The act was introduced by the repatriation minister Edward Millen to provide housing for Australian soldiers returning from World War I, supplementing existing state schemes.

It was "effectively a not-for-profit co-operative arrangement from its inception, financed by premiums paid by the Homes purchasers and borrowers, with no monetary assistance whatsoever provided by the Commonwealth government".

The inaugural commissioner, James Walker, oversaw a rapid expansion of the housing scheme, employing primarily returned soldiers and aiming to build 8,000 homes per year.

[6] After finding the private sector unable to provide adequate building materials or keep up with the desired rate of construction, Walker began to vertically integrate the commission's supply chain, purchasing timber plantations and sawmills in Queensland and Victoria, a tileworks in South Australia, joinery works in multiple states, and leasing a brickworks.

[8] The Great Depression saw a significant increase in mortgage payments in arrears, and by 1936 the commission had foreclosed on nearly 3,000 homes despite relatively generous hardship provisions.

As a result, in 1947 the commission introduced a points scheme giving preference based on disabilities and family circumstances, which continued until 1953 when it reverted to a first-come, first-served basis.

[13] The early 1950s saw a major expansion of the scheme, with over 15,000 homes built per year and eligibility extended to soldiers returned from the Korean War and the Malayan Emergency.

[17] Both the housing and insurance schemes were transferred to the new Department of Veterans' Affairs by the Fraser government in 1976, with the commission rebranded as the Defence Service Homes Corporation (DSHC).

[24] In February 2014, the National Commission of Audit recommended in its Phase One Report that the Commonwealth sell its interest in Defence Housing Australia.