How to stack the First Home Guarantee and the First Home Super Saver

Two federal schemes interact to make a first-home deposit cheaper. Both are means-tested. Both are designed for owner-occupiers and never investors. Used together, they can knock years off the wait for a first home.

The First Home Guarantee, FHBG

Housing Australia (formerly the National Housing Finance and Investment Corporation, NHFIC) operates the First Home Guarantee. The federal government underwrites a portion of an eligible buyer's mortgage so the lender treats the deal as if the buyer had a 20 percent deposit. The practical effect: you can borrow with as little as 5 percent deposit and pay no Lenders Mortgage Insurance.

LMI on a $600,000 loan at a 5 percent deposit is roughly$24,000. Avoiding it is the single biggest saving from the FHBG. The scheme has annual places that run out, applies only to owner-occupiers, and has income and property-price caps that vary by region. The cap for Sydney and Melbourne is higher than for regional centres, reflecting the difference in median prices.

Eligibility, as of the 2024-25 income year, is:

• Australian citizen or permanent resident.
• Has never previously owned Australian property.
• Intends to live in the property as their principal place of residence.
• Income under $125,000 single or$200,000 combined.
• Property price under the relevant regional cap published by Housing Australia.

The First Home Super Saver, FHSS

The ATO runs the First Home Super Saver scheme. The idea is to use your super fund as a tax-advantaged savings vessel for a deposit. You make voluntary contributions, the contributions are taxed at 15 percent inside super (instead of your marginal rate), and you withdraw them when you are ready to buy. The withdrawn amount is taxed at your marginal rate minus a 30 percent offset, which keeps the net rate well below the original marginal rate.

The caps:

• Up to $15,000 of voluntary contributions per financial year.
• Up to $50,000 of voluntary contributions across all years.
• Plus the deemed earnings on those contributions.

You apply through myGov for a determination before signing a contract. You then request the release, your fund pays the ATO, and the ATO withholds tax and pays you the net.

How they stack

The two schemes target different parts of the same purchase. FHSS lowers the tax on the money you save toward the deposit. FHBG lets you settle with a small deposit and skip LMI. Used together:

1. From your first job, salary sacrifice into super up to $15,000 a year of voluntary contributions.
2. Over three to four years you accumulate up to $50,000 plus earnings.
3. When you are ready to buy, request an FHSS determination from the ATO. The released amount lands in your bank account, net of tax.
4. Apply for an FHBG place through a participating lender. The released super contributes to your 5 percent deposit.
5. You settle without LMI and with less out-of-pocket savings than a non-FHBG buyer would need.

What this does not cover

State stamp duty is separate and runs through the relevant state revenue office. Some states (NSW, Victoria, Queensland, WA, Tasmania) have their own first-home buyer concessions on stamp duty. The Commonwealth FHBG and FHSS schemes do not waive state duties.

Foreign buyer surcharges (FIRB and state surcharges) do not apply under these schemes because the FHBG is open only to Australian citizens and permanent residents.

This explainer is general information about the federal schemes. For tailored advice see a licensed financial adviser. For binding application rules check the Housing Australia site for the FHBG and the ATO site for the FHSS.