Canberra & Perth

First Home
Super Saver

The First Home Super Saver (FHSS) scheme offers a novel approach for first-time homebuyers to financially prepare for their dream home by allowing them to accumulate savings within their superannuation fund through voluntary or personal contributions.

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benefit

Under the First Home Super Saver (FHSS) scheme:

  • Under this initiative, aspiring home buyers may step into their future homes with a minimal deposit requirement of merely 5%.
  • The government pledges to underwrite the additional 15%, enabling lenders to lend loans to these hopeful buyers without the burden of Lender's Mortgage Insurance (LMI).
  • Tailored with precision for those venturing into homeownership for the first time.
  • Income and house price limits apply.
  • Individuals are afforded an opportunity to strategically save for their first home by setting aside up to a maximum of $15,000 in a single financial year, cumulating to a total ceiling of $50,000 across all contributing years.
  • In addition to these contributions, participants benefit from an allocation of deemed earnings, which are specifically calculated based on the shortfall interest charge (SIC) rate, rather than the actual earnings on those contributions within the fund.
Crucially, the funds liberated under the FHSS scheme are versatile, offering the potential to facilitate the purchase of both newly constructed and pre-existing homes within Australian. This scheme manifests as a sophisticated financial tool designed to ease the pathway into homeownership for first-time buyers, encapsulating a blend of saving discipline and fiscal advantage. ​

Eligibility criteria:

  • Must be 18+ to request FHSS determination or release funds (can save pre-18).
  • Cannot have previously owned property in Australia (exceptions for financial hardship).
  • Cannot have previously applied for FHSS fund release.
  • No requirement for Australian citizenship or residency for taxation purposes.

To get started with the First Home Super Saver (FHSS) scheme, follow these steps:

Ensure you’re eligible for FHSS before making contributions. Check eligibility criteria such as age, property ownership history, and prior FHSS fund release applications.

Confirm with your superannuation fund that they participate in the FHSS scheme and understand any applicable fees, charges, or insurance implications.

Contributions: Contribute to your super fund through salary sacrifice or eligible personal voluntary contributions.

You don’t have to inform your employer or super fund about your intent to use the FHSS scheme.
There’s no requirement to notify the Australian Taxation Office (ATO) or receive approval before starting your contributions for FHSS.

Begin by carefully planning and making the eligible contributions to your super fund while adhering to the criteria and limits. Or contact a broker to:

  • Assist you in understanding how the FHSS scheme can benefit your overall savings and loan amount.
  • Help you find the most suitable mortgage products according to your financial situation and the amount saved through the FHSS scheme.
  • Guide you through the mortgage application process, potentially saving you time and helping you avoid common pitfalls.

When planning to utilize the First Home Super Saver (FHSS) scheme to save for your first home, understanding the types of super contributions you can make is crucial. This will help you strategize your savings more effectively. There are mainly two types of contributions you can consider for the FHSS scheme: Salary Sacrifice Contributions (Pre-Tax Contributions):

  • Individuals are afforded an opportunity to strategically save for their first home by setting aside up to a maximum of $15,000 in a single financial year, cumulating to a total ceiling of $50,000 across all contributing years.
  • In addition to these contributions, participants benefit from an allocation of deemed earnings, which are specifically calculated based on the shortfall interest charge (SIC) rate, rather than the actual earnings on those contributions within the fund.
  • These are contributions made before tax is applied to your salary, which may reduce your taxable income.
  • You need to arrange this with your employer, as it involves agreeing to forego part of your pre-tax salary or wages, having that amount contributed to your superannuation instead.
  • Since these contributions are pre-tax, they are normally taxed at the concessional rate of 15% in the super fund, which could be lower than your marginal tax rate.

2. Personal Voluntary Super Contributions (After-Tax Contributions):

  • These contributions come from money you've already paid income tax on, such as from your take-home pay.
  • You can make these contributions directly to your super fund or by asking your employer to deduct them from your after-tax salary.
  • Because this money has already been taxed at your marginal tax rate, these contributions are not taxed again in your super fund.

For both types of contributions, you should:

Discuss with your employer: how often they can make these contributions (monthly, quarterly, etc.) and ensure that the contributions are deposited into your super fund. This is vital because, for the FHSS scheme, contributions only count once they’re received by your super fund.

Check with your super fund: about the process for making personal voluntary contributions if you choose to make them directly.

Contribution Strategies:

  • You can opt for a single lump sum contribution (e.g., $15,000 in one financial year) or smaller, regular contributions throughout the year, based on what suits your financial situation best.
  • Keep in mind the annual limits for concessional (pre-tax) and non-concessional (after-tax) contributions, to avoid exceeding these caps.

Further Considerations:

  • Verify your eligibility for the FHSS scheme and stay informed about the contribution limits and conditions, as these can change.
  • Plan your contributions in a way that maximizes your tax benefits while aligning with your savings goals for purchasing your first home.

Incorporating these contributions into your broader financial and home-saving strategy can be a powerful way to build your deposit, leveraging the concessionally taxed environment of your super fund.