What is the First Home Super Saver Scheme (FHSS)?
The First Home Super Saver Scheme (FHSS, sometimes written FHSSS) lets first home buyers save part of a deposit inside superannuation and then withdraw it to buy a home. The appeal is structural, not magic: super is a concessionally taxed environment, so voluntary contributions made into your fund are generally taxed more lightly than money saved in an ordinary deposit account. For many people that difference means the savings available for a deposit go further under the FHSS than they would saving the same amount outside super.
The scheme applies to voluntary superannuation contributions made from 1 July 2017. Those contributions, together with the deemed earnings attributed to them, can be withdrawn for a home deposit. It is worth being clear about what the FHSS is and is not: it is a way to save a deposit tax-effectively, not a separate loan, and it does not replace the home loan itself. Where it fits in a property plan is the part worth thinking through deliberately, because the contribution caps and the timing of a release interact with the rest of how you intend to fund the purchase.
The ATO administers the scheme, and the rules around contribution limits, deemed earnings and withdrawal tax are set by legislation and change from time to time. The detail below is general and current at a point in time; before you act on it, confirm the current figures and your own position with the ATO and your licensed financial adviser.
Eligibility and how contributions are made
You can generally apply to release funds under the FHSS if you are 18 or over, have not previously requested an FHSS release, and have never owned real property in Australia. Eligibility is assessed individually, so you can still qualify even if you plan to buy with a partner who does not meet the criteria — each person is tested on their own record.
Contributions into the scheme are the voluntary ones you make on top of compulsory employer super. There are two common routes:
- Salary sacrifice. You arrange with your employer to direct part of your pre-tax salary into super. These are concessional (before-tax) contributions and are taxed at 15 per cent inside the fund, as usual.
- Personal after-tax contributions. You contribute money you have already been taxed on, directly to your fund. These non-concessional contributions are not taxed again on the way in.
Both types can count toward your FHSS balance, but only up to the annual and total limits the ATO sets. Contributing beyond those caps does not increase what you can release under the scheme, so the limits are a hard constraint to plan around rather than push against.
How the savings grow and how they are released
Your FHSS balance does not earn your fund's actual investment return for this purpose. Instead, the ATO applies a deemed rate of earnings to your eligible contributions, set with reference to the Shortfall Interest Charge. That deemed rate has generally sat above standard term-deposit and savings-account rates, which is part of why saving inside the scheme can compare favourably to saving outside it — though rates move, so treat any comparison as indicative rather than guaranteed.
When you are ready, you apply to the ATO for a release. The ATO tells you the maximum amount available, arranges for the money to come out of your super, and pays it to you. A withdrawal of concessional amounts and the associated earnings is generally taxed at your marginal tax rate, less a 30 per cent tax offset, and the ATO withholds an estimate of the tax owed before paying the balance to you. The practical effect is that the amount that lands in your account is net of that withholding, so it is worth knowing the likely figure before you commit it to a deposit.
What you can buy, and what happens if plans change
The home you buy with released FHSS money has to be a residential premises that you intend to live in. That includes vacant land where you plan to build, but it excludes anything that cannot be occupied as a residence, and it excludes houseboats and motor homes. It must become your home rather than an investment property: you are generally required to occupy the premises for at least six months within the first year after purchase or construction.
If your plans change and you do not buy a home within the allowed period, you have two broad options. You can recontribute the released amount back into super as a non-concessional contribution, or you can keep the money and pay FHSS tax — broadly equivalent to 20 per cent of the assessable concessional amounts released — which effectively reverses the tax benefit you received. Neither outcome is a penalty for saving; it is simply the scheme unwinding the concession if the money is not used as intended.
The rules around this scheme change regularly, so confirm current figures and timing on the ATO's First Home Super Saver page before you rely on any number here.
Where the FHSS tends to matter most is in how it sits alongside the rest of a first-home purchase — the deposit you are building outside super, the deposit size a lender will want, lenders mortgage insurance, and the timing of a release against a likely settlement. That structural fit is what we help you map, while suitability of contributing to super itself stays with your licensed financial adviser and accountant.
Book a strategy session and we will work through how an FHSS deposit fits the loan you are planning.
General information only — not personal financial product or credit advice. The First Home Super Saver Scheme is a superannuation matter; suitability and tax outcomes depend on your circumstances and should be confirmed with the ATO and your licensed financial adviser and accountant. Lending is subject to each lender's policy, your full circumstances and responsible-lending assessment. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).