Home loans for ADF members and vets

By   |   Verified by David Boyd   |   Updated 19 Sep 2023

Home loans for ADF

If you are a member of the Australian Defence Force, working in the Army, Navy or the Air Force as a permanent member or a reservist, you may qualify for a discounted home loan that falls under the Australian Defence Force Home Ownership Assistance Scheme (DHOAS).

The scheme entitles you to more favourable payment terms and bigger interest rate discounts than available to the typical home buyers. Depending on your length of service and other eligibility criteria, you may be able to get a home loan for up to 90% to 95% of the property’s purchase price.

Eligibility criteria

If you are a member of the Australian Defence Force (ADF), here's what you need to become eligible to get a Defence Force home loan.

  • Must have served in the ADF within the last two years. This means you qualify if you are either currently in the service or have left recently.
  • You have to have completed a minimum qualifying period, which takes into account time served in the foreign service. For both permanent and reservist members, there are minimum service requirements to fulfill in order to qualify for the loan scheme.
  • You must have accrued Service Credit, also referred to as the DHOAS entitlement, by completing effective service.
  • You need to meet the conditions that come with the assistance scheme.

Subsidies for Defence Force home loans are granted on a tiered basis. The Subsidised Loan Limits (SLLs) for each tier are updated in July for each financial year. The most current rates are available on the DHOAS website.

Permanent members

The minimum qualifying period for permanent members is four consecutive years. Service Credit begins accruing after completing a month of service. From then on your service credit accrues on a monthly basis.

After the four-year qualifying period, for every calendar year you serve, you get a year and for every month you serve you get one month of entitlement accruing to you under the terms of the DHOAS scheme.

In most cases the maximum is 20 years, with a 25 year limit for those serving during wartime.

Reserve members

Reservists need to complete eight years of service before they can qualify. From that point onwards, each year of service is taken to represent 20 days of paid service during one financial year. Once you have qualified, you begin to accrue a year of subsidy entitlement for every financial year in which you complete 20 days of service.

It’s possible to reduce the qualifying period by opting to serve full-time for a continuous period of at least six months in one financial year. This is taken to be the equivalent of two years out of your eight-year qualifying period. Once you have completed the qualifying period, the continuous full-time service allowance does not apply.

Factors that may impact your eligibility for the Defence Force home loan subsidies:

  • Switching from being a permanent member to a reservist
  • Taking a break in service and returning to service
  • Separating from both the ADF as well as overseas service

Occupation as a condition for eligibility

The DHOAS is meant to support home ownership. As such, occupancy is a key requirement for being eligible for DHOAS subsidy. Either you and / or your family members must occupy the subsidised home for a period of at least 12 months. Subsidy payments start only after you begin living in the property and have a valid subsidy certificate. If you are away, one or more of your dependents living in the property would meet the occupancy requirement.

Lender considerations

Lenders will review your specific situation to understand the many variables that could impact your eligibility for a Defence Force home loan.

  • There will be no waiver of Lenders Mortgage Insurance (LMI).
  • A deposit amounting to 5% of your home purchase price is required by most lenders to qualify for the loan.
  • A Guarantor No Deposit Defence Force Home Loan can be used if you wish to borrow 100% or more of the home purchase price. Loan terms differ from lender to lender.
  • You can only have one DHOAS home loan at any given time and it would be secured on the property. This is why you do not find lines-of-credit on DHOAS mortgage products.
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homeloans.com.au Low-rate Home Loan (Owner, Principal & Interest)

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  • No monthly or annual fees
  • 100% offset account
  • Unlimited additional repayments
  • Free online redraw


Should you consider a professional package?

Professional packages are best suited for those who need to borrow over $250,000 and want other facilities like credit cards and transaction accounts rolled into one institution. A professional package charges a single annual fee — that could range from $300 to $750 — depending on the package. It would be worth considering a professional package should the potential saving in fees be big enough when comparing the one-off pro pack fee versus the total annual fees you’d pay on separate products.

Getting a second property as an investment

There are a number of options open to you on how to get an investment property.

Getting a second DHOAS home loan

Once you have completed the 12 month occupancy requirement in your subsidised home, you will continue to receive the monthly subsidy payments for the DHOAS home loan whether or not you continue to live there.

You may rent out the property and still get your DHOAS subsidy payment for as long as your home loan remains current. If you are considering renting the house, it is best that you get independent tax advice on the implications of getting the subsidy on an investment property.

Once you close a DHOAS home loan, you are allowed to transfer your DHOAS subsidy entitlement to another property. In spirit, your next DHOAS home loan can be used for getting a second home as an investment property. However, the 12 months of occupation rule must be fulfilled in order to get your subsidy payments.

You can find more information on restarting the subsidy on another DHOAS home loan and property on the Defence Home Ownership Assistance Scheme website.

Go for a Defence Housing Australia (DHA) investment property

If you are an ADF member buying a DHA property, keep in mind that your entitlements may be affected in case you are posted to the same location as your investment property.

DHA has investment opportunities in a range of investment properties across the nation at a variety of prices. You could choose from a range of townhouses, units and houses in regional areas, smaller cities, and in state capitals like Sydney and Melbourne, depending on the size of loan you can get.

You may:

  • Borrow 95% of the property value or up to 97% of purchase price to cover your LMI.
  • Borrow up to 90% with no LMI when buying a DHA investment property.
  • Borrow up to 100% of property value with a guarantor.
  • Borrow up to 100% of your rental income less management fees, which is normally 16.5% of rental amount. That means some lenders may accept 83.5% of the rental income.

You can get more information at the DHA website.

Consider working with a mortgage broker

Only a handful of lenders are approved to offer Defence Force home loans. Working with a knowledgeable mortgage broker can open up a wider choice of lenders and help you get a more advantageous loan for your situation.