First Home Super Saver Scheme (FHSS)A Faster Deposit

$50,000. That's the most the ATO will let you pull back out of super to put toward your first home, and most first home buyers have never run the numbers on it. The first home super saver scheme (FHSS) is the closest thing Australian tax law offers to a deposit shortcut: the same dollars from your payslip, taxed at 15 per cent on the way into super instead of at your marginal rate, then released when you're ready to buy. For a buyer on $145,000, that difference can be worth more than $6,000 over three years. Same salary. Bigger deposit.

The timing suits savers. The RBA cash rate sits at 4.35% after hikes in February, March and May 2026, and the board held steady at its June meeting. Higher rates have thinned the crowd: auction clearance rates are running in the low 40s, and Cotality's June 2026 Home Value Index shows the national median easing 0.4% over the month to $937,722. A rising-rate market rewards the prepared buyer, because there are fewer bidders at the open home and more room to negotiate. Better still, the FHSS settings haven't moved: $15,000 a year, $50,000 lifetime. That stability makes it one of the few first home levers you can plan around for two or three years without the rules shifting underneath you.

What is the first home super saver scheme, and why does it beat a bank account?

The FHSS lets you make voluntary contributions to your super fund, then apply to the ATO to release those contributions, plus deemed earnings, to buy your first home. The scheme has run since 2017, and the current caps have held since 1 July 2022.

The advantage is tax, not investment returns. Salary-sacrificed contributions are taxed at 15 per cent going into super. Keep that same money in your pay instead and you lose your marginal rate first: 32 cents in the dollar for someone earning $120,000, 39 cents for someone on $145,000 once the Medicare levy is counted. More of each dollar survives the trip through super than survives the trip through your payslip. When you withdraw under the FHSS, the released amount is taxed at your marginal rate minus a 30 percentage point offset, so most of that head start stays yours.

Follow the chain through. Contributions land larger because they're taxed lighter. Larger contributions mean a larger release. A larger release means a larger deposit, which can mean a smaller loan, a better rate tier, or simply reaching your target months sooner. If you're already saving for a deposit out of after-tax pay, you're doing the same work for a smaller result.

One boundary matters before anything else: your employer's compulsory 12 per cent super guarantee does not count. Only voluntary contributions qualify, whether salary-sacrificed, or made from after-tax money. If you haven't yet worked out your target number, start with how much deposit you actually need, then work backwards to a contribution plan.

How much can you put in, and what actually comes back out?

You've been told super is locked away until you're 60. For up to $50,000 of your own voluntary contributions, the ATO disagrees.

Two details in that table decide your strategy. First, the caps are per person. A couple can each contribute and each request a release, which doubles the ceiling to $100,000 of contributions between them. Second, the 85 per cent figure isn't a penalty; it simply reflects the 15 per cent contributions tax already paid on pre-tax money.

There's a trap for higher earners. The concessional contributions cap is $30,000 a year, and your employer's 12 per cent super guarantee counts toward it. On a $145,000 salary, employer contributions already use $17,400 of that cap, leaving about $12,600 of salary-sacrifice room, not the full $15,000. Contribute past the cap and the excess gets taxed at your marginal rate anyway, which defeats the point. After-tax contributions can fill the gap, since they still count toward your FHSS total and come back out untaxed.

What does the FHSS look like in real dollars?

Meet Renee, a 31-year-old project manager in Parramatta earning $145,000, aiming to buy in three years. She can redirect $12,500 of gross salary a year toward her deposit. Two paths.

Path A, the savings account: That $12,500 is taxed at 39 per cent (37 per cent plus the Medicare levy) before it reaches her account. She banks $7,625 a year. After three years: about $22,900, plus a little interest, which is also taxed at her marginal rate.

Path B, the FHSS: She salary sacrifices the same $12,500 a year. After the 15 per cent contributions tax, $10,625 lands in super each year, $31,875 over three years. On release, the assessable amount is taxed at her marginal rate minus the 30 per cent offset, an effective 9 per cent for her. She walks away with roughly $29,000, plus deemed earnings on top.

The gap: around $6,100 more deposit from identical gross savings. A couple both running the same plan would be roughly $12,300 ahead. That's most of the stamp duty on many first homes, or the buffer that turns a nervous auction bid into a confident one.

Based on typical scenarios. Individual outcomes vary.

Where do buyers get caught?

The scheme's rules are strict about sequence, and the sequence trips people more than the maths does.

Get your FHSS determination from the ATO, and request the release, before you sign a contract. We've watched a pre-approval sit idle for five weeks because the release request went in after the buyer had found the property; the money cannot arrive faster than the ATO processes it, and releases generally take a few weeks to land. Build that lag into your plan the way you'd build in a settlement period.

The other conditions are quicker to clear but worth knowing cold:

• You must be 18 or older and have never owned property in Australia before, including investment property (a financial hardship exception exists).
• Once funds are released, you generally have 12 months to sign a contract, extendable, or you recontribute the money.
• You need to intend to live in the home for at least six of the first twelve months. The FHSS is for a home, not a rental.
• The deemed earnings released with your contributions are calculated at a rate the ATO sets, not your fund's actual returns, so don't count on market performance either way.
• Some defined benefit and untaxed funds can't participate; check yours before contributing.

One more practical note from the lending side: released FHSS money sitting in your account is generally accepted by lenders as part of your deposit, but a release that lands the week before your application invites questions. Earlier is cleaner.

How does the FHSS stack with the other first home schemes?

The FHSS builds the deposit. Other levers stretch it, and they stack.

Since 1 October 2025, the Australian Government 5% Deposit Scheme (formerly the First Home Guarantee) has had no income caps and no place limits, letting eligible buyers purchase with a 5 per cent deposit and no LMI under property price caps ($1.5M in NSW, $950k in Victoria, $1M in Queensland). An FHSS release can supply most of that 5 per cent. Stamp duty concessions have widened through 2026 as well, with the ACT abolishing duty for first home buyers entirely from 1 July 2026; the state-by-state stamp duty guide covers where you stand. And if you're weighing the schemes against each other, including Help to Buy's shared equity route, the FHG vs FHSS vs Help to Buy comparison walks through which combination fits which buyer. Where the scheme's price caps don't reach, specialist lending policies available through Wity let any borrower buy with a 15 per cent deposit and no LMI, so an FHSS-built deposit still goes further than the old rules suggest.

Deposit is half the equation. Borrowing power is the other half, and this is where plans built on one bank's calculator fall over. The Wity Borrowing Power Assessment models your capacity across 45+ lenders, factoring in how each treats your income, your HECS balance and your freshly released FHSS funds, so you know your real ceiling before you start salary sacrificing toward the wrong target.

What should you do this month?

Check your remaining concessional cap in myGov, pick a contribution amount, and set the salary sacrifice up with payroll this pay cycle; every month you wait is a month of tax savings gone. If you're within a year of buying, request your FHSS determination early and read the First Home Buyer Guide 2026 for the full sequence from contribution to keys.

Want to see how an FHSS release changes your buying position? Start the Wity questionnaire — free, no credit check, two minutes.