Defence Home Owner Scheme (DHOS)
The Defence Home Owner Scheme (DHOS) closed to new applications from 1 July 2010.
The scheme was superseded by the Defence Home Ownership Assistance Scheme (DHOAS) when it was launched on 1 July 2008.
There are some limited extenuating circumstances where a DHOS-eligible person, who was unable to meet the 30 June 2010 deadline to submit an application for DHOS, might be able to apply for a similar benefit under DHOAS.
Current DHOS recipients
DHOS subsidy payments continue to be paid into the DHOS home loans of existing clients.
DHOS applicants with extenuating circumstances
If you were eligible for DHOS but you were unable to apply for your entitlement before the scheme closed on 30 June 2010, there are some extenuating circumstances where you may be able to access limited benefits under DHOAS.
If you are in one of the following three categories, you are defined as an "Old Scheme Member" under the DHOAS Act and you are entitled to apply for DHOAS subsidy:
- An 'operational service member' as defined in the Defence Force (Homes Loans Assistance) Act 1990 (DFHLA Act). An operational service member is a person who was allotted for duty anywhere within the Middle-East operational area, sometime between 2 August 1990 and 9 June 1991.
- An incapacitated person, as defined in the DFHLA Act who was not able to apply for DHOS before the Scheme's 'finishing day', due to a compensable condition. The Act defines an incapacitated person as one who, on or after the Act's commencing day, separates from the Defence Force because of a compensable disability.
Please note you will not be eligible if you previously applied for an entitlement certificate under DHOS after you separated.
(* Please see details below about a specific and limited case, involving the involuntary discharge of a DHOS home loan and/or destruction of the subsidised property, where a DHOS application will be accepted).
Old scheme member benefits under DHOAS
As an 'Old Scheme Member', you can apply to receive a subsidy on a DHOAS home loan, with a subsidised loan limit of up to $80,000.
If your application is approved, you will be sent your certificate. You take this to one of the three appointed DHOAS Home Loan Providers to apply for a DHOAS home loan.
The amount you borrow will be up to you and your home loan provider, depending on your own personal circumstances and your home loan provider's lending criteria. However, your maximum subsidised loan limit is $80,000.
This means you will be paid a DHOAS subsidy on a loan amount up to $80,000, even if your home loan is greater than this amount.
For details about how your subsidy is calculated, please see DHOS-eligible $80,000 subsidised loan limit.
For details of the maximum subsidy currently payable on an $80,000 subsidised loan, please see Subsidy Tier Tables - $80,000 Subsidised Loan Limit.
Your Home Loan Provider will advise DVA when your DHOAS home loan has settled and you have drawn-down the funds.
At this time, you will also need to submit to DVA a completed Subsidy Authorisation Request Form, indicating you are meeting the conditions of the Scheme (excluding DHOAS-related eligibility and entitlement criteria).
Once this information is received, DVA will calculate your subsidy and commence your monthly payments directly into your home loan account.
You will receive the subsidy for as long as the following apply:
- You have a DHOAS entitlement
- The DHOAS home loan you establish, using your one subsidy certificate, remains open and unchanged
- You are meeting the conditions of DHOAS
You can apply for your entitlements using the Application for Subsidy Certificate.
You need to provide supporting evidence of your ADF service along with the completed form and forward it to DVA, at the address provided.
The following conditions apply to your subsidy certificate:
- As an 'Old Scheme Member' applying under DHOAS, you have access to only one subsidy certificate.
- Your DHOAS subsidy certificate is valid for 12 months. If you want to access your entitlements under DHOAS, you need to use your subsidy certificate to take out and settle a DHOAS home loan, within 12 months of your certificate's issue. The date of issue and expiry date are on the certificate. Please note there is no option to extend the validity of the certificate.
- The certificate enables you to open a DHOAS home loan, into which your subsidy payments are made.
- If you close or make changes to your DHOAS home loan, your subsidy payments will cease. As you are unable to reapply for another subsidy certificate, you will not be able to establish another DHOAS home loan and restart subsidy payments.
Important note: If you intend to close or change your DHOAS home loan, it is recommended that you contact the DHOAS service line on 1300 434 627 to discuss the impact of the closure on any outstanding entitlement you have.
Limited cases where a DHOS application is accepted
There is a specific and limited extenuating circumstance where a DHOS-eligible person may apply for entitlements under DHOS (as opposed to applying as an “Old Scheme Member” for limited benefits under DHOAS).
The extenuating circumstance is where a DHOS-eligible person's DHOS home loan is discharged as a result of one of the following:
- Destruction of the subsidised property
- Compulsory acquisition of the property by a government authority
- Sale or transfer of the property under an order of a court, other than an order made under the Bankruptcy Act 1966 or in proceedings for the recovery of a judgement debt.
In this specific case only, within 12 months of the loan being discharged, the person can apply once for a DHOS certificate of entitlement to take out another DHOS home loan and restart their subsidy payments.
For further information, please call 1300 434 627.
Existing DHOS subsidy recipients
If you established a DHOS home loan and started receiving your subsidy payments prior to the closure of the scheme on 30 June 2010, your subsidy will continue to be paid into your existing DHOS home loan for as long as you have a DHOS entitlement and you are meeting the conditions of the scheme.
However, any change to your current DHOS loan arrangements will result in your existing subsidy payments stopping. Given DHOS is now closed, you will not be able to reapply for DHOS to restart your subsidy payments.
If you intend to close or change your current DHOS home loan it is recommended that you contact the DHOS service line on 1300 434 627 to discuss the impact of the scheme's closure on any outstanding entitlement you may have.
How DHOS subsidy is calculated
The monthly subsidy is 40% of the average (not actual) monthly interest calculated over the life of the loan.
Using a benchmark interest rate, the interest bill is calculated over the 25 year loan term. This interest amount is then divided by the number of months in the 25 year term (300) to produce a monthly average. The subsidy payable each month will be 40% of this monthly average.
DHOS benchmark interest rate
The interest rate that applies to the DHOS home loan is called the 'Benchmark Interest Rate'. DVA calculates the benchmark rate for DHOS home loans monthly.
Using data provided by the Reserve Bank of Australia (RBA) at the end of the month, DVA averages the variable rates of the five largest lenders, and then compares that average against the NAB variable rate. The benchmark rate for DHOS will be the lower of the two.
If the benchmark rate changes, so too will the amount of subsidy you receive. The RBA provides DVA with information about lenders' variable rates, on the last business day of the month. DVA recalculates the DHOS benchmark interest rate and advises NAB of the change.
The adjustment to your DHOS home loan repayment and subsidy amount takes effect two months after the advice from the RBA, to allow for administration.
RBA advises DVA of changes in the benchmark rate on the last business day of May 2021. You will see this change in the DHOS Benchmark Interest Rate reflected in your July 2021 subsidy payment.
Table of Benchmark Interest Rates for past 12 months (based on a $80,000 DHOS home loan over 25 years).
|Monthly subsidy||Effective Date|
Generally, a DHOS-eligible person is entitled to one year of subsidy for each year of effective service completed after finishing the basic service period (five years for Permanent members and eight years for Reservists), up to a maximum of 20 years of subsidy.
For example, an eligible person who completed 10 years of effective full-time service would be entitled to five years of subsidy payments. A Reservist who completed 12 years of effective service would have a four year entitlement.
Personnel who served in operational areas and enlisted after 15 May 1985 or who revoked their Defence Service Homes (DSH) entitlement may be eligible for additional assistance for warlike service.
Warlike Service is the period of service in the operational area defined as warlike by the Minister for Defence. The basic service period for personnel with warlike service is waived and an additional period of between two years and five years, depending on the length of warlike Service, is added to the subsidy period.
The additional period is based on the length of time served in a locality during which service in that area is deemed 'warlike' (service in Somalia, Cambodia, the former Yugoslavia, Rwanda, East Timor, current Gulf i.e. Op Falconer, Afghanistan & Iraq).
The subsidy period entitlement for eligible persons with warlike service is calculated on the number of completed years, plus the additional years of subsidy in accordance with the following:
|Total of periods that warlike service was performed||Additional years of subsidy|
|Not more than three months||Two|
|More than three but not more than six months||Three|
|More than six but not more than nine months||Four|
|More than nine months||Five|
Eligible persons who completed warlike service may accrue a subsidy entitlement up to a maximum of 25 years.
The subsidy period for eligible persons with allotted warlike operational service in the Middle East region between 2 August 1990 and 9 June 1991 (Gulf War) is calculated on the greater of the number of completed years of service, or 16 years, up to a maximum of 25 years.
Therefore, an eligible person who served for two years but had Operational Service between 1990 and 1991 is entitled to 16 years' subsidy. The same person with 19 years' service would be entitled to 19 years.
If you receive a DHOS subsidy you are required to meet the following conditions of the Scheme. This information applies to current recipients of DHOS.
- The subsidy recipient and/or partner*/dependent children must not have more than 50 per cent beneficial interest in any property other than the property for which the subsidised loan will be used. Beneficial interest relates to the ownership of a property and is different to the equity a person has in a property. This means that if the title of the property is in your name or jointly with any other immediate member of your family (partner* or children), then you own the property 100%. It should not be confused with the amount of equity you may have in the property i.e. the value of the property less the amount of any mortgage.
- * The term 'partner' refers to married spouses or defacto partners, as officially defined by Defence. This includes same sex partners whose relationship meets Defence's definition of a defacto relationship.
- The house for which the loan is being used must be suitable for the eligible person and their family having regard to size of the house, location to the workplace, and so on. The house may only be used as a residence and may not be used to carry on a business, trade or profession.
- The title of the house, mortgage documents and loan account, are to be held in the name of the entitled person either solely, or as joint tenants with a spouse (partner or proposed). The property cannot be owned with any other person, nor can the title be held as tenants-in-common. The National Australia Bank (NAB) must hold the first mortgage over the property.
Please note: This information does not apply to DHOS-eligible persons, who due to extenuating circumstances, receive limited benefits under DHOAS.
If you receive the DHOAS subsidy on an $80,000 subsidised loan you are required to meet the conditions of DHOAS (excluding DHOAS-related eligibility and entitlement conditions).