Can I use my superannuation to help buy my first home?

By Joachim Sim

Can I Borrow From My Super to Buy My First Home?

If you're saving for your first home, you may have wondered: “Can I borrow from my super to buy a house?”

The short answer is you generally can't borrow money directly from your superannuation to purchase your first home. However, eligible first-home buyers may be able to access certain voluntary contributions they have made to super through the Australian Government's First Home Super Saver (FHSS) scheme. The scheme is designed to help eligible first-home buyers save for a deposit using the superannuation system.

What is the First Home Super Saver Scheme?

The First Home Super Saver Scheme, commonly called the FHSS scheme, allows eligible people to make voluntary contributions into their super and later apply to have eligible amounts released to help purchase or build their first home in Australia. Importantly, this isn't a loan against your super balance.

You also generally cannot simply withdraw your existing compulsory employer super contributions to fund your home deposit. The FHSS scheme relates to eligible voluntary contributions made into your super. These can include certain concessional contributions, such as salary-sacrifice contributions and personal contributions for which you claim a tax deduction, as well as eligible after-tax (non-concessional) contributions.

How Much Super Can I Use to Buy My First Home?

Under the current FHSS rules, up to $15,000 of eligible voluntary contributions made in any one financial year can count towards the scheme.

Across all financial years, the maximum amount of eligible contributions that can count is currently $50,000 per person.

Your actual FHSS maximum release amount isn't necessarily $50,000. The amount that can be released depends on factors including the type and amount of eligible contributions you've made, together with associated earnings calculated under the FHSS rules.

For couples buying together, eligibility is assessed individually. This means two eligible purchasers may each potentially access their own FHSS amounts towards purchasing the same property.

Who Is Eligible for the FHSS Scheme?

There are several eligibility requirements.

Generally, you need to be 18 or older when requesting an FHSS determination and must not previously have owned property in Australia. Previous ownership can include not only a home, but also an investment property, vacant land, commercial property, certain leases of land or a company-title interest in land. Your name must also be on the title of the property you purchase. There is a financial-hardship provision that may allow some people who previously owned property to qualify in certain circumstances, subject to the ATO's requirements.

The property must be intended as your home. Generally, you need to genuinely intend to move into the property as soon as practicable and occupy it for at least six of the first 12 months after it becomes practicable to do so.

How Do I Access My Super Under FHSS?

Accessing money under the FHSS scheme isn't as simple as asking your super fund to transfer money into your bank account. When you're preparing to purchase, you first apply to the Australian Taxation Office for an FHSS determination. This tells you your maximum FHSS release amount.You can do this through ATO online services linked to your myGov account.

After receiving your determination, you can request the release of an amount up to your FHSS maximum release amount.Timing is particularly important. Your FHSS determination needs to be obtained before ownership of real property transfers to you. There are also specific time limits surrounding contracts and release requests, so it is worth understanding the process before purchasing a property, rather than leaving it until settlement is approaching.

The ATO advises that after a release request is made, it can take approximately 15 to 20 business days for the money to be received.

Can FHSS Money Be Used as Part of My Home Deposit?

Potentially, yes.

Money validly released through the FHSS scheme can contribute towards the funds you have available for your first-home purchase.

However, having money available for a deposit doesn't automatically mean you will qualify for a particular home loan.

A lender will still assess factors such as your income, existing debts and commitments, living expenses, credit history, employment circumstances, proposed property and overall borrowing capacity.

The size of your deposit can also affect your loan-to-value ratio (LVR), which can influence the lenders and loan options available to you and whether Lenders Mortgage Insurance (LMI) may apply.

This is why it can be worthwhile discussing your borrowing position with a mortgage broker before deciding how much you need to save or before making an offer on a property.

Is Using Super for Your First Home the Right Choice?

The FHSS scheme can be useful, but whether it is appropriate will depend on your individual circumstances.

Using eligible super contributions towards a home purchase needs to be considered alongside your broader financial position, home deposit strategy and future retirement savings.

A mortgage broker can assist with the home lending side, including assessing your borrowing capacity, lender requirements, loan structure and available lending options.

For advice about superannuation, taxation or whether making additional super contributions is appropriate for you personally, you should consider speaking with an appropriately qualified financial adviser, accountant or tax professional.

Planning to Buy Your First Home?

Buying your first home can involve much more than simply finding the lowest advertised interest rate.

Your deposit, borrowing capacity, lender eligibility, loan structure, government schemes and the features you need from your loan can all influence which lending option may suit your circumstances.

If you're thinking about buying your first home, speaking with a mortgage broker early can help you understand how much you may be able to borrow, what deposit you may need and which lending options are available to you before you start making offers.

Thinking about buying your first home? Get in touch to discuss your borrowing position and the home-loan options that may be available to you.

This article provides general information only and does not constitute financial, taxation or superannuation advice. Eligibility and rules for government schemes can change. Check current requirements with the Australian Taxation Office and seek professional advice where appropriate.