- How lump sum works
- Keeping enough credit for ongoing subsidy payments
- Applying for lump sum
- Payment of lump sum
- Your monthly subsidy payments and the lump sum
- Construction loan and lump sum
You can convert your accrued DHOAS entitlement into a lump sum if you have accrued sufficient entitlement. That is, you have completed your qualifying period and, in addition, you have completed further service to gain a service credit. You can also use extra entitlement you have accrued from warlike service to convert into a lump sum.
After receiving a portion of your entitlement in a lump sum, you must also still retain sufficient service credit to support on-going monthly DHOAS subsidy payments. Otherwise your payments will cease and you will have to reapply once you accrue further entitlement.
For Permanent members, this is at least one month (but ideally two months to ensure no gaps due to administrative processes). For Reservists, this is up to one year, depending on how many months of service credit you need before you finish effective service within the financial year and accrue another year of credit.
Permanent members transferring to the Reserves need to be particularly mindful of not falling short of service credit. For further information, please see: Transferring from Permanent Force to Reserves.
To be eligible to receive the lump sum, you must not have previously owned a home, either to live in or for an investment, whilst in the ADF. (You can own an interest in non-residential property).
There is also a reasonable expectation you will continue to provide effective service for at least another 12 months.
Please note: The lump sum will not be paid on a residential property bought before you were issued the DHOAS subsidy certificate that is the basis for the lump sum request. This prevents a person from getting the lump sum where they have only owned the one property, but bought it some time previously.
How lump sum works
You can convert a maximum of four years, or 48 months, of your service credit into a lump sum. For the purpose of calculating the lump sum, the tier 1 subsidy amount is used (even if you are entitled under a higher subsidy tier). This reflects the purpose of the incentive to purchase a first home while you are in service.
You are a Permanent member who has ten years of service. Subtracting your two year qualifying period, you have eight years of accrued entitlement. You can convert up to four years of this entitlement into a lump sum payment. This leaves you with a four year service credit, which will support your ongoing monthly subsidy payments into your DHOAS home loan.
The amount of your lump sum will be the equivalent of 48, tier 1 subsidy payments. The maximum tier 1 subsidy amount, which is applicable in the month of payment, will apply to the lump sum calculation. (This is regardless of your eligible tier level and home loan amount.) As at May 2023, this would be 48 x $521 = $25,008.
Given you are a Permanent member with ten years of service, you will receive your ongoing subsidy payments at the tier 3 level.
In this situation, you would be advised to consider whether it is best for you to expend four years of your accrued entitlement on receiving the lump sum at the tier 1 level or expending it on receiving monthly subsidy payments into your DHOAS home loan over four years, at the higher tier level.
Keeping enough credit for ongoing subsidy payments
After converting entitlement into a lump sum, you need to ensure that you retain enough service credit to support your ongoing, monthly subsidy payments.
If you run out of service credit, your subsidy payments will cease and you will be required to reapply for DHOAS once you have accrued further entitlement. To avoid a disruption to your payments, it is better to convert less of your service credit into a lump sum and ensure you have sufficient cover into the future.
For example, if you are a Permanent member and you have four years of entitlement, you cannot convert all of this entitlement. You need to retain at least one month of entitlement, but ideally at least two months to cover any administrative processes.
Reservists are advised to retain up to one year, depending on how many months of service credit you need to support subsidy payments before you complete effective service within the financial year and accrue another year of credit.
Permanent members transferring to the Reserves need to be particularly mindful of not falling short of service credit.
Applying for lump sum
You apply for the lump sum at the same time you apply for your DHOAS subsidy certificate, using the Application for Subsidy Certificate.
Payment of lump sum
The lump sum is not paid to you before or on settlement of your property and cannot be used as an upfront deposit to purchase your house. It will also not be paid before your first repayment is due.
The lump sum, along with your first subsidy payment, is paid into your DHOAS home loan after it has been drawn down and your home loan provider advises DVA of settlement. You cannot receive your lump sum or monthly payments until you have sent to DVA a completed Subsidy Authorisation Request Form. Your first monthly subsidy and lump sum will be paid at the start of the month, and will cover the month prior.
For example, if you draw down your loan in September (and as long as your home loan provider has advised DVA and you have sent in your SARF in time), you will receive your lump sum and first subsidy payment in early November. This payment will be for the month of October.
If you draw down your loan prior to the tenth-last business day of the month, your first payment will cover two months of subsidy.
Your monthly subsidy payments and the lump sum
After payment of your lump sum, you will receive your entitlement in monthly subsidy payments, paid into your DHOAS home loan. These monthly subsidy payments are calculated using your eligible tier level. The years of entitlement that you convert into a lump sum are counted towards your maximum accrued entitlement period for DHOAS of up to 20 or 25 years (depending on warlike service).
If you are entitled to a higher tier level, you are advised to consider whether it is best for you to expend a portion of your accrued entitlement on receiving the lump sum at the tier 1 level or expending it on receiving monthly subsidy payments into your DHOAS home loan, at the higher tier level.
Construction loan and lump sum
You can receive the lump sum if you have a DHOAS construction loan. For further details see Construction loan and lump sum.