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Saving enough cash to fund a house deposit is one of the biggest hurdles. You could access your super early with the Australian government’s First Home Super Saver Scheme

For many first-home buyers, scraping together enough cash to fund a deposit is one of the biggest hurdles when it comes to entering the housing market. With that said, if you meet the eligibility criteria and made voluntary contributions to your superannuation, you might be able to access your super early under the Australian government’s First Home Super Saver (FHSS) Scheme.

Please note, we do not participate in the Home Guarantee Scheme, First Home Super Saver Scheme, Victorian Homebuyer Fund or other government home-buyer assistance schemes. If you are eligible for the First Home Buyer Grant, these funds can't contribute to your 20% deposit. Please speak to your conveyancer on how best to approach this.

What is the First Home Super Saver (FHSS) Scheme?

The First Home Super Saver (FHSS) Scheme allows eligible first home buyers to use their super fund to save money for their first home. Through this scheme, you can make voluntary contributions (either before-tax concessional or after-tax non-concessional) to your super to put towards a deposit. If you’re eligible, you can then apply to have these voluntary contributions released, along with the associated earnings, to help you purchase your first home.

To find out if you’re eligible, please click here.

How does it work?

This information is accurate as of October 31, 2023, for the most up-to-date information, please visit visit the ATO website.

Essentially, the scheme allows eligible individuals to contribute an extra $15,000 to their super each year, up to a total of $50,000. With that said, chances are you’ll probably save less than $15,000 a year when you take into account the annual limit for super contributions. Because super contributions typically get taxed at a rate of 15%, you may be only be able to contribute a maximum of $27,500 to your super each year. This includes your employer’s contributions too.

When the time comes to buy your first property, you’ll need to apply for a FHSS determination through the Australian Taxation Office (ATO). The determination details the maximum amount you can withdraw from your super under the scheme. Once you receive your determination, you can then apply to the ATO once more to release your super funds (plus associated earnings and less applicable taxes). The ATO forwards this request to your super fund, which then sends your funds back to the ATO. The ATO will withdraw tax and forward the remaining funds to you.  

It’s important to be organised and put in your application ahead of time so you’re not scrambling to pull together a deposit. You also have 12 months from the date you requested your FHSS savings to sign a contract. If you don’t manage to buy a property within this time, the funds will be recontributed to your super. Don’t stress if you’re not able to get into the property market before the 12-month mark, there are a few fallback options if things don’t quite go to plan.

To put it simply, you can break the FHSS scheme into 4 easy steps:

1. Where eligible, make voluntary super contributions,
2. Contribute up to the maximum threshold, being:
3. a. $15,000 per year, or
4. b. $50,000 total for an individual or $100,000 total for 2 eligible individuals.
5. Apply to the ATO to access your additional super funds under the FHSS scheme, and
6. Withdraw the cash from your super to put towards your first home.

Ultimately, you can’t just access your existing super under the FHSS scheme. It’s also worth noting that limits apply. For more information, visit the ATO website.

Benefits

These are some of the key reasons why people choose to use their super account to fund a deposit for their first home.

Tax savings

By making voluntary contributions to your super fund, there’s the potential to save thousands of dollars in tax. Depending on your annual income, you could be taxed at a lower rate compared to your income tax rate, which could help you to save for a deposit faster.

Earn investment returns

Depending on the market, your super may earn interest returns that you can take advantage of when you make voluntary contributions. In some cases, these investment earnings could be more than what you would earn if you were to put your savings into a high-interest savings account or a term deposit.

Purchase a property with a partner

Through your powers combined, you and your partner (if eligible) could potentially access a combined amount of $100,000 to put towards your first home if you both meet the eligibility requirements.

Drawbacks

Although the FHSS scheme might sound like a great deal, below are some of the limitations.

Less take-home pay

Whether you choose to salary sacrifice or make after-tax super contributions, chances are you’ll have less cash left over from your payslip. With this said, it’s important to consider whether or not you can afford to make these voluntary payments.

Limited access to funds

Unlike a savings account, when you contribute extra funds to your superannuation, you can’t access the money whenever you like. And when it does come time to access the funds, you can only access them if

• You are eligible
• Put these funds towards purchasing a home

And may not be able to access all of your additional contributions.

Capped amount

Sure, $50,000 might sound like a lot of money if you’re able to access the maximum amount, but how does it actually stack up against the purchase price of the property? If your deposit is less than 20% of the purchase value, you might still be up for lender’s mortgage insurance.

For more information on the FHSS scheme, refer to the ATO website. If you’re not confident navigating the ins and outs of this scheme by yourself, it could be worth chatting with a qualified tax professional or a financial advisor before pulling the trigger.  

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍