In this guide
Saving the deposit to buy your first home has always been a tall order, but with property prices at record highs, getting into the housing market has become even more of a challenge.
The First Home Super Saver (FHSS) scheme, developed by the Australian Government could be part of the solution for some first home buyers, but it is important you are aware of the rules and limits on the amount you can withdraw.
The scheme allows you to save money towards your first home by making personal voluntary contributions to your super account, where tax concessions and a generous rate of interest can add to your savings.
What you can withdraw
Voluntary contributions you have made since 1 July 2017 to a taxed super fund are eligible to be included in the scheme, even if you didn’t originally intend to use them as savings towards a home.
If you’re a member of one of the rare untaxed super funds, you can open an account in another fund to make contributions you would like to withdraw for your first home.
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Contributions made by another person (like your spouse, your employer, or the ATO co-contribution) can’t be used, although savings transferred from an overseas super fund* can be.
Up to $15,000 in voluntary super contributions per financial year and $50,000 in total can be used towards your FHSS release.
The maximum you can withdraw using the scheme is 100% of your eligible non-concessional contributions and 85% of your eligible concessional contributions plus associated earnings (interest).
Remember the $50,000 limit applies to the contributions that can be included in your release. The amount you can withdraw could be more than $50,000 after interest is added to your savings.
*Excluding applicable fund earnings and Australian-sourced amounts or returning New Zealand-sourced amounts transferred from KiwiSaver.
Who is eligible
To be eligible for the FHSS scheme, you must have never owned property in Australia (including an investment property, vacant land, lease of land or commercial property) and cannot have applied for a release from the scheme in the past.
Although you can make contributions before you turn 18, you must be at least 18 years old to apply for the release of your contributions.
You must live in the property you purchase or intend to as soon as practicable after buying. You are also required to live in the property for at least six months within the first 12 months that you own it, after it’s practical to move in.
If you have owned property in the past but lost it due to financial hardship, you may be eligible for a hardship exception. It’s important to apply to the ATO for this exemption before you start saving to confirm you’re eligible.
Unlike many other first home buyer programs, eligibility for the FHSS scheme is assessed per person, not per property. Couples, siblings or friends can each access their own contributions to purchase the same property and if some of the buyers have owned property before, that won’t prevent those who are first-time purchasers from using the scheme.
How your savings are taxed
You can make both concessional and non-concessional contributions into your super account to release when you purchase your first home.
Non-concessional contributions are not taxed because you have already paid income tax.
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Concessional contributions are taxed at the rate of 15%. This tax rate is usually lower than the normal marginal tax rate you pay on your income. If you are a lower-income earner, you need to weigh up whether concessional contributions would benefit you, or if it is more appropriate to make non-concessional contributions or save outside super.
When you make an FHSS withdrawal, there is further tax to pay. The assessable amount is subject to withholding tax at your marginal tax rate, less a 30% tax offset. This assessable amount is made up of your net concessional contributions and the associated earnings on both your concessional and non-concessional contributions. Non-concessional contributions are not included in the assessable amount and are released tax free.
The assessable FHSS amount needs to be declared in your tax return in the financial year in which you request a release of your savings from the scheme. This may not be the same financial year in which you receive your FHSS money.
To avoid affecting other liabilities and benefits, the assessable FHSS withdrawal is not included in your assessable income for calculating Division 293 tax, Medicare Levy surcharge, family assistance and child support payments, or in the repayment income used to calculate your study and training loan repayments for the year.
How your savings grow
The associated earnings on your FHSS savings are deemed using a formula calculated by the ATO, not on the actual investment earnings on your super contributions.
The ATO calculates your associated earnings using the shortfall interest charge, which is the 90-day bank bill rate plus 3%, and interest is compounded daily. In many cases, the interest added to FHSS savings is higher than the rate you could obtain for a savings account. For example, the annual rate for July–September 2025 is 6.78%.
Calculator
To estimate how the lower tax and higher interest of the FHSS scheme could benefit you, try this calculator provided by the Commonwealth Superannuation Corporation (CSC).
The estimate shows the difference in what you could save in a bank account versus through super for your first home, based on your income and what you can afford to save. The calculator assumes you will contribute by salary sacrifice, but the results are equally valid for personal tax-deductible contributions. Unfortunately, it doesn’t allow for after-tax (non-concessional) contributions.
How to apply
While you’re saving, you don’t need to do anything or notify anyone that you’re saving towards the FHSS scheme.
Once you’ve finished saving and are ready to buy a home, log in to myGov and visit the linked ATO service. In the superannuation section you will find the FHSS scheme section you need to use to apply for your savings to be released and to notify the ATO of relevant details.
Step 1: Apply for a FHSS determination
The determination will tell you how much you have available to withdraw, including deemed earnings, and is generally issued immediately. You can apply for multiple determinations if you wish, and more earnings will be added every day, increasing the amount you can apply to withdraw. You must apply for your determination before the settlement date of any contract you have signed to buy a property. Missing the deadline means you won’t be able to withdraw your savings from super.
Step 2: Apply for a release
You might like to request one last determination on the same day, prior to submitting your release. This will ensure the amount you can apply for is as up-to-date as possible.
It can take 15–20 business days after making a release request to receive your payment. If you need the funds to ensure you have enough for settlement on your property, make sure you apply well in advance. You must apply for the release of your savings within 90 days of signing a contract to purchase your home (you may instead apply before signing if you wish). If you miss the 90-day deadline, you will not be permitted to apply, and your savings will remain in super.
Step 3: Notify the ATO that you have signed a contract to buy
You must notify the ATO that you have signed a contract to purchase or build your home within 90 days of doing so, or FHSS tax at the rate of 20% may apply. If your determination was issued prior to 15 September 2024, the deadline to notify the ATO that you have signed a contract is 28 days.
If you didn’t sign a contract before making a release request, you have 12 months from the date of the request to do so. However, the ATO will generally extend this time limit to 24 months automatically if you miss the deadline.
If you won’t be signing a contract to purchase or build a home before the deadline, you can recontribute the amount that was released into your super account or choose to keep it and pay 20% FHSS tax. If you recontribute the amount to super, you must notify the ATO before your purchase deadline expires to avoid the tax.
Correcting application errors
If you make a mistake on your FHSS release request, you can change or withdraw it if the funds have not yet been paid to you. If the ATO has already received the amount from your super fund when you request a change or withdraw your application, they will send the amount back to your fund to be reinvested as if the withdrawal never occurred. You are then free to make an amended request.
What’s the catch?
Although the FHSS scheme is very attractive, there are a few potential issues to be aware of.
1. Increasing income
If your income is exposed to a higher tax bracket when you make your FHSS withdrawal compared with when you made contributions, the tax benefit of the scheme is reduced.
2. Division 293 tax
If your income plus concessional super contributions is above $250,000 per year, your concessional super contributions attract additional tax (Division 293). Income for Division 293 purposes is not the same as your taxable income. It includes other items such as investment losses, fringe benefits, and family trust distributions.
If you’re liable for Division 293 tax while you’re making concessional contributions to super for the FHSS, the tax benefit of the scheme is substantially lower. Only a small reduction in total tax on your contributions is created.
You can still benefit from the 30% tax rebate on the earnings portion of your FHSS withdrawal.
3. Lower super balance for retirement
If the investment return of your super account is lower than the earnings added to your FHSS savings, your withdrawal will be partially drawn from your other super savings instead of being fully funded by the contributions you made.
4. The withdrawal could affect eligibility for income-tested first home buyer schemes
Because the taxable amount of an FHSS withdrawal is included in your assessable income, it can affect whether you qualify for an income-tested first home buyer scheme in the financial year after you request your withdrawal.
For example, if you’re applying for a first home buyer scheme in 2025–26, your 2024–25 income from your tax return is generally used to determine if your income is below the qualifying threshold.
Be careful timing your FHSS withdrawal and any application for an income-tested scheme and read all the terms and conditions. Remember withdrawals are included in your income for the financial year you request the withdrawal, and that may not be the same year you received the funds.
5. If you have a government debt, your withdrawal can be withheld to pay it
Amounts you withdraw from the FHSS scheme can be used to pay any outstanding debts to the government, including income tax, Centrelink and Child Support Agency amounts. Payment of your FHSS amount could be reduced to nil if you have outstanding government debts that exceed the value of your release.
If you have an income tax debt that includes a compulsory repayment of part of your study loan, some of your released FHSS amount will be used to pay this compulsory repayment, as it forms part of your income tax debt.
The bottom line
If you’re saving for a first home, it’s worth considering the FHSS scheme to boost your deposit with tax savings and a generous interest rate.
Before deciding, consider your personal circumstances and the potential drawbacks of the scheme to choose whether it’s right for you.
Also make sure you understand the application process and deadlines before buying a property to avoid trapping your savings in super or paying FHSS tax.
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