Buy your first home with help from your super

The Australian Government's First Home Super Saver (FHSS) scheme exists to help first-home buyers save for a home deposit using their super.

• The FHSS scheme can be an effective strategy for first-home buyers to save a deposit
• The lower tax environment of super can help accelerate first-home buyers' savings by around 30%^disclaimer
• The total amount you can save for a deposit through your super is up to $50,000, making the scheme much more attractive – especially for couples

It's hard to get into the property market

Saving enough for a home deposit is one of the biggest barriers facing first-home buyers in Australia.

"It's definitely possible for first-home buyers to get into the market, but the data tells us it's very difficult compared to what we’ve seen historically," says ANZ Economist, Madeline Dunk.

Dunk goes on to say, "Our latest ANZ CoreLogic Housing Affordability Report estimates that it takes first home buyers around 11.1 years to save a 20 per cent deposit for a house, and about 8.5 years for a unit."

“It can be particularly challenging in some parts of the country, such as Sydney, where it takes the average first home buyer 15.6 years to save up for a deposit on a house."

To help address this issue, the Australian Government introduced the FHSS scheme in 2017.

What is the FHSS scheme?

The FHSS scheme allows first-home buyers to make voluntary contributions to their super, which they can later withdraw to help fund the purchase of their first home.

With the tax concessions available inside super, this can help first-home buyers grow their deposit faster than outside super.

The FHSS scheme can allow an individual to withdraw up to $50,000 saved in super or $100,000 per couple.

How much can I contribute to super under the FHSS scheme?

The FHSS scheme allows individuals to voluntarily contribute up to $15,000 per financial year into their super. These are either voluntary concessional (pre-tax) or non-concessional (after-tax) contributions. Note, if you're an employee, your super guarantee contributions (i.e. the compulsory super contributions your employer makes on your behalf) do not count towards the FHSS contribution limit and cannot be accessed to buy your home.

When the time comes to buy your property, you request a determination of how much you are eligible to withdraw from the Australian Taxation Office (ATO) using your MyGov account. Once you have received the determination, you can then request a withdrawal from your super fund to help fund your home purchase. Again, this request is made to the ATO which deals directly with your super fund. The ATO initially receives the amount from your super fund and pays the appropriate amount to you after any adjustment for tax.

How much will I be able to withdraw from super?

The FHSS is managed by the ATO, and it decides how much you're eligible to withdraw based on the value of your voluntary contributions, the types of contributions (e.g. pre-tax or after-tax) and how long your money was invested.

If you make pre-tax super contributions, such as via a Salary Sacrifice arrangement with your employer, 15% of the contribution is taxed going into your super account. However, when withdrawn it is taxed at your marginal rate less a 30% offset when used to buy your first home under this scheme. Super contributions from your take-home pay (i.e. after-tax contributions) are not taxed going into your super fund or on withdrawal.

In addition to being able to access some or all of your voluntary contributions, you are also paid associated earnings. Associated earnings are calculated by the ATO on a notional earnings rate rather than reflecting the actual fund earnings. Associated earnings are calculated using a formula and rate of return based on the shortfall interest rate. 

When you withdraw your FHSS contributions (and the associated earnings it's made) for your first-home purchase, your savings will generally be taxed at your marginal tax rate less a 30 percent offset.

Am I eligible for the FHSS?

You can only make a FHSS release request if you are over 18 years old. However, you can make eligible contributions to your super before you are 18.

Also, you must have:

• never owned property in Australia (unless the Commissioner of Taxation determines that you have suffered a financial hardship)
• not previously made a FHSS release request under the FHSS scheme

Eligibility is assessed on an individual basis. So, if you're thinking of buying a property with a partner, sibling or friend, you can each access your own eligible FHSS contributions to purchase the same property. Also, if the person you are buying with has previously owned a home, it won't stop anyone else who is eligible from applying.

Can I use my super to buy a home or investment property now?

The purpose of the FHSS scheme is to help Australians save for their first home. So, if you want your first property purchase to be an investment property, you'll need to move in as soon as practical and live in it for at least six months within the first 12 months after you buy, before switching it over to be an investment property.

Care should be taken to ensure you fulfill the requirements of the scheme and apply the amount received under the scheme to the purchase or construction of your first home within the time period. It is also necessary to notify the ATO once you have entered the contract to purchase or construct your new home.

What if I change my mind?

Voluntary contributions can be withdrawn to build or buy a home, nothing else. So, if your plans change, and you decide not to buy a home, you won't be able to withdraw the money for another purpose. But money invested in super isn't wasted as it will boost your overall super balance.

From 15 September 2024, if you change your mind prior to the ATO releasing the money from the super funds, you can withdraw your application and the ATO will arrange for the payment to be returned to your super fund.

However, if you change your mind after the ATO has arranged your super to be paid to you, there are two choices:

• keep the funds and pay flat rate of 20% tax on the assessable portion (amount relate to pre-tax contributions and associated earnings), or
• recontribute the amount back into your super fund as a non-concessional (after-tax contribution)

Will it mean I have less money in retirement?

Not necessarily. 

If you weren't likely to make extra contributions anyway, it won't have a big impact on your super balance. Using the scheme to get your deposit together may mean you gain an asset (your home) faster than you otherwise would and this may give you the option to sell your home (e.g. to downsize) and access all or part of your equity tax-free at retirement. A larger deposit may reduce the amount you need to borrow and provide an indirect savings through lower interest costs.

Where can I find more information about the FHSS scheme?

You can visit the ATO website for further details on the FHSS scheme.

So, should I use the FHSS to help save my deposit? 

The FHSS can work for you if:

• you're saving for a first home deposit anyway and want to make the most of the tax benefits of super
• you're prepared to live in the property you purchase for at least six months within the first year of purchase
• you won't require the money you are saving for your house for anything else
• the additional savings means you may save a larger deposit and may avoid lenders' mortgage insurance, which can add up to tens of thousands of dollars to the cost of buying a home

Calculate how much you can save using the FHSS Scheme Calculator and see if the FHSS Scheme is right for you.

How do I make a voluntary contribution?

Most funds can release funds under the FHSS scheme, but it's best to check before putting your money into super.

The good news is ANZ Smart Choice Super can release funds under the FHSS scheme and our customers can easily start their first-home deposit saving journey by making after-tax, non-concessional voluntary contributions via BPAY^®:

• Biller Code – 169060
• Reference Code – Member number (this is a combination of your ANZ Smart Choice Super BSB and account number)

ANZ Smart Choice Super customers could also make concessional contributions by arranging a salary sacrifice arrangement with their employer (on top of the 11.5% super guarantee payments, which are increasing to 12% on 1 July 2025) or claiming a deduction on a personal contribution. 

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