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Home loans explained: The First Home Super Saver Scheme

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If you are looking to purchase your first home but are struggling to save up enough money for a deposit, you might want to check out the Australian Government’s First home super saver (FHSS) scheme.

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What is the First Home Buyer Super Save Scheme?

The First Home Super Saver Scheme (FHSSS) was introduced in July 2017 by the Australian Government and the Australian Taxation Office as a way to improve housing affordability and help first home buyers get into Australia’s expensive property market.

The scheme allows borrowers to save money and grow their home deposit using their superannuation fund. Borrowers will benefit from a lower rate of tax charged on their superannuation account.

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How does the First Home Buyer Super Save Scheme work?

The FHSS scheme requires you to make voluntary contributions into your super fund account. This is done by either making manual personal contributions or you may be able to enter into a salary sacrifice arrangement with your employer.

It’s important to note that not all employers provide these arrangements, so you may have to make the contributions yourself or opt for another saving method.

The main benefit to the FHSS scheme is the tax saving that can be made, as super contributions are charged at a lower tax rate than most income levels.

  • The amount you’ll save on tax varies depending on your income. Concessional super contributions which come from an individual’s pre-tax income (usually from an employer) are generally taxed at 15%.
  • However, those with an income of $37,000 per annum or less will get any tax paid on their super contributions refunded back into their super account. This is known as the 'low income super tax offset'.
  • Those with a combined income and super valued at over $250,000 per annum will need to pay Division 293 tax which is an extra 15% tax charged on the super contributions.
  • However, if you decide to add personal after-tax contributions to your super, these will not be taxed again.
  • You can save up to $15,000 of voluntary contributions within one financial year to be released under the FHSS scheme, or up to $30,000 in contributions over the course of the scheme.
  • Before signing your first home contract or applying to release your FHSS funds, you have to apply and receive your FHSS determination from the Australian Tax Office (ATO). After you’ve made a valid release request you have 12 months to either sign a contract to purchase/construct a home or recontribute the FHSS amount into your super.
  • If you sign a contract you must notify the ATO within 28 days of signing it. If you recontribute your FHSS amount you must inform the ATO within 12 months of requesting the release.

Related: Our complete guide to the First Home Owner Grant

Who is eligible for the FHSS scheme?


The main eligibility requirement to partake in the First Home Super Saver Scheme is to have never owned property in Australia. You must also be at least 18 years old.

In some cases of severe financial hardship, the ATO may consider granting those who have previously owned property access to the scheme. To be eligible for this, you should have lost all property because of events such as:

  • Severe illness
  • Bankruptcy
  • Loss of employment
  • Relationship breakdown (e.g. divorce)
  • Natural disaster that affected property interests

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What are the benefits of the FHSS Scheme?

The benefits of the First Home Super Saver Scheme include:

  • Makes it easier to access the property market and focus on saving.
  • You can save on tax which can help you save up for a deposit more quickly. Concessional super contributions are only taxed at 15% whereas your marginal tax rate (income tax) can be up to 45%.
  • As of July 2019, you don’t have to wait until your FHSS amounts are released before signing a contract to purchase your property.

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Are there any restrictions or conditions to be aware of?

There are a number of First Home Super Saver Scheme restrictions you should be aware of:

  • The home you wish to purchase must be located in Australia, as of July 2019.
  • Some superannuation funds will not release the money and could charge additional fees. It’s best to ask about this before entering into a salary sacrifice arrangement or making voluntary contributions.
  • When you receive your FHSS funds, you will receive a payment summary that will affect your tax for that financial year.
  • You must intend to live on the property as soon as possible after purchase. Or, you should live there for at least 6 out of the first 12 months of owning the property.
  • The FHSS scheme is a one-time only deal and you can only make a single withdrawal.
  • You can not use the funds on certain types of property: a houseboat, motor home, premises incapable of being used as a residence and vacant land. The FHSS scheme can be used to purchase vacant land if the contract to begin construction on a home is made within 12 months of the release request.

If eligible, you can benefit greatly by using the FHSS scheme. Find out more by speaking to one of our Home Loan Specialists today.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

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Tags: first home buyer, saving, home loan, first home, new purchase, first home owners grant

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