First Home Super Saver Scheme Explained: The Complete Homebuyer’s Guide

Saving for your first home in New South Wales can be overwhelming. Between rising Sydney house prices, ongoing rent, and general cost of living increases, it’s becoming harder for everyday Australians to build a home loan deposit.

The First Home Super Saver Scheme (FHSS scheme) aims to help by allowing you to grow your deposit through your super fund using voluntary contributions that benefit from a lower tax rate and potential investment earnings. If you’re early in your home-buying journey, this government scheme may give you a valuable edge.

This guide breaks down the Super Saver Scheme in plain terms so you’ll understand how it works, who it’s best suited for, and how to make the most of it when buying your first home in NSW.

As local Newcastle mortgage brokers, we’ll also offer insight on how to use the scheme alongside other grants and lending options.

Not sure how to use your super for a home deposit? Our Newcastle mortgage brokers simplify the FHSS process, help you avoid delays, and match you with lenders that recognise super-based savings. Call us on (02) 4920 6468 or visit www.mortgagebrokersnewcastle.com.au.

What Is the First Home Super Saver Scheme and How Does It Work?

The First Home Super Saver Scheme is a federal government initiative that allows you to use your superannuation fund to save for your first home deposit. The scheme is built around voluntary contributions made into your super, which are taxed at a lower rate than regular income, helping your savings grow faster.

The savings you make under this scheme can be withdrawn along with a calculated amount of deemed investment earnings when you’re ready to buy. It was introduced to help first home buyers break into competitive markets like Sydney, Newcastle, and other parts of New South Wales, where saving in a regular bank account often isn’t enough.

Here’s a quick overview of how it works:

• You contribute extra funds to your super (voluntarily), either before tax (via salary sacrifice) or after tax.
  
  
• You can contribute up to $15,000 per financial year, and up to $50,000 in total.
  
  
• These contributions are taxed at 15%, which is usually less than your standard income tax.
  
  
• When you're ready to buy, you apply through MyGov to withdraw the contributions and deemed earnings to use as your home deposit.
  
  

If you're a healthcare worker, the FHSS scheme may pair well with your profession-specific loan options. See how it complements home loans for nurses in Newcastle and healthcare professionals.

Are You Eligible for the Super Saver Scheme in New South Wales?

Not everyone can use this strategy. You’ll need to meet specific eligibility requirements set by the Australian Taxation Office (ATO), which are designed to ensure the scheme supports genuine first-home buyers.

To qualify, you must be:

• At least 18 years old
  
  
• Buying your first home (you’ve never owned residential or investment property in Australia)
  
  
• Planning to live in the property for at least six months within the first year
  
  
• Someone who hasn’t already used the Super Saver release before
  
  

If you've previously owned a property but lost it due to financial hardship, like a natural disaster, bankruptcy, or relationship breakdown, you might still be eligible. In this case, you’ll need to submit a First Home Super Saver Scheme Hardship Application Form to the ATO for special consideration.

This is especially helpful for those recovering financially, including discharged bankrupts or buyers with bad credit.

How Much Can You Save with This Super-Saver Strategy?

The FHSS scheme lets you contribute additional funds into your super fund and withdraw them later to use as a deposit.

The main advantage here is the tax treatment of those contributions and the way your savings grow while invested.

Each eligible individual can contribute up to $15,000 in a financial year and a total of $50,000 in voluntary contributions.

These contributions can be either:

• Concessional contributions – before-tax payments like salary sacrifice, taxed at 15%
  
  
• Non-concessional contributions – after-tax payments made from your bank account
  
  

When it’s time to withdraw the funds, the ATO calculates an amount of deemed investment earnings to add to your total. These aren’t the actual returns your super fund earned but a government-set estimate based on average returns.

When you withdraw, the total amount is included in your taxable income, but you receive a 30% tax offset, reducing the tax payable.

Want to see your potential savings? Try the First Home Super Saver Scheme calculator.

Make your FHSS funds go further. Our Newcastle team helps you apply correctly, understand tax benefits, and access loans that suit first-home buyers using the Super Saver Scheme. Reach out at (02) 4920 6468 or visit www.mortgagebrokersnewcastle.com.au.

How to Apply for the FHSS Scheme

The process of using the FHSS scheme is straightforward if you follow each step carefully. You’ll need access to your MyGov account, a superannuation fund that accepts voluntary contributions, and clear documentation of your contributions.

Step 1: Make voluntary contributions

Start by contributing extra funds to your super fund. This can be done through a salary sacrifice arrangement with your employer (concessional) or direct after-tax payments (non-concessional). Most super funds have a member portal or client secure portal where you can track contributions and ensure you’re within limits.

Step 2: Request a determination

Next, log in to your MyGov account and access the ATO section. Apply for an FHSS determination, which tells you how much you’re allowed to withdraw. This calculation includes your eligible contributions and deemed investment earnings.

Step 3: Request a release

Once you’ve received your determination, submit a release request via your MyGov account. The ATO will process it and send the funds to your nominated bank account. Keep in mind that this process can take 15 to 25 business days, so plan ahead.

Step 4: Sign a property contract

After the funds are released, you’ll have 12 months to sign a real property contract to buy or build your home. If needed, you can request a 12-month extension. Be careful not to sign a property contract too early unless it includes a clause allowing you to cancel if the funds aren’t received in time.

Pros and Cons of Using the Super Saver Scheme

This super-based savings method has some clear benefits, especially for long-term savers. But like any strategy, it comes with conditions and potential downsides to weigh up before you decide.

Pros

• You pay less tax on contributions (15%) compared to regular income
  
  
• Deemed investment earnings help grow your savings faster
  
  
• Acceptable as genuine savings by most lenders, supporting your home loan application
  
  
• Can be used by both partners, increasing your total deposit amount
  
  

Cons

• The withdrawal process isn’t instant and takes time to finalise
  
  
• Only voluntary contributions count, not your employer’s Superannuation Guarantee
  
  
• Complex for those unfamiliar with superannuation or tax rules
  
  
• Mistakes or exceeding limits could lead to penalties, including shortfall interest charges
  
  

Get expert help using super to buy your first home. Our Newcastle mortgage brokers help you structure contributions, access better loan options, and avoid costly mistakes with the FHSS scheme. Call (02) 4920 6468 or visit www.mortgagebrokersnewcastle.com.au

FAQs: First Home Super Saver and Your Home Loan Application

Can both my partner and I use the scheme?

Yes. If both of you are eligible, you can each contribute up to $50,000 and combine your savings for a larger home deposit.

What happens if I don’t buy a home after withdrawing funds?

The money must be returned to your super fund. It’ll stay there until retirement, and you may have to pay extra tax depending on the situation.

Can I use it to buy land?

Yes, if you’re planning to build your first home on it and live there, it qualifies.

Do lenders accept these savings as genuine?

Yes. Most lenders consider FHSS withdrawals as genuine savings, which helps meet lending criteria and may reduce your need for Lenders Mortgage Insurance.

Is this suitable for self-employed people?

Yes. As long as you make eligible voluntary contributions, you can use the scheme even if you’re self-employed. Learn more about home loans for self-employed buyers.

Can I combine this with the First Home Owner Grant or stamp duty relief?

Absolutely. Many buyers use the scheme alongside the New South Wales First Home Owner Grant, First Home Guarantee, and stamp duty concessions to maximise their financial support.

Are salary sacrifice contributions eligible?

Yes. Salary sacrifice contributions are considered concessional contributions and are counted toward the scheme.

Supercharging Your First Home Deposit: Final Thoughts

The First Home Super Saver Scheme is a valuable tool for first home buyers in Newcastle and across New South Wales looking to fast-track their home deposit. By saving through your super fund, you can take advantage of tax benefits, boost your deposit with investment earnings, and follow a disciplined savings path that aligns with your long-term goals.

At MB Newcastle, we help first-home buyers understand how the FHSS scheme fits into their savings plan. Our team can guide you in setting up salary sacrifice and other voluntary contributions, ensuring they’re done correctly to meet super fund and ATO requirements. 

We also compare a range of home loans to help you find the right lender based on your financial situation and borrowing capacity. We’re based in Newcastle and work with clients throughout New South Wales. 

Give us a call on (02) 4920 6468 or visit www.mortgagebrokersnewcastle.com.au for advice tailored to your situation.