ADF Housing entitlements guide:
dhoas, hpas & hpsea

defence housing entitlements

As we come from both a property investment and ADF background, we’re in a unique position to discuss the special ADF housing entitlements that you are eligible to receive. These are loosely grouped into two categories – ‘assistance to purchase’ (HPAS/HPSEA) and ‘assistance to repay the loan’ (DHOAS). Now, let’s have a look at both of these – and put the terms against the acronyms. Keep in mind that while the information here is always available in the PACMAN for you to check up on anytime, it will not be laid out as simply as this! 

 

Home Purchase Assistance Scheme (HPAS)

As a member of the ADF, you are eligible for assistance to purchase your own home. HPAS comes in the form of a lump-sum payment of $16,949, before tax. Note that the amount you’re eligible for is affected by your share of ownership of the property (ie – joint ownership with a non-ADF member will see the amount halved).

To be eligible to receive an HPAS payment, you must meet the following criteria:

  1. You must not have received HPAS before; it is payable only once in your entire period of service.
  2. You must purchase a home in your current (or new) posting location.
  3. On the day that you sign contracts, it is expected that you will serve in the location for 12 months after the purchase. Also, this means that you will have to live in the house for the remainder of your posting tenure to that location.
  4. If you are MWD(U), you need to remain in that categorisation for the next 12 months.


The best part? You are eligible to receive this lump sum payment BEFORE you need to pay your deposit as you are considered to have purchased a home when you have signed either the contract to purchase or the agreement for it to be built.

Home Purchase or Sale Expenses Allowance (HPSEA)

While we are strong advocates for a ‘buy and hold’ property strategy, there are some circumstances when it is untenable to continue ownership of a property. HPSEA is an allowance for the reimbursement of reasonable costs to an ADF member when they sell a home at the time they are being posted to a new location; or if they sell in their previous posting location and buy again in the new location.

An example of this would be if you own a home in Sydney, then get posted to Brisbane and want to buy a new home there. You would be eligible to receive HPSEA to reimburse the sale and purchase costs, including real estate agent’s commissions, stamp duty, solicitor’s fees, mortgage costs etc. This is to compensate for the relatively high transactional costs of selling and buying. For this allowance, the amounts that you will receive through HPSEA vary, depending on your costs. All of this is covered in extensive detail within PACMAN.

Defence Home Ownership Assistance Scheme (DHOAS)

The Defence Home Ownership Assistance Scheme (DHOAS) is a subsidy and home loan scheme available for current and former Australian Defence Force members. It is designed to assist ADF members and their families in repaying their defence home loan and achieve homeownership easier. 

The Australian Government has announced a $46.2 million expansion of the Defence Home Ownership Assistance Scheme, aiming to improve access to home ownership for eligible defence personnel earlier in their careers. 

The changes will allow veterans who served on or after 1 July 2008 to access the scheme at any stage after they have left the service. 

From 1 January 2023, the eligibility criteria for the scheme for each subsidy tier will be expanded by:

  • Halving the minimum service required for access by current ADF members from four to two years for permanent service, and from eight to four years for Reserve service
  • Removing the access cap altogether for veterans who have left the service (previously five years).

Basically, a DHOAS loan subsidises your home loan, for an amount and period of time based on how long you serve. As of  March 2024 it contributes a monthly amount between $539 and $1,078 to your loan. Not bad for just being an eligible ADF member, right? The amount you are entitled to receive varies, based on a three tier system – as seen in the table below.

The Australian Average House Price (AHP) is used to determine the subsidised loan limits under the three tiers. Each tier’s subsidised loan limit represents a percentage of the AHP, as shown here:

● Tier 1, is 40% of the AHP
● Tier 2, is 60% of the AHP
● Tier 3, is 80% of the AHP (The maximum benefit!)

Subsidy Tiers for 2023-24

Subsidy Tier Minimum Permanent Service Minimum Reserve Service Subsidised Loan Amount Maximum Monthly Subsidy*
1
2 years
4 years
$364,916
Up to $539
2
4 years
8 years
$547,373
Up to $808
3
8 years
12 years
$729,831
Up to $1,078

As of 1 July 2023, the AHP is $912,289. This figure is used to determine the 2023-24 subsidy tier values.*Estimated monthly subsidy values based on the March 2024 median interest rate. These monthly subsidy values fluctuate based on changes in the median interest rate.

You can see that you have to wait two years of service before you gain access to DHOAS. We recommend that you wait until you have done at least four to six years of service before you pull the trigger. This is for either of two reasons:

1- So you can have a higher monthly subsidy (about an extra $260 per month stays in your pocket) or;

2- So you can use four years of your service in a lump sum – very useful to top up your cash buffer after you have purchased your home.

The real kicker is the main condition of receipt – you and/or your family must occupy the home for at least 12 months and you will need to be occupying the home and holding a valid subsidy certificate before your subsidy payments will commence.

DHOAS HOME LOAN PROVIDERS

australian military bank

Australian Military Bank

Defence Bank Limited (Defence Bank)

National Australia Bank (NAB)

DHOAS LUMP SUM OPTION

Under certain circumstances, you may be eligible to have your subsidy paid out as a lump sum. If you have accrued sufficient entitlement you can convert up to four years of your service into a lump sum payment. 

This equates to $536 per month x 4 years [48 months] = $25,728. This can be especially useful if you’re looking to fast track your housing investment, but will only be applicable in some situations.

PRO TIP FOR COUPLES

The DHOAS Scheme was designed to incentivise members to stay in the ADF – the longer you serve, the more entitlement you accrue and the longer you can receive assistance.

If you have both served more than 4 years, you can get the subsidy for a loan up to $1,094,746 (2 x $547,373) and received a monthly allowance of $1,608 (2 x $804). Now that is a massive chunk off your monthly repayments!!

PRO TIPS TO MAXIMISE YOUR HOUSING ENTITLEMENTS

DHOAS, HPAS & HPSEA

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