

A: You are permitted to access only one subsidy certificate after separation. It is only valid for 12 months and you must submit your application within two years after separation or you will lose your service credit. The latter applies as long as you don’t re-enlist.

Q: Will a dishonourable discharge affect me?

A: No, you will still be eligible to access DHOAS and your entitlement will remain unaffected.

Q: What happens to my subsidy payments if I die?

A: Your surviving partner will receive your entitlement but only if they continue to have a minimum 50% stage in the house subject to subsidy. If the property is jointly owned and you’ve already accessed DHOAS, then payments will continue.

If you had not yet applied for DHOAS help, your partner has two years from the date of your discharge or death, whichever takes place first, to apply to receive assistance. You don’t need to die during service and it doesn’t need to be connected to your service for your partner to be entitled to subsidy payments.

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at Talk to him to find out more about home loans.

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36 Responses to The Australian Defence Force Home Loan Scheme

  1. Default Gravatar
    Daryl | January 27, 2016

    Hi i am daryl,
    If i have already bought a house then served the army, provided i have served the minimum time requirement am i entitled to reimbursement?

    • Staff
      Belinda | February 2, 2016

      Hi Daryl,

      Thanks for reaching out.

      DHOAS is a subsidy payable upon you meeting the eligibility and entitlement conditions.

      Therefore you will need to meet the qualifying period using your service with the Army and accrue service credit to entitle you to a monthly subsidy. The subsidy is not reimbursed based on the home purchase that occurred prior to you enlisting with the Australian Defence Forces. Essentially once you qualify for a DHOAS certificate you can commence payments on an eligible DHOAS loan, and payments will only occur once you have been issued a certificate.

      If you have further enquiries, please get in touch with DHOAS directly.


  2. Default Gravatar
    Ricky | January 18, 2016

    Hi i am rick, i have been in the army from last 6 years, planning to buy a house this year, Which bank you prefer will be suitable to take loan?

    • Staff
      Belinda | January 19, 2016

      Hi Rick,

      Thanks for getting in touch. is an online comparison business so we are not licensed to recommend specific lenders to you for your home loan application.

      As a member of the Australian Defence Force, you may be eligible to apply for the Defence Home Ownership Assistance Scheme (DHOAS) and the Home Purchase Assistance Scheme (HPAS). As mentioned above on this page, the Australian banks that offer these types of loans include the Australian Military Bank, Defence Bank Limited, National Australia Bank and Westpac.

      A mortgage broker may be able to help you choose the right lender for your personal situation.

      For further information, you can visit the DHOAS website and enquire with them directly.

      Kind regards,

  3. Default Gravatar
    Paul | January 12, 2016

    Am I eligible for DHOAS if I own investment properties?

    • Staff
      Belinda | January 13, 2016

      Hi Paul,

      Thanks for your enquiry.

      As long as you satisfy the eligibility requirements as outlined above on this page and on the Defence Home Ownership Assistance Scheme (DHOAS) website you will be eligible for the DHOAS if you currently own investment properties.


  4. Default Gravatar
    Natalie | August 29, 2015

    Hi, My parter has been in the ADF full time for 8 years now. We are currently posted in QLD but in two years is looking at discharging and joining the reserves in VIC.

    If we buy a house next year, prior to us moving to VIC (the house will be rented) and then move into it once we have the posting for reserves, are we still eligible for DHOAS once we commence living in the property.

    Thanks Natalie

    • Staff
      Belinda | August 31, 2015

      Hi Natalie,

      Thanks for your enquiry.

      As DHOAS is intended to help you achieve home ownership, the main condition is that you and/or your family occupy your subsidised home for at least 12 months. You need to be occupying the home before your subsidy payments can commence.

      However, this occupancy requirement can be met by one or more of your dependents if you are away from home.

      If you’ve received a posting order and know that you’ll be relocating to VIC, you cannot access DHOAS before you get there as you need to satisfy the above occupancy criteria.

      It would be best that you check with the Australian government Department of Defence about whether or not you can rent the property prior to moving in.


  5. Default Gravatar
    Kitty | July 14, 2015

    My husband has been in the defence force for nearly 19 years, we have never had a home loan. He is planning on staying in until he retires, my question is, would we be eligible for the (DHOAS)& (HPAS)if we also was granted the First Home Owners Grant for a new dwelling from the NSW Govt?

    • Staff
      Jodie | July 14, 2015

      Hi Kitty,

      Thank you for contacting, a financial comparison website.

      There is no restriction of you being able to receive the above mentioned Defence Force Home Loan assistance schemes as well as the First Home Owners Grant scheme, however it may be best to discuss with one of the lenders above that offer Defence Force loans to see which loan would suit your specific needs.

  6. Default Gravatar
    John | June 2, 2015

    I am an ex service TPI pensioner at the moment I am having trouble in our two story house.My question is can I get a Defence Home loan to do the nessesary alterations so I can live downstairs. I served 20 years in the Navy

    • Staff
      Jodie | June 3, 2015

      Hi John,

      Thank you for getting in contact with, a financial comparison website.

      In order to be eligible for a Defence Force Home Loan you must have served in the ADF within the last two years, but please contact a mortgage broker or one of the above mentioned lender’s to discuss your specific needs.


  7. Default Gravatar
    leigh | May 21, 2015

    I am a former serving member discharged in march 1991 have had a previous DFHL at last I think I was still eligible to borrow $19500-00 am I still eligible if I am I wish to apply for this loan

    • Staff
      Belinda | May 25, 2015

      Hi Leigh,

      Thanks for your enquiry.

      To be eligible for the Australian Defence Force home loan, you must have served in the ADF within the last two years and you must complete a minimum qualifying period.

      I hope this helps.


  8. Default Gravatar
    Belle | April 29, 2015

    Hi, I just purchased a property which currently has a tennant that would like to stay on for 12 months, how soon do I have to move into the property ?


    • Staff
      Belinda | May 20, 2015

      Hi Belle,

      Thanks for your enquiry.

      With the Defence Home Ownership Assistance Scheme (DHOAS), you and/or your family need to occupy your subsidised home for at least 12 months. You need to be occupying the home before your subsidy payments can commence.

      If you have received a posting order and know you will be relocating within 12 months, then you cannot access DHOAS.

      However, if you receive a posting after moving into a DHOAS subsidised property in good faith that you would have stayed for 12 months, then your DHOAS subsidy assistance can continue even though you are planning to relocate.

      It would be best for you to contact the Department of Veterans’ Affairs (DVA) to discuss any change in circumstances that you may have.

      I hope this clarifies things for you.


  9. Default Gravatar
    Michael | April 18, 2015

    I served for 21 Years in the RAN – 21/10/1965 to 32/12/1986. I served on the HMAS Brisbane in Vietnam for six months in 1969.
    I have never applied for a Defence Home Load.
    I am due to retire on 3 August 2015 after 28 years continuous service in Local Government in Victoria.
    I still owe $250000 on my residence which I have lived in since 20 February 1987.
    Am I entitled to the Defence Force Home load in order to pay out my current Mortgage which is with Westpac? If so how much can I apply for and at what interest rate?
    I currently have a DFRBD Pension and a Superannuation Pension from Vision Super (Local Government Authorities). My wife of 41 Years has due to serious health issues been unable to work for most of our married life and does not have any income whatsoever.
    When I retire I will have about $75000 in long service leave and annual payments with a small Super pay out which I will convert into my current superannuation pension.

    • Staff
      Jodie | May 8, 2015

      Hi Michael,

      Thank you for reaching out, we have contacted you via email in response to your query.


  10. Default Gravatar
    Adrian | March 11, 2015

    I just received my Hpas payment. Of half the full amount. Because my partner is on the loan. She is/was in the army also for 9 years and discharged 6 months ago. Does she have to also go tho and do all the paper work again?. As we were expecting to get the full amount just with the one application.

    Please help me clarify this.

    • Staff
      Shirley | March 11, 2015

      Hi Adrian,

      Thanks for your question.

      Unfortunately if you and your spouse are both members and are posted to the same location, only one of you can be paid the home purchase assistance scheme (HPAS). The other may be able to claim the allowance for a home purchase at a future posting.

      Should you require anymore assistance, please get in touch with the Department of Defence directly.


    • Default Gravatar
      Adrian | March 11, 2015

      Hello again sherly thank you for getting back so fast. That does not quite answer my question we knew only one of us would receive the amount. But we only received half the amount we were suppose to. Is there a number I can call as I can’t find one anywhere?.

      Kind regards Adrian

    • Staff
      Shirley | March 11, 2015

      Hi Adrian,

      The Defence Service Centre is available on 1800 333 362. They should be able to point you in the right direction.

      All the best,

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