By Chaice Paterson, CEO & Founder, Low Deposit Homes | Updated June 2026
It’s the question almost every Defence first home buyer asks: should I use DHOAS or the First Home Guarantee (the 5% Deposit Scheme)? The short answer is that it’s not either/or — for most eligible ADF members, the right move is to use both, because they solve completely different problems. The First Home Guarantee gets you into the home (a 5% deposit with no Lenders Mortgage Insurance). DHOAS makes the home cheaper to hold (a monthly subsidy on your loan interest for years). One is an entry tool, the other is an ongoing saving. Here’s how they compare, when each matters most, and why stacking them beats choosing.
Quick comparison
| First Home Guarantee (5% Deposit Scheme) | DHOAS | |
|---|---|---|
| What it does | Lets you buy with a 5% deposit, no LMI | Pays a monthly subsidy onto your loan interest |
| Who runs it | Federal (Housing Australia), a civilian scheme | Defence, via the Department of Veterans’ Affairs |
| Who’s eligible | First home buyers (citizens & PRs); ADF members included | Current & former ADF who’ve served on/after 1 Jul 2008 and met the qualifying period |
| When it helps | At purchase — slashes the deposit barrier | Ongoing — reduces what you pay each month for years |
| Dollar value | Saves the LMI premium (can be tens of thousands) + lets you buy with ~5% down | ~$490–$981/month depending on tier & rates |
| One-off or ongoing | One-off benefit at purchase | Ongoing while you hold an eligible loan |
| First home only? | Yes (first home buyer scheme) | No — DHOAS isn’t limited to first homes |
Why it’s not actually a choice
The two schemes work on different levers, so using one doesn’t use up the other — they sit in separate eligibility silos. The First Home Guarantee is a civilian first home buyer scheme; DHOAS is a Defence entitlement. An eligible serving member buying their first home can take the 5% deposit and no-LMI benefit of the First Home Guarantee to get in the door, and have DHOAS subsidising the loan afterward. Layer on the First Home Owner Grant (where the package is under $750,000) and the state stamp duty exemption, and you’ve got a stack no civilian buyer can match.
So the real question isn’t “which one” — it’s “am I capturing both?” Most members aren’t, because nobody hands them the combined picture.
When the First Home Guarantee matters most
The 5% Deposit Scheme is the bigger deal when your deposit is the barrier — which, for most first home buyers, it is. Saving a 20% deposit on an $800,000 build means $160,000; the scheme drops that to around $40,000 and removes the LMI premium you’d otherwise pay for a small deposit. If getting in the door is your challenge, this is the scheme doing the heavy lifting. (Note the price caps: $1 million in Queensland metro, $950,000 in Melbourne metro.)
When DHOAS matters most
DHOAS is the bigger deal over time — and the longer you’ve served, the more it’s worth, because your tier rises with service. At Tier 3 (8+ years permanent service), the subsidy applies to a loan portion up to $827,380 and can be worth around $981 a month at recent rates. Across the early years of a mortgage — when your interest bill is highest — that compounds into a very significant figure. DHOAS also isn’t limited to your first home, so it keeps working on future purchases.
The verdict for ADF first home buyers
For an eligible serving member buying their first home, the best outcome is almost always: First Home Guarantee to get in with a low deposit and no LMI, DHOAS to lower the repayment, plus the grant and stamp duty exemption on top, and HPAS as a one-off cash boost. The schemes don’t compete; they compound. The only real “which is better” situations are edge cases — for example, if your package price exceeds the First Home Guarantee cap, you’d lean on DHOAS, the stamp duty exemption and HPAS instead. We work out exactly which combination applies to your situation and connect you with defence-savvy lenders who know how to assemble it.
Frequently asked questions
Can I use DHOAS and the First Home Guarantee at the same time? Yes — they’re separate schemes (one Defence, one civilian) and don’t cancel each other out. Most eligible ADF first home buyers can use both.
Which saves more money? Different kinds of saving. The First Home Guarantee saves a big one-off cost (LMI, plus letting you buy with 5% down). DHOAS saves smaller amounts monthly but for years. Over a full mortgage, both are substantial.
Does using DHOAS reduce my First Home Owner Grant? No. The grant is a state scheme assessed on its own rules; DHOAS doesn’t affect it.
I’ve served 10 years — does that change the answer? It makes DHOAS more valuable (you’d likely be Tier 3, the highest subsidy), but you’d still use the First Home Guarantee to minimise your deposit. Stack both.
What if my package is over the First Home Guarantee cap? Then you lean on DHOAS, the Queensland stamp duty exemption (no cap) and HPAS. We’ll model it for your price point.
Find out which schemes you qualify for
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Related Defence guides
- Defence Force First Home Buyer Guide
- DHOAS explained — how the subsidy works
- How the Defence schemes stack with the first home grants
See your own numbers
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Estimate your net cash to get in and your monthly repayment after the DHOAS subsidy, with your Defence benefits stacked on the first home buyer grants.
Low Deposit Homes operates under Winning Homes Australia Pty Ltd (ACN 633 321 758). All figures illustrative and current as at June 2026; DHOAS values move with interest rates, scheme caps and rules change, eligibility varies. General information only, not financial or credit advice.