MWL Blog

Buying a House- ADF Schemes & Grants Explained

So you’ve decided that now is the right time to look at buying a house….yay, go you! But which grants and schemes can an ADF member access when buying a property and how do they all actually work?

 

I don’t know about you but sometime’s you just need it explained in plain old non-military speak.

 

So let’s get to the details about the cashola you *and the ADF member* might be entitled to access through things like the First Home Loan Deposit scheme, First Home Buyers Grant, DHOAS, HPAS, and HPSEA.

*don’t worry all of those letters will be explained below*

 

The First Home Loan Deposit scheme

What is it?  The First Home Loan Deposit Scheme is an Australian Government initiative to support eligible first home buyers to purchase their first home sooner. Usually, first home buyers with less than a 20% deposit need to pay lenders mortgage insurance. Under the Scheme, eligible first home buyers can purchase a home with a deposit with as little as 5%.

 

This is because the National Housing Finance and Investment Corporation guarantees, to a participating lender (including our partner Defence Bank), up to 15 percent of the value of the property purchased that is financed by an eligible first home buyer’s home loan.

 

As mentioned in episode 64 of the MWL Podcast, there are a number of eligibility requirements, including property price caps. Here is a handy online calculator to work out the average cost of a house in the suburb you’re interested in and to find out whether it might be within the property price cap.

 

There are currently 27 participating lenders, including Defence Bank, across Australia offering places under the First Home Loan Deposit Scheme. However, the scheme is supporting only a limited number of home loans so it is first come, first served.

 

When it comes to the eligibility requirements for the First Home Loan Deposit scheme, are there any ADF exemptions?

At the moment, there aren’t any exemptions for ADF members with the property having to remain owner occupier if purchased through the FHLDS. This means that if you and the ADF member posted out of the location of the home the loan would no longer be guaranteed by the scheme. Defence Bank will continue to lobby and advocate for this when they meet with NHFIC

 

The First Home Owner Grant

What is it? The First Home Owner Grant was introduced on July 1st, 2000 to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories and administered under their own legislation.

 

Here is a break down of what is available in the various states and territories and whether there are any ADF exemptions when it comes to some of the requirements you need to meet to receive the grant;

 

NSW

The NSW government offers a $10,000 First Home Owner Grant for builders of new homes up to $750,000, and purchases of new homes up to $600,000.

ADF exemption- YES. You must live in the home you buy for at least 6 months in the first year of owning the property to receive the grant unless you work in the Australian Defence Force.

Check out all of the eligibility criteria here

First home buyers in NSW may also be eligible for;

  • No stamp duty for all homes up to $650,000
  • Stamp duty reductions on homes up to $800,000
  • No insurance duty on lender’s mortgage insurance

 

VIC

The Victorian government offers a grant of up to $20,000 for first home buyers building or buying a new home in regional Victoria, or up to $10,000 for these types of homes in cities. The maximum purchase price of eligible new homes is $750,000, and the home must be less than five years old.

ADF exemption- YES. You must occupy the home for at least 12 months but Australian Defence Force personnel are exempt.

Check out all of the eligibility criteria here

First home buyers in Victoria may also be eligible for;

  • both new homes and established homes are eligible for a first home buyer duty exemption if the home is valued at $600,000 or less, or a concession for a principal place of residence with a dutiable value between $600,001 and $750,000 .
  • New and established homes valued up to $550,000 are eligible for a concession if you intend to live there as your primary home.
  • First home buyers with a family (at least one dependent child) may be eligible for a duty concession or exemption on a property valued at up to $200,000.
  • First home buyers purchasing an off-the-plan property or refurbished lot may be eligible for an off-the-plan duty concession.

 

QLD

First home buyers in Queensland may be eligible for the Queensland First Home Owners’ Grant which offers $15,000 for eligible first home buyers who are buying or building a new home up to the value of $750,000 – including off-the-plan homes.

ADF exemption- MAYBE. In exceptional circumstances, the Commissioner of State Revenue may use discretion concerning some eligibility criteria. For example, if you live in the home for less than 6 months.

Check out all of the eligibility criteria here

 

ACT

As of July 2019, the ACT does not offer any first homeowner grants to first home buyers, but it does offer a means-tested full stamp duty concession to all first home buyers on all properties.

Check out all of the eligibility criteria here

 

NT

In the Northern Territory the Government offers a First Home Owner Grant of $10,000 for first home buyers buying or building a new home or an established home.

ADF exemption- YES. Where applicants are prevented from complying with the six-month continuous occupancy requirement, the period may be reduced including for changes in posting of ADF personnel.

Check out all of the eligibility criteria here

First home buyers in the Territory may also be eligible for;

  • The BuildBonus grant (for the building of new homes) and/or the territory homeowner discount, which is a stamp duty discount of up to $18,601.
  • A Home Renovation Grant of up to $10,000 for eligible recipients of the above First Home Owner Discount.
  • A Household Goods Grant of up to $2,000 for purchasing household goods, granted to eligible recipients of the First Home Owner Grant.

 

SA

In South Australia the Government offers for, eligible first home buyers, a $15,000 grant for new residential dwellings valued at up to $575,000. You must live in the property for at least six months in the first year of owning it to be eligible for the grant.

ADF exemption- Maybe. You can apply for an exemption, if you live in the home for less than 6 months, due to being a member of the ADF.

Check out all of the eligibility criteria here

 

WA

In Western Australia, eligible first home buyers can receive a First Home Owner Grant of up to $10,000 for buying or building a new home. Homes south of the 26th parallel (including all of the Perth metro area) can have a total value of up to $750,000, whereas homes located north of the 26th parallel can be valued at up to $1 million.

ADF exemption- Maybe. If there is a change of circumstance and you’re unable to satisfy the residence requirements and can demonstrate good reasons that are unforeseen and/or beyond your reasonable control, the Commissioner may consider an application to reduce the time you are required to live in the home to a period of less than 6 months.

Check out all of the eligibility criteria here

First home buyers in WA may also be eligible for;

  • The Home Buyers Assistance Account, which is a grant of up to $2,000 to cover the incidental expenses of purchasing an established or partially built home through a licensed real estate agent in WA. It is available for properties with a purchase price of up to $400,000.

 

TAS

The first Home Owner Grant in Tasmania is $20,000 for buying or building a new home, including a kit home, off-the-plan home, or owner/builder home.

ADF exemption-Maybe. Under the First Home Owner Grant Act 2000​ the Commissioner of State Revenue may exercise discretion in reducing the residency period.

Check out all of the eligibility criteria here

First home buyers in Tasmania may also be eligible for;

  • A 50% stamp duty discount if the property has a dutiable value of $400,000 or less.

 

DHOAS

So what about that thing called DHOAS? What the heck is it and what do all those letters mean?

The Defence Home Ownership Assistance Scheme assists current and former ADF members and their families to achieve homeownership. DHOAS is administered by the Department of Veterans’ Affairs on behalf of the Department of Defence.

The Scheme is aimed at improving ADF recruitment and retention and the longer you serve in the ADF, the more entitlement you accrue under DHOAS and the longer you can receive assistance. To be eligible, you must have served within the last five years of applying for DHOAS, completed a qualifying period of service, and accrued a service credit.

So the longer your ADF member stays in defence the more benefit they get under the DHOAS.

But how does it actually work? Once you have been approved you will be emailed a certificate of entitlement and that is all you need to prove your DHOAS eligibility when you come to the bank for your home loan. So if you’re thinking about accessing DHOAS it isn’t necessary that you have your certificate of entitlement before you come and speak to the bank. You can get your loan application underway before you receive your certificate and as long as you have your certificate to the bank before you proceed to settlement than it’s all fine.

Depending on the amount you are eligible to receive, a percentage of your interest on your DHOAS home loan is then paid into your loan account each month. It’s basically about helping you pay off your loan early.

For the full eligibility criteria, further info and how to apply check out this link.

 

HPAS

So we’ve covered the First Home Loan Deposit Scheme, the First Home Owners grant, and DHOAS but what else is available?

Well, I’m glad you asked because there is this thing, offered by Defence, called the Home Purchase Assistance Scheme aka HPAS.

HPAS comes as a lump-sum payment of $16,949 *before tax* and its purpose is to assist the ADF member to purchase their own home.

To be eligible to receive a HPAS payment the ADF member can’t have received HPAS before. HPAS is actually only payable once in an ADF member’s entire period of service. You have to purchase the home in your current (or new) posting location. On the day that you sign contracts, it’s expected that the ADF member will serve in the location for 12 months after the purchase, and the ADF member will live in the house for the remainder of their posting at that location. If you are MWD(U) *member with dependent unaccompanied* the ADF member needs to remain as categorised as MWDU for the next 12 months.

But if you check all of those boxes and ARE eligible to receive HPAS you will actually receive the lump sum payment BEFORE you need to pay your house deposit because you’re considered to have purchased a home when you have signed either the contract to purchase the home or the agreement for it to be built.

Keep in mind though, the amount the ADF member is eligible for is affected if a non-ADF member (who isn’t a recognised partner) is joint owner of the property. So, for example, if the ADF member purchased the property with you and you were not officially listed as their partner or the ADF member purchased with a friend, sibling etc and you or they were listed joint owner of the property than the ADF member would only be eligible to receive 50% of that $16,949 lump sum payment.

 

HPSEA

So that’s HPAS but did you also know there is an allowance called the Home Purchase or Sale Expenses Allowance aka HPSEA?

HPSEA is an allowance for the reimbursement of reasonable costs to an ADF member when they sell a home at the time they’re being posted to a new location; or if they sell in their previous posting location and buy again in the new location. This allowance covers stuff like the sale and purchase costs, including real estate agent’s commissions, stamp duty, solicitor’s fees. HPSEA is basically to compensate ADF members for the high costs of selling and buying. The amounts that you’ll receive through this allowance depend on your costs.

And finally, what about the newest grant on the block……

 

The Home Builder Grant

The HomeBuilder grant provides eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home. HomeBuilder will assist the residential construction market by encouraging the commencement of new home builds and renovations.

Check out all of the eligibility criteria in the links below but here is a quick rundown of which states or territories do offer exemptions for ADF members in regard to the property being the principal place of residence for a certain period of time. So, for instance, if you did apply for the HomeBuilder grant and, at the time, did intend on living in the property in that state or territory but due to ADF commitments or a last-minute posting had to leave that state or territory without occupying the property for the minimum time (to receive the grant) the following would apply;

 

NSW

To receive the HomeBuilder Grant in NSW you must retain ownership of the property and occupy it as your principal place of residence for a continuous period of at least six (6) months.

ADF exemption- Where an applicant was a member of the permanent forces of the Australian Defence Force and the applicant was enrolled on the NSW electoral roll at the date of the eligible HomeBuilder contract, then the applicant is exempt from the residence requirement.

To receive the exemption, you must provide a document issued by the Australian Defence Force clearly showing your name and that you are a member of the permanent forces at the date of the eligible HomeBuilder contract.

Check out all of the eligibility criteria here

 

VIC

To receive the HomeBuilder Grant in Victoria you must retain ownership of the property and occupy it as your principal place of residence for a continuous period of at least six (6) months.

ADF exemption- Where an applicant was a member of the permanent forces of the Australian Defence Force and the applicant was enrolled on the Victorian electoral roll at the date of the eligible HomeBuilder contract, then the applicant is exempt from the residence requirement.
To receive the exemption, you must provide a document issued by the Australian Defence Force clearly showing your name and that you are a member of the permanent forces at the date of the eligible HomeBuilder contract.

Check out all of the eligibility criteria here

 

QLD

To receive the HomeBuilder Grant in Queensland the home must be your principal place of residence after completion or settlement.

ADF exemption- Unclear. There is no clear exemption outlined for Queensland but I did speak with a Qld government rep and they said if you have genuine difficulties or complications in meeting the residency requirements the Queensland Commissioner has the discretion to consider an exemption. So if you were to unexpectedly post out of your location but had received this grant you would be able to put forward your exceptional circumstances.

Check out all of the eligibility criteria here

 

ACT

To receive the HomeBuilder Grant in the ACT you must retain ownership of the property and occupy it as your principal place of residence for a continuous period of at least six (6) months.

ADF exemption- Maybe. If you have difficulties in meeting the residency requirement, please contact us to discuss your situation.

Check out all of the eligibility criteria here

 

NT

To receive the HomeBuilder Grant in the NT you must be owner-occupiers.

Exemption- No. I was told by the Northern Territory Revenue office that there is no exemption for members of the Australian Defence Force.

Check out all of the eligibility criteria here

 

SA

To receive the HomeBuilder Grant in South Australia you must retain ownership of the property and occupy it as your principal place of residence for a continuous period of at least six (6) months.

Exemption- Maybe. If you have genuine difficulties or complications in meeting the residency requirements please contact RevenueSA to discuss your situation. Where there are good reasons to do so, the Commissioner has the discretion to extend the twelve (12) month period in which you must commence occupying your home or reduce the six (6) month period for which you must occupy your home.

Check out all of the eligibility criteria here

 

WA

The grant will be paid to all registered owners of the property.

Exemption- Yes. Where an applicant was a member of the permanent forces of the Australian Defence Force and the applicant was enrolled on the WA electoral roll at the date of the eligible HomeBuilder contract, then the applicant is exempt from the residence requirement.
To receive the exemption, you must provide a document issued by the Australian Defence Force clearly showing your name and that you are a member of the permanent forces at the date of the eligible HomeBuilder contract.

Check out all of the eligibility criteria here

 

TAS

To qualify for the Grant, you and any other applicant to your grant application must retain ownership of the property and occupy it as your principal place of residence for a continuous period of at least six (6) months.

Exemption- Yes. Genuine difficulties or complications in meeting the residency requirements could mean that you discuss your situation with the State Revenue Office. Where there are good reasons to do so, the Commissioner of State Revenue has the discretion to extend the 12 month period in which you must commence occupying your home or reduce the six (6) month period for which you must occupy your home.

Check out all of the eligibility criteria here

 

So obviously I have only touched on all of those potential grants and schemes you can possibly access as a new homeowner and partly as a return property owner.

It can kind of, sort of get confusing when it comes to what you can and can’t access but I hope this gives you a starting point with what to look into further or a reminder about what is available.

There are various eligibility requirements in different states and territories and minimum service periods but there are definitely some great benefits available

To find out more info about the First Home Loan Deposit Scheme, the First Home Buyers Grant, DHOAS, HPAS, HPSEA, and the HomeBuilder Grant click on the links provided above.

Don’t forget that if you are in the market for a DHOAS loan or would like to look into the First Home Loan Deposit Scheme, Defence Bank are one of the few banks approved to offer both of those.

To get in contact with Defence Bank visit their website or call 1800 033 139 and of course to listen to the MWL Podcast episode on Buying a House-ADF schemes and grants click here