The First Home Super Saver Scheme

What it is

The government's first home buyer site describes the scheme this way: you make extra voluntary contributions to your super, on top of what your employer pays, and can withdraw those savings plus associated earnings to put toward a first home deposit. Contributions can be made before tax through salary sacrifice, or after tax as personal contributions. Couples, friends or siblings can each access their own savings to buy the same property.

This is one of several federal and state supports. For the full picture see first home buyer schemes.

The limits

The firsthomebuyers.gov.au scheme page states both figures. The ATO's published position, as shown in the search extract of its "About FHSS release amounts" page, is the same $15,000 a year and $50,000 total. I could not open the ATO page itself to read its update date, so confirm the figures there on the day.

Who is eligible

From the firsthomebuyers.gov.au page, you must:

• be 18 or older
• have never owned property in Australia, unless you qualify under the financial hardship rules (this includes investment property, vacant land and commercial property)
• plan to live in the home you buy or build
• have made eligible voluntary contributions to your super
• not have already withdrawn money through the scheme

The ATO has its own "Eligibility for the FHSS scheme" page and a hardship application form. Use those if your situation is unusual.

Request a determination, then a release

The order matters.

1. Request an FHSS determination from the ATO before ownership of the property transfers. The ATO then tells you how much you can access.
2. Request the release of that amount, after the determination.
3. Buy or build. The ATO sets a time window around the release request for signing a contract. Read the current window on the ATO site, because it has changed for recent determinations.

The ATO's "When you want to release your FHSS amount" section sets out each step, including how tax is treated on the amount released. I could not read that page, so I have left the tax rates out. Do not guess them. The tax treatment of a release depends on how you contributed, and the ATO page is the place to check it.

FHSS is not the 5% Deposit Scheme

The firsthomebuyers.gov.au FAQ says the 5% Deposit Scheme cannot be applied for directly with Housing Australia, only through a participating lender, and that it does not say how FHSS interacts with it. If you want to use both, ask a participating lender. See lenders mortgage insurance for how the guarantee relates to LMI.

What it does to your loan and costs

A bigger deposit lowers your loan-to-value ratio. For a $600,000 property, a $60,000 deposit means a $540,000 loan, an LVR of 90%. Add $20,000 from a release and the loan is $520,000, an LVR of about 87%. That is RateSonar's arithmetic with invented round numbers, not a prediction. See what LVR means.

Check current rates for your band on the 90% LVR owner-occupier board and the main home loan rates. Then remember buying costs. Stamp duty is paid in addition to the deposit.

Mistakes and what to ask

• Buying before requesting a determination. The ATO's determination has to come before ownership transfers.
• Assuming the limits are your savings target. They are caps.
• Not asking your super fund how long a release takes and whether it supports the process.
• Not asking the ATO or a tax adviser how your own contributions will be treated.