First Home Super Saver Scheme (FHSS): How to Use Super to Save $50,000 for Your First Home in Australia

Buying your first home in Australia feels increasingly out of reach for many Australians, particularly younger professionals just starting their careers. The biggest hurdle? Saving that initial deposit. With median house prices continuing to climb year after year, the deposit amount has become a substantial barrier to homeownership.

The good news is the Australian government offers several schemes to help, including the First Home Super Saver Scheme (FHSS). This guide will walk you through everything you need to know about using your super to save for your first home in a tax-effective way.

What is the First Home Super Saver Scheme?

Normally, money in your super is locked away until retirement. The FHSS scheme changes this by letting you use the superannuation system to save for your first home while enjoying significant tax benefits.

You can make voluntary contributions to your super for buying your first home. There is a limit on how much you can contribute each year and total across all years. The limit is $15,000 per financial year and $50,000 maximum total across all years.

Why Save Through Super Instead of a Regular Savings Account?

Let me show you the difference using a real-world example. Meet Sharon, a corporate accountant earning $75,000 annually. Let's compare two scenarios: saving outside super versus using the FHSS scheme.

Scenario 1: Traditional Savings Account

On her $75,000 salary, Sharon pays $14,788 in income tax and Medicare levy, leaving her with $60,212 take-home pay. She decides to save $15,000 per year in a savings account offering 2% interest.

After 3 years of saving $15,000 annually at 2% compound interest:

• Total saved: $45,000
• Interest earned: $1,824
• Total: $46,824 (ignoring tax on interest for simplicity)

Scenario 2: FHSS Scheme Through Super

Sharon makes the same $15,000 contribution, but this time into her super as a voluntary concessional contribution.

Before contributing, you need to check your concessional contributions cap (currently $30,000 per year).

In Sharon's case

• Employer super guarantee: $9,000 (on $75,000 salary)
• Available for voluntary contributions: $21,000
• She can safely contribute the maximum $15,000 without breaching her cap

Because Sharon claims a tax deduction for voluntary super contributions, her:

• Taxable salary reduces to $60,000
• Tax payable: $9,888
• Tax savings: $4,900 per year

Over 3 years:

• Total contributions: $45,000
• Total tax savings: $14,700 (extra cash in her pocket!)

The Super Returns Advantage

Here's where it gets interesting. Inside super, your money is invested and grows much faster than in a typical savings account.

When you save for first home deposit through the FHSS scheme, your contributions don't earn the actual investment returns your super fund achieves. Instead, the ATO calculates the return on your contributions using the Shortfall Interest Charge (SIC) rate. The current SIC rate for the October to December 2025 quarter is 6.61%, and it's updated quarterly.

This creates an interesting dynamic. If your super fund earns 8% returns but the SIC rate is 6.61%, you're effectively getting less than your actual returns. However, if your fund earns only 4% but the SIC rate is 6.61%, you benefit from the higher returns.

The SIC rate provides certainty and protects you from market volatility when it comes to your FHSS withdrawal amount.

How Much Can You Actually Withdraw?

When you withdraw from super for first home under the FHSS scheme, you don't get 100% of your contributions back because super contributions are taxed at 15% on entry.

Let's calculate Sharon's withdrawal.

Sharon contributes $15,000 per year for 3 years. Using the current SIC rate of 6.61% on a compounding basis results in total earnings of approximately $6,456 (calculations may vary based on exact contribution dates as earnings are calculated daily).

Sharon's FHSS withdrawal calculation will be as follows:

• Contributions: $45,000 × 85% = $38,250 (reflecting the 15% contributions tax already paid)
• Total earnings: $6,456 × 85% = $5,488
• Total FHSS withdrawal: $43,738
• Plus tax savings held separately: $14,700
• Total available for first home: $58,438

That's $11,614 more than saving outside super, a significant boost toward your deposit!

How to Make Voluntary Super Contributions for FHSS scheme

You have two options:

Option 1: Salary Sacrifice (Recommended)

The easiest method is to arrange a salary sacrifice into super through your employer. Your employer deducts the amount from your pre-tax salary and contributes it directly to your super fund.

For example, if you're paid monthly, you could arrange $1,250 per month ($15,000 annually). Benefits include:

• Automatic "forced savings".
• Money contributed throughout the year for better earnings on your contributions.
• Less temptation to spend it.

Option 2: Personal Contributions

You can make after-tax contributions directly to your super fund, then claim a tax deduction.

It is important to note that you can only claim the deduction in the year your super fund receives the money. Make sure contributions are made well before 30 June if you want to claim the deduction in that financial year.

You'll need to complete a "Notice of Intent to Claim a Deduction" form with your super fund, then claim the deduction when lodging your tax return.

Who Can Use the FHSS Scheme?

You're eligible if you meet these criteria:

Property ownership:

• You've never owned property in Australia (including investment properties, vacant land, or commercial property)
• Your name must be on the property title
• Multiple buyers (spouse, siblings, friends) can each access their own FHSS amounts for the same property

Age requirement:

• Must be 18 or older when withdrawing (though you can start contributing earlier)

Residency:

• No requirement to be an Australian citizen or tax resident

Occupancy requirement:

• You must intend to live in the property for at least 6 months within the first year of ownership
• After meeting this requirement, you can convert it to an investment property
• This means you cannot buy an investment property initially using FHSS

First-time use:

• You haven't previously accessed the FHSS scheme successfully

Does Your Super Fund Support FHSS?

Before starting, check with your super fund to confirm they allow FHSS withdrawals. Most major funds do, but it's worth verifying.

How to Access Your FHSS Amount: Application Process

The ATO administers the FHSS scheme. Here's the process:

When to notify: You don't inform the ATO when making contributions. You need to notify only when you're ready to withdraw.

Access via myGov:

1. Log into myGov
2. Select Super > Manage > First Home Saver

Step 1: Request a Determination The ATO calculates your available FHSS amount based on information from your super fund(s), including your deemed earnings at the current SIC rate.

Step 2: Complete Release Request Provide:

• Amount to be released
• Super fund details
• Your bank account details

The ATO notifies your super fund, which transfers the money to the ATO.

Step 3: Confirm Property Purchase You must buy a property within 12 months of your release request (or apply for a 12-month extension).

Understanding the Tax When You Receive FHSS Money

The ATO releases your FHSS amount to your nominated bank account, but there are tax implications.

The FHSS amount is assessable income in the financial year you request the release (not when you receive the cash).

The ATO withholds tax before depositing funds into your account. The withholding rate equals your marginal tax rate (including Medicare levy) less a 30% tax offset.

Let's return to Sharon's example:

Sharon's marginal tax rate on $60,000 salary is approximately 16%. With the 30% offset, no tax is withheld when the ATO deposits the funds.

Sharon's tax return for the year:

• Reduced salary: $60,000
• FHSS amount (including earnings portion): $43,738
• Total taxable income: $103,738

Tax calculation:

• Tax and Medicare levy on $103,738: $23,777
• Less: Tax already paid on salary: $9,888
• Less: 30% tax offset on FHSS ($43,738): $13,121
• Final tax liability: $768

Comparing FHSS to Traditional Savings: The Bottom Line

After 3 years, here's Sharon's position:

Saving outside super:

• Total saved: $46,824

Using FHSS scheme:

• FHSS withdrawal: $43,738
• Tax savings retained: $14,700
• Total: $58,438
• Extra benefit: $11,614

The FHSS scheme delivers approximately 25% more toward Sharon's deposit compared to traditional savings, thanks to:

• Immediate tax deductions reducing current tax bills
• 15% contributions tax (vs her 34.5% marginal rate)
• Earnings oon your contributions at the SIC rate (currently higher than most savings accounts)

Is the FHSS Scheme Right for You?

The First Home Super Saver Scheme offers genuine benefits for first home buyers:

• Higher earnings compared to typical savings accounts
• Immediate tax deductions reducing your current tax bill
• Tax-effective way to save for house deposit faster
• Protection from market volatility through the deemed earnings calculation

However, everyone's situation is different. Consider speaking with a financial adviser to work out whether the FHSS scheme aligns with your circumstances, timeline, and homeownership goals.

Key considerations:

• Your current marginal tax rate (higher earners benefit more from the tax deduction)
• Your employer's super guarantee contributions (to ensure you don't breach contribution caps)
• Your timeline for buying (you can contribute for multiple years)
• Whether the deemed earnings rate is competitive with other safe investment options

Ready to get started? Check your super fund supports FHSS, review your concessional contribution cap, and start making voluntary contributions toward your first home today.

Disclaimer: This article provides general information only and should not be considered personal financial advice. The deemed earnings rate (SIC rate) changes quarterly, so actual figures will vary. Consult with a qualified financial and Tax adviser before making decisions about your super or property purchase.