Superannuation first home buyer: how to use super for a first home deposit

A superannuation first home buyer can use the First Home Super Saver (FHSS) scheme to save part of a first home deposit inside super, then apply to release those savings later. You cannot withdraw your whole super balance for a home. You can only release eligible voluntary contributions you have added yourself, plus an amount of associated earnings, up to set limits. Whether this suits you depends on your circumstances and your lender’s criteria.

This guide explains how the scheme works for a super first home buyer, what the limits are, who may qualify, and the steps to release your money. Every figure below traces to the Australian Taxation Office (ATO) or MoneySmart.

What the First Home Super Saver scheme is

The First Home Super Saver scheme lets you make extra voluntary contributions into your super fund, then apply to have eligible contributions released to help buy or build your first home. MoneySmart describes it as a way to save for a deposit inside super, where contributions may be taxed at a lower rate than your normal income, so your deposit could build sooner.

It is important to be clear on one point. The scheme does not let you raid your full super balance. The compulsory contributions your employer pays cannot be released. Only the extra voluntary contributions you choose to make, made on or after 1 July 2017, count towards what you can take out.

How much super you can use for a house deposit

There are two firm limits set by the ATO. They cap how much a superannuation first home buyer can release.

You can release a maximum of 15,000 dollars of eligible voluntary contributions made in any one financial year. Across all years, you can release a maximum total of 50,000 dollars of eligible contributions, plus an amount of associated earnings on top.

Associated earnings are not the actual investment returns on your money. They are a deemed amount the ATO calculates at the shortfall interest charge rate, to recognise that your contributions sat inside super for a period.

How much you actually receive also depends on the type of contribution. You can release 100 percent of eligible non-concessional (after-tax) contributions, and 85 percent of eligible concessional (before-tax) contributions. Only 85 percent of concessional contributions can come out because they have already been taxed at 15 percent inside super.

Who may qualify as a super first home buyer

The ATO assesses FHSS eligibility for each person individually. You must be 18 years or older to request a release, though you can make eligible contributions before you turn 18. You must intend to live in the home, and you generally must not have owned property in Australia before.

Because eligibility is assessed per person, couples, siblings or friends can each access their own eligible FHSS contributions towards the same property. That can lift the combined deposit two people bring to a purchase. If you are buying with someone else, our guide on Buying first home with a partner walks through how shared purchases work.

The amount you can borrow on top of your deposit will still depend on your income, your expenses and lender criteria. Try the borrowing power calculator before you set a deposit target.

The tax position

Saving inside super can be tax-effective for some people, though the outcome depends on your circumstances. Concessional contributions are taxed at 15 percent inside super, which is usually less than a person’s marginal income tax rate.

When you release your money, you also receive a non-refundable tax offset equal to 30 percent of the assessable FHSS released amount, in the year you request the release authority. This offset reduces the tax that would otherwise apply to the released concessional amount and its associated earnings. It is not a cash bonus, and the released amount is still counted in your assessable income before the offset applies.

This is general information, not tax advice. Your result depends on your income, your contribution type and your circumstances. The team at Finance Lab can talk you through how it may fit your plan, and you can confirm the tax detail with the ATO or a registered tax agent.

Steps to release super under the FHSS scheme

The order of the steps matters. Get one out of sequence and you may lose eligibility.

Because the money is released to you rather than held in an offset or a savings account, it forms part of your deposit funds. Lenders treat the source of a deposit carefully, so it helps to understand what counts as savings. Our explainer on Genuine savings explained covers how lenders view deposit funds.

How FHSS fits with other first home buyer support

The FHSS scheme is one option among several. It does not replace a deposit you save in the bank, and it does not change how lenders assess your loan. It sits alongside other support, such as the Home Guarantee Scheme, which can let eligible buyers purchase with a smaller deposit and avoid lenders mortgage insurance. You can read more in our guide on First home guarantee eligibility.

A smaller saved deposit can mean a higher loan-to-value ratio and the cost of lenders mortgage insurance. Building part of your deposit through super may help you reach a target sooner, but it is not guaranteed to remove that cost. Whether it does depends on the total deposit you bring and your lender’s criteria. For a fuller picture of the path to your first home, start with the First home buyer guide.

If you are weighing up your options, the team at Finance Lab can map how the FHSS scheme, your savings and any guarantee scheme could work together for your situation.

Frequently asked questions

Talk it through with the team at Finance Lab

Using super for a first home deposit can be worthwhile for some buyers and not others. The team at Finance Lab can review your numbers, explain how the FHSS scheme may fit alongside your savings and any guarantee scheme, and connect the steps to your loan options. Reach out to the team at Finance Lab to start.