Owning your first home in NSW

The different grants and schemes on offer in NSW can help make it easier to purchase your first home, but often the deposit is the challenge.

That’s why the Federal Government created the FHSS scheme. If your super has been topped up by you through salary sacrificing or voluntary contributions, then you may be able to use up to $50,000 of that (and the earnings) to put towards your first home deposit.

If it’ll be a few years before you’re ready to buy, then making additional contributions to your super now means you’ll have more to draw upon when it’s finally time to buy - plus, you may be able to get some tax advantages making saving even easier.

When you’re ready to buy your first home, your FHSS savings will give you an advantage while the other federal and NSW first home programs should help to bring the funding target within reach.

Saving via your super for the FHSS can happen in two ways.

Firstly, through contributions such as salary sacrificing (where you get your employer to direct some of your normal pay straight to your super) or making a contribution yourself then claiming a tax deduction.

Either way, you may only pay 15% tax on that amount rather than your higher, standard tax rate.

You can also make and use any after-tax contributions you make to your super.

Note, there are limits on how much you can contribute to your super each year.

1. Check you’re eligible for the FHSS – are you 18 years old or over and a first home buyer? There’s no Australian citizenship or residency requirement to apply.
2. Check that your super fund allows you to withdraw under the FHSS (Spaceship Super does!)
3. Start out by contributing to your own super in any of the following ways:
   1. Contribute after-tax money to your super and then a claim tax deduction in your tax return.
   2. Salary sacrifice, by asking your employer’s payroll department to send some of your income directly to your super account instead of to you.
   3. Contribute after-tax money to your super account, without claiming a tax deduction.
   • Options a and b count towards your ‘concessional contributions’ annual cap of $27,500 (including your employer contributions) and come with tax savings.
   • Option c counts towards your ‘non-concessional’ annual cap of $110,000.
   • There’s a $15,000 cap on how much you can save via the FHSS each year. 
4. Think financial years. Your annual limits reset on 1 July every year. 
5. When it comes time to start looking for a home, you apply for a FHSS Determination and a release from the ATO.
   Make sure you get the determination before you sign a contract, so you know how much you’re able to withdraw as a deposit.
   Much of the information will be pre-filled, but it will be handy to have a record of your contributions on hand just to check.
6. Buy your property!
   Once you sign a contract, submit an FHSS Release Request.
   The ATO requires this within 14 days of signing the contract, but it’s best to do it straight away.
   The amount you withdraw via FHSS will be paid into your bank account. In most cases it will take between 15 to 25 business days.
7. Alternatively, you can submit the Release Request before signing a contract.
   If you do this, you have up to 24 months (an initial 12 months and an automatic 12-month extension if you need it) to sign a contract on your first home.
   If more than one person is buying the home, each person can use their own FHSS as long as they meet the criteria.
   Even if one person is not eligible, other eligible buyers can still apply for the FHSS.

The First Home Guarantee (called FHBG to avoid confusion with other programs) is an Australian Government program to help eligible first-time home buyers buy a home with a deposit of just 5%. The program also means there is no Lenders Mortgage Insurance to pay.

When you apply for your first home loan, lenders will often ask for up to 20% of the purchase price  as a deposit. If you can’t meet that, then you may need to pay expensive Mortgage Lenders Insurance.

However, the Commonwealth Government’s First Home Guarantee (FHBG) aims to help eligible applicants get around that by offering to guarantee some of the mortgage.

Generally, to meet the 2023 eligibility criteria for the First Home Guarantee (formerly called First Home Loan Deposit Scheme or FHLDS) in New South Wales, you must:

• Be an individual or couple
• Hold Australian citizenship
• Be 18 years  old or over
• Earn no more than $125,000 if you’re an individual or $200,000 if you’re a couple
• Intend to live in the property
• Be a first home owner.

Only homes to live in qualify, but these can be:

• Existing or new houses, townhouses, apartments or units
• House and land packages
• Vacant land with a home building contract
• An off-the-plan apartment or townhouse.

In Sydney, Newcastle, Lake Macquarie and the Illawarra, the property must be valued up to $900,000 and in the rest of NSW the cap is $750,000.

Check out the First Home Guarantee website for full eligibility details.

Join Spaceship Super and start tracking your FHSS contributions in the Spaceship app.