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Guide to the First Home Super Saver Scheme

Are you a first home buyer wondering if you can use your super for a deposit? Well, the First Home Super Saver Scheme (FHSS) may be just what you’re looking for.

The Australian government’s scheme has been running since July 2017, and it’s designed to help first time buyers achieve their homeownership dreams sooner by allowing them to build a home deposit inside their superannuation.

Currently participants are able to access contributions of up to $50,000 for a deposit, following an announcement made in the 2021/22 Federal Budget.

And in the 2022/23 budget, the government is set to expand several of its homebuyer schemes to continue helping first time buyers.

So if you’re a young Australian looking to save up for a first home loan deposit then sit back, because our First Home Super Saver Scheme guide will run you through everything you need to know.

How does the First Home Super Saver Scheme (FHSS) work?

Saving for your first home is no easy task! Not only do you have to pull together a home loan deposit which, by itself, is going to be a substantial figure, but there are also additional costs like lenders mortgage insurance, stamp duty (unless you’re eligible for exemption in your state) and upfront mortgage fees to consider. Throw in the raising cost of living into the mix and it's no wonder many people struggle getting into the market. 

So it’s easy to see why many first home buyers are interested in making use of the First Home Super Saver Scheme. So how does it actually work? Well, as a first home buyer you can:

  • Opt in to the scheme through the Australian Taxation Office (ATO). Then you’ll have the ability to...
  • Sacrifice up to $15,000 of your salary each year. This can be done by either: a) salary sacrificing through your employer who will transfer any voluntary contributions into your superannuation fund on top of the 10% compulsory contributions they’re required to make OR b) by making personal contributions to your super. 
  • Withdraw your contributions (up to the present $50,000 cap). This cap will include all voluntary contributions you've made under the scheme since July 2017.
First Home Super Saver Scheme process

What about tax?

One of the major benefits of the scheme is that by saving inside your super you’ll be paying less tax than you would be liable for by saving outside of your super. That way you’ll be able to save up for a deposit faster. Here are some of the numbers:

  • If you elect to make ‘before-tax contributions’ (e.g. via salary sacrificing) these will be taxed at 15% inside your super and you obviously won’t have to pay any tax beforehand.
  • If you choose to make ‘after-tax contributions’ (e.g. via personal contributions) these will already have been taxed at your marginal rate (anywhere between 19-45%), but they won’t be taxed again inside your super.
  • Then when you go to withdraw your FHSS contributions, they’ll be taxed at your marginal income tax rate (including the Medicare levy), minus a 30% tax offset.

If you’re interested in seeing exactly what the difference could be in the way of savings, the FHSSS Calculator from the Commonwealth Superannuation Corporation is a good place to start.

Am I eligible for the FHSS scheme?

You can start making voluntary super contributions at any age, but you must be at least 18 years old before you can request for those funds to be released under the FHSS scheme. Other FHSS scheme requirements include:

  • You've never owned any kind of property (including owner occupied, investment, commercial or vacant land) in Australia. That is, the funds are used to purchase your first home.
  • You live or intend to live in the property you're purchasing as soon as it's practicable, and this must be for at least six of the first 12 months from settlement. In other words, you're an owner occupier.
  • You purchase a property within 12 months of applying for a request for release, although you can request the ATO to extend this by another 12 months if needed.
  • You have not previously received a FHSS payment.

How do I withdraw my FHSSS contributions?

Once you’re ready to put your deposit into action there are a couple of steps that will need to be taken before you can access your contributions.

Step 1: Contact the ATO

You’ll need to apply directly to the ATO to access your contributions by requesting an FHSS ‘determination’ which can be done via the MyGov portal and then through the linked ATO service. During this process you’ll be told the maximum amount that can be released to you (depending on the contributions you’ve made).

Step 2: The ATO issues a release authority to your super fund

Next up, the ATO will contact your superannuation fund and issue them with a ‘release authority’, then your super fund will then send the money to the ATO. Before they release the money though, the ATO will withhold the outstanding tax owed (see above) as well as any outstanding Commonwealth debts you may have. 

Step 3: You receive the money 

According to the ATO, it generally takes 15-25 business days for your super fund to release the money and then for the ATO to transfer it to your bank account. At the end of the financial year you’ll also receive a payment summary which you’ll need in order to complete your tax return. 

Also, it’s worth bearing in mind that you can only apply for the release of your FHSS scheme contributions once.


Home loan approval tips for first home buyers

While taking the first step and saving for your home deposit (and other property buying costs) may be exciting, when you get there you still have to convince the banks that you’re worthy of a home loan. So make sure you:

  • Can show genuine savings. When you apply for a home loan, the lender will want to see that you have 'genuine savings' by looking at least 3 months worth of your most recent bank statements. The benefit of a good savings history is it shows the bank that you’re more than capable of repaying the home loan.
  • Don’t job hop. Unless absolutely necessary, it’s a good idea to stay with your current employer, so you can show the lender you have a stable income and are not a risky borrower.
  • Check your credit score. It’s easy to receive a copy of your credit score these days, as there are several online credit reporting providers which allow you to access a copy of your credit report once a year for free. When you download your report, make sure you look out for any errors, and get them removed from your file before applying for a home loan.

First Home Super Saver Scheme FAQs

Can couples use the scheme?

Yes, couples can make use of the FHSS Scheme. In fact, the ATO states that couples, siblings or friends can each utilise their own FHSSS contributions to purchase the same property. However, contributions are made individually. Basically that means hypothetical couple Juan and Sara could both save up to $30,000 individually (under the existing cap), then once they’ve withdrawn it, put that combined $60,000 towards buying a home.

Are there price restrictions on property purchases?

Unlike other schemes for first home buyers, there are no strict price caps on property that can be purchased using a deposit saved up under the First Home Super Saver Scheme.

What if I change my mind and don’t want to buy a property?

According to the ATO, once you’ve applied to withdraw your contributions and they’ve been released you’ll have 12 months to sign a contract to purchase or build a home. However, if you change your mind or your plans fall through, some of the options available include:

  • The ATO can grant you an extension
  • You can deposit the contributions back into your superannuation. Bear in mind, the exact amount you can re-contribute might be different to the amount that was released to you
  • You can keep hold of the contributions, though they will incur an additional tax (FHSS tax)
Are there other schemes for first home buyers?

Yes. In addition to the FHSSS, first time buyers may also be eligible for the Federal Government’s First Home Loan Deposit Scheme (FHLDS) which lets people take out a mortgage with a deposit as low as 5% without having to fork out for lenders mortgage insurance (LMI).

There’s also the Family Home Guarantee which allows eligible single parents with children to purchase a home with a deposit as low as 2%. Like the FHLDS, the government will guarantee the loan which means borrowers won’t need to pay lenders mortgage insurance

Depending on where you live and the price of the property you’re intending to purchase, you may also be eligible for a stamp duty concession.

How much do I need to save for a home loan deposit?

The general rule of thumb is that you’ll want to save a deposit of at least 20% as that will allow you to avoid paying lender mortgage insurance (unless you’re eligible for one of the schemes above) when taking out a home loan.

For example, on a property worth $700,000 a 20% deposit would equate to $140,000. Of course, there are plenty of other variables to consider, so check out our home loan deposit guide for a more extensive run through.

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Tom Watson
Tom Watson
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Tom has over five years experience as a finance journalist covering everything from property and fintech to consumer banking.

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Maria Gil
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Maria has five years of journalism experience and is currently a finance journalist covering home loans and property, personal finance and the currency exchange market. She has also completed her ASIC RG146 (Tier 2).

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