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Buy your first home with help from your super

2023-02-07 05:30

The Australian Government's First Home Super Saver (FHSS) scheme exists to help first-home buyers save for a home loan deposit using their super. And it's even more attractive from 1 July 2022!

  • 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 30%disclaimer
  • The government has also increased the total amount you can save for a deposit through your super, making the scheme much more attractive – especially for couples

Want to buy a property and know you could afford the mortgage repayments, but can't seem to get the deposit together? The FHSS scheme may be just what you need to get you on the property ladder.

It's getting harder to buy property

Saving enough for a home loan 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 according to a number of metrics it's very difficult compared to what's been the case historically," says ANZ Senior Economist, Daniel Gradwell.

Gradwell goes on to say, "If we look at how long it would take a person on the average wage to save a 20 per cent deposit, that's at record-high levels."

As of March 2022, the ANZ CoreLogic Housing Affordability Report shows that the average time for a first home buyer to save a 20% deposit has risen to a national record of 11.4 years.

To help address this issue, the Australian Government introduced the FHSS scheme in 2017 with further improvements taking effect from 1 July 2022.

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 a property purchase.

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

Better still, from 1 July 2022 the FHSS has become more attractive with a higher limit on the amount that can be saved in super – increasing from $30,000 to $50,000 per individual or $100,000 per couple.

How much can I contribute to super under the FHSS?

Currently, the FHSS scheme allows individuals to contribute up to $15,000 per financial year into their super – either through voluntary concessional (before-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) will not count towards the FHSS contribution limit and cannot be accessed to buy your home.

Although the annual limit of $15,000 (per financial year) hasn't changed, as mentioned above, the maximum total amount you can save through super has increased from $30,000 to $50,000 per individual or $100,000 per couple.

When the time comes to buy your property, you can request a determination of how much you are eligible to withdraw, or request a withdrawal from super (via the Australian Taxation Office (ATO) using your MyGov account) to help fund your home purchase. 

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 and it is also taxed at your marginal rate less a 30% offset on the way out, once you withdraw it to buy your first home. However, 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 helping you keep more of your savings, the interest earned on your voluntary FHSS contributions is 'deemed' at a current rate of 4 per cent for the July to September 2022 quarter (this rate was around 3 per cent for the last two financial years, and 4 per cent in 2019-20).

Although this deemed earning rate may be less than your actual super fund's performance it is currently much higher than typical deposit rates on offer from most financial institutions. And, importantly, this rate isn't affected by falling markets.

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

How much more could I save for my first home deposit?

The following tables illustrate how much more could be saved via the FHSS scheme by contributing $12,500 per year as pre-tax contributions e.g. via a salary sacrifice arrangement with your employer, compared with having the same annual amounts in a standard savings account earning a gross rate of 2.1% p.a.


Assumptions: This table based on rules and caps as at 1 July 2022. Shortfall interest charge (SIC) assumed to be 3.5% pa - compounding yearly, bank interest is 2.1%, This example is for illustrative purposes only.

As illustrated above, if your gross taxable income is $100,000 p.a., and you were to make before-tax concessional contributions of $12,500 p.a. (e.g. via a Salary Sacrifice arrangement), your actual take-home pay would only decrease by $8,188 in the first year.disclaimer After four years, you'll have an estimated $45,864 available to withdraw from your super for your first home purchase - giving you $10,336 more than a standard savings account. But it could be more compelling if you're looking to buy your first home with a partner.

Let's say your partner (who has also never owned a home) earns a gross salary of $70,000 p.a. and salary sacrifices the same $12,500 p.a. Because of the tax advantages of super, your partner's actual take-home pay would only drop by $8,050 p.a. and after four years, you could both have a combined FHSS amount of $91,727 to put towards your first home - equating to $21,242 more than if you had left your savings in a standard savings account. 

Although the above examples are based on pre-tax concessional contributions only, you can also make after-tax non-concessional contributions (i.e. from your take-home pay) to further boost your first home savings. Just remember to stay under the following super contribution caps:

  • $27,500 per year for concessional (before tax) contributions which includes any mandatory employer super guarantee contributions 
  • $100,000 per year for non-concessional (after tax) contributions. 

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 (potentially up to $100,000 for a couple). 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 have to 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.

Note, you can only use voluntary super contributions you've personally made since 1 July 2017, not the compulsory super paid by your employer.

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.

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.

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

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 avoid lenders' mortgage insurance, which can add up to tens of thousands of dollars to the cost of buying a home.

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 10.5% super guarantee payments) or claiming a deduction on a personal contribution

Buy your first home with help from your super

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The information contained in this document is general in nature only and does not constitute tax advice. We recommend that you seek independent tax advice specific to your individual circumstances from a tax specialist or registered tax agent.

“ANZ Smart Choice Super” is a suite of products consisting of ANZ Smart Choice Super and Pension (PDF)ANZ Smart Choice Super for employers and their employees (PDF) and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees (PDF). OnePath Custodians Pty Limited (ABN 12 008 508 496, AFSL 238346 RSE L0000673) (OPC) is the issuer of the ANZ Smart Choice Super suite of products. OPC is the trustee of the Retirement Portfolio Service (ABN 61 808 189 263, RSE R1000986) (RPS) and the ANZ Smart Choice Super suite of products are part of the RPS. You should consider obtaining financial advice before making any decisions based on the information. You should obtain a Product Disclosure Statement (PDS) relating to the relevant financial product and consider it before making any decision about whether to acquire or continue to hold the product. Target Market Determinations (TMDs) where required for relevant products have to be available for consideration by distributors/members. A copy of the PDS and TMD (where relevant) is available via the links above, and upon request by phoning 13 12 87 or by searching for the applicable product at The ANZ Smart Choice Super and Pension product is distributed by Australia and New Zealand Banking Group Limited (ANZ) (ABN 11 005 357 522).  We recommend that you read the ANZ Financial Services Guide (PDF), before deciding whether to acquire or continue to hold this product. View the ANZ Smart Choice Super and Pension Target Market Determination (PDF). ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees are MySuper compliant products issued pursuant to the latest PDS available at OPC is a member of the Insignia Financial group of companies, comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (Insignia Financial Group). The Australia and New Zealand Banking Group Limited (ANZ) (ABN 11 005 357 522) brand is a trademark of ANZ and is used by OPC under licence from ANZ. ANZ and the Insignia Financial group of companies (including OPC) are not related bodies corporate. ANZ does not stand behind or guarantee these products.

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First Home Super Saver Scheme Factsheet, Australian Government. March 2022.


This drop in take-home pay only relates to the first year of saving via salary sacrificing into super per this example, this is due to potential tax rate changes in future years that could see this figure vary.