Home loans for veterans

A veteran is someone who has served in the Australian Defence Force (ADF), often serving the country overseas. The government usually pays an allowance to assist with the well-being of service members who are no longer actively serving in the military. Such payments are made periodically and can be shown as part of your income when you’re applying for a home loan.

The defence pension, or a veteran’s pension, is one such type of regular financial support offered by the government to service members who once served in the armed forces. When the individual who served passes away, the money is paid to their beneficiaries, such as a war veteran widow or their children. 

Some veterans also receive a disability pension, to support and compensate for any injury or long-term diseases that were caused or aggravated by their service with the ADF.

Currently serving members of the ADF and other younger veterans may be eligible for assistance when taking out a mortgage to buy a home or an investment property. 

According to the Department of Veterans’ Affairs (DVA), eligible veterans, ADF personnel and their dependants may be able to access three types of DVA home loan subsidy schemes, depending on their qualifying period of service.

• Defence Home Ownership Assistance Scheme (DHOAS): Available to current and former ADF members who served on or after 1 July 2008, and completed a qualifying period of service and accrued sufficient entitlement and have served in the ADF within the last five years.
• Defence Service Homes Scheme (DHS): Available to former ADF members who completed a qualifying period of service before 15 May 1985 or served in Namibia between 18 February 1989 and 10 April 1990.
• Defence Home Ownership Scheme (DHOS): available to former ADF members who enlisted on or after 15 May 1985, and separated from the ADF before 1 July 2008.

Veterans can also apply for the everyday home loans found in Australia’s mortgage market, provided they can fulfil the necessary eligibility requirements, whether they receive support from the DVA or not. 

Generally, to qualify for a home loan, a borrower will need to demonstrate to the lender that:

1. You’ll be able to meet your loan repayments on time.
2. Your income will continue until the end of the loan term.

Older veterans are often entitled to a government pension that is considered a part of their income during the home loan application process. However, veterans that are solely dependent on a government pension are more likely to fall into the category of non-standard borrowers. Lenders are extra cautious while evaluating such borrowers for a home loan. 

Veterans may opt for a standard home loan or apply with a specialist lender that offers unique solutions for veterans. Three lenders that provide home loans as part of the DHOAS are Defence Bank, Australian Military Bank, and NAB. DSH loans are available through Westpac. 

If you have other sources of income apart from your veteran’s pension or are only borrowing a small percentage of the property value, you may be able to apply for a standard home loan and access a greater variety of home loan options. 

If you’re applying with your veteran’s pension as your only source of income, or are borrowing at an advanced age, you may need to look at a lender that specialises in veteran home loans or non-standard home loans.

Pensioners applying for a home loan may be able to make their application stronger with a sizeable deposit (preferably 20 per cent of the property price) and a clean credit history. 

If you can't decide the next course of action, you can discuss your unique circumstances with a mortgage broker that has access to a wide range of lenders. A broker will provide you with expert financial advice regarding your home loan and help you look for lenders that suit your personal circumstances. 

Veterans home loans are specifically tailored for veterans who have served in the ADF and receive a regular pension from the DVA. Some lenders also offer home loans for veterans’ families to individuals receiving a war widow’s or widower’s pension. 

Some specialist lenders also provide disabled veteran home loans. These loans are for veterans who suffered a disability during their time serving as a member of the ADF and receive the Incapacity Pension from the DVA.

Eligibility for the various veteran home loan programs from the DVA will be based upon your period of service and other factors, all covered on the DVA website. 

For veterans applying for other home loans, banks may accept the following types of veteran’s pension as income for home loan application purposes:

• Service pension
• War widow’s or widower’s pension
• Veteran’s affairs age pension
• Other permanent and ongoing pension income on a case-to-case basis

Veteran pensioners may need to provide some additional documents on top of the standard documentation required for a home loan application. Different lenders may have specific requirements in this regard, but you’d generally need to provide them with the following documents:

• Proof of genuine savings amounting to at least 5 per cent of the property value to cover the minimum deposit
• Bank statements showing your pension payments or a current Department of Veterans’ Affairs statement
• When applying for a home loan on a disability pension, you’ll need a letter from Centrelink confirming the nature and status of your disability pension.