Can You Use the FHSS and First Home Guarantee Together?
Saving a deposit is often one of the biggest hurdles for first home buyers. The good news is that two Australian Government initiatives may help make that journey easier: the First Home Super Saver Scheme (FHSSS) and the First Home Guarantee.
While they serve different purposes, these programs can work together. The FHSSS helps eligible buyers save part of their deposit through voluntary super contributions, while the First Home Guarantee can reduce the deposit needed to secure a home loan. When combined, they may help eligible first home buyers purchase or build a home sooner.
How the FHSSS and First Home Guarantee work together
The First Home Super Saver Scheme (FHSSS) and the First Home Guarantee are separate government schemes, but they can complement each other when you're preparing to buy your first home. While the FHSSS helps eligible buyers grow their deposit through voluntary super contributions and associated earnings, the First Home Guarantee helps reduce lender risk by allowing eligible buyers to purchase with a smaller deposit.
In practical terms, the FHSSS can help you save part of your deposit in a tax-effective way, while the First Home Guarantee may allow you to secure a home loan with as little as a 5% deposit without paying lenders mortgage insurance (LMI). This combination can make it easier for first home buyers to enter the market sooner while reducing some of the upfront financial pressure.
For example, a buyer may use FHSSS savings towards their deposit and then apply for the First Home Guarantee through a participating lender. As long as they meet the eligibility requirements for both schemes, the two programs can work together to support their path to home ownership.
What are the benefits of combining FHSSS and the First Home Guarantee?
Using the FHSSS and First Home Guarantee together can help first home buyers strengthen their deposit position while reducing some of the upfront costs associated with purchasing a property. Because each scheme addresses a different part of the buying journey, combining them may improve affordability and make it easier to enter the market.
- Build your deposit through voluntary super contributions and associated earnings.
- Reduce the deposit required to secure a home loan through the First Home Guarantee.
- Avoid paying lenders mortgage insurance (LMI) when eligible under the guarantee.
- Improve borrowing capacity by increasing the funds available for your purchase.
- Potentially enter the property market sooner than relying on traditional savings alone.
- Make buying or building a home more achievable with lower upfront costs.
- Access support from two Australian Government initiatives designed for first home buyers.
Who is eligible to use both FHSSS and the First Home Guarantee?
To use both the First Home Super Saver Scheme (FHSSS) and the First Home Guarantee, you must meet the eligibility requirements for each program separately. While there is some overlap, qualifying for one scheme does not automatically mean you'll qualify for the other.
Eligibility requirements
FHSSS eligibility
- Must be at least 18 years old.
- Must not have previously owned property in Australia, unless an FHSSS hardship exemption applies.
- Must make eligible voluntary super contributions before requesting a release.
- Must intend to live in the property you purchase or build.
First Home Guarantee eligibility
- Must be an Australian citizen or permanent resident.
- Must be purchasing as an owner-occupier.
- Must meet Housing Australia income caps.
- Must buy within the applicable property price cap for the location.
- Must apply through a participating lender.
To access the full benefit of both schemes, buyers should confirm their eligibility early in the process. A mortgage broker, lender or financial adviser can help determine whether both the FHSSS and First Home Guarantee align with your circumstances before you commit to a property purchase.
How much deposit do you need when using both schemes?
One of the advantages of combining FHSSS savings with the First Home Guarantee is that you may not need a traditional 20% deposit to purchase a home. Eligible buyers can use funds released through the FHSSS towards their deposit and then access the First Home Guarantee, which allows qualifying borrowers to purchase with a deposit as low as 5% without paying lenders mortgage insurance (LMI).
Typical deposit requirements
Minimum deposit under the First Home Guarantee:
- As little as 5% of the property's purchase price.
- No requirement to save a full 20% deposit.
- Eligible buyers can avoid LMI when purchasing through a participating lender.
Using FHSSS savings towards your deposit:
- FHSSS funds can contribute to all or part of your required deposit.
- The amount available will depend on your voluntary super contributions and associated earnings.
- Individual buyers may be able to withdraw up to the FHSSS release limits set by the ATO.
For example, in a $700,000 home, a buyer using the First Home Guarantee may only need a $35,000 deposit (5%) rather than a $140,000 deposit (20%). If part of that deposit comes from FHSSS savings, reaching the required amount may become more achievable while improving overall borrowing capacity.
The exact deposit you'll need will depend on the property's purchase price, lender requirements, and your personal financial circumstances.
Can you use FHSSS and the First Home Guarantee for house and land packages?
Yes, eligible first home buyers may be able to use both the FHSSS and First Home Guarantee when purchasing a house and land package or building a new home. In this scenario, FHSSS savings can contribute towards your deposit, while the First Home Guarantee may allow you to secure a home loan with a smaller deposit and avoid lenders mortgage insurance (LMI).
This combination can be particularly appealing for buyers looking to build rather than purchase an established home. House and land packages often provide greater control over home design, location and budget, while both schemes can help reduce some of the financial barriers associated with entering the property market.
As with any property purchase, buyers must still satisfy the eligibility requirements for both schemes, as well as the lender and construction contract requirements. It's also important to ensure the property and total purchase costs fall within the relevant First Home Guarantee price caps and lending criteria before proceeding.
How to use FHSSS and First Home Guarantee together
Using both schemes requires some planning, as the FHSSS is administered through the ATO while the First Home Guarantee is accessed through a participating lender. Following the correct sequence can help avoid delays and ensure your deposit funds are available when you need them.
Step 1: Make voluntary super contributions
Start by making eligible voluntary contributions into your super fund through salary sacrifice or personal contributions. These contributions may help grow your first home deposit in a more tax-effective way than saving entirely outside super.
Step 2: Request an FHSS determination
Before withdrawing any funds, request an FHSS determination from the ATO. This confirms how much of your eligible contributions and associated earnings may be released under the scheme.
Step 3: Make an FHSS release request
When you're preparing to buy or build, submit a release request through the ATO. Once approved, the ATO will arrange for the eligible FHSS amounts to be released from your super fund.
Step 4: Speak with a participating lender
At the same time, discuss your plans with a participating lender offering the First Home Guarantee. They can assess your eligibility, borrowing capacity and how your FHSSS savings contribute towards your deposit.
Step 5: Choose an eligible property or build
Whether you're purchasing an existing home, building a new home or securing a house and land package, the property must meet the First Home Guarantee requirements, including applicable price caps and owner-occupier conditions.
Step 6: Finalise your home loan application
Once your deposit funds and eligibility have been confirmed, your lender can proceed with the home loan assessment. If approved, you can move forward with purchasing or building your first home while accessing the benefits of both schemes.
What are the limitations or risks of using both schemes together?
Combining the FHSSS and First Home Guarantee can provide valuable support for first home buyers, but it also comes with additional rules and planning considerations. Because you're using two separate government initiatives, it's important to understand how their requirements may affect your timeline and eligibility.
Eligibility requirements
Meeting the criteria for one scheme does not automatically qualify you for the other. Buyers need to satisfy the separate income, property and eligibility requirements that apply to each program.
Things to keep in mind:
- Separate eligibility rules apply to each scheme
- Property and income requirements must be met
- First Home Guarantee price caps still apply
- Not all buyers will qualify for both programs
Timing and application processes
The FHSSS and First Home Guarantee follow different application pathways, which means timing can play an important role in a successful purchase.
Things to keep in mind:
- FHSSS funds must be released through the ATO process
- Delays can occur if paperwork is incomplete
- Property purchase timelines need to align with scheme requirements
- Early planning helps avoid last-minute complications
Financial planning considerations
While both schemes can help reduce barriers to home ownership, buyers still need to ensure the purchase remains affordable over the long term.
Things to keep in mind:
- A smaller deposit still results in a larger loan amount
- Ongoing repayments need to fit within your budget
- Additional costs, such as legal fees and moving expenses still apply
- Buyers should consider long-term financial commitments beyond settlement or construction completion
What happens if your FHSSS withdrawal timing doesn’t align with your home purchase?
Timing is an important part of using the FHSSS successfully. If your withdrawal process doesn't align with your property purchase or building plans, it can cause delays and additional administrative requirements. Planning ahead can help ensure your deposit funds are available when needed.
Request your FHSSS release before committing
Where possible, buyers should begin the FHSSS release process before signing contracts. This helps reduce the risk of delays that could affect finance approval or settlement timelines.
Monitor ATO processing requirements
FHSS determinations and release requests are processed through the ATO and your super fund. Allowing sufficient time for these steps can help avoid unnecessary pressure during the purchasing process.
Understand the post-release deadlines
Once FHSSS funds are released, buyers are generally expected to purchase or build a home within the required timeframe. Missing these deadlines may require further communication with the ATO.
Keep supporting documentation organised
Maintaining copies of contracts, release requests, and FHSSS records can make it easier to respond if additional information is requested during the process.
Seek advice if your plans change
If settlement is delayed, a build timeline changes or you decide to purchase a different property, it's worth speaking with your lender, financial adviser or the ATO to understand how the changes may affect your FHSSS obligations and eligibility.
Common mistakes when combining FHSSS and the First Home Guarantee
Using two government schemes simultaneously can add extra steps throughout the home-buying process. Many issues arise not because buyers are ineligible, but because important requirements or deadlines are overlooked.
Assuming approval for one scheme means approval for both
The FHSSS and First Home Guarantee have separate eligibility requirements. Buyers should confirm they qualify for each scheme individually before making property decisions.
Leaving FHSSS applications until the last minute
Some buyers wait until they have found a property before starting the FHSSS release process. This can create unnecessary pressure if ATO processing or super fund administration takes longer than expected.
Not checking property price caps
A buyer may qualify for the FHSSS but still be unable to access the First Home Guarantee if the property exceeds the relevant price cap. Confirming eligibility early can help avoid disappointment later.
Overestimating available FHSSS funds
The amount buyers expect to withdraw is not always the amount available under FHSSS rules. Requesting an FHSS determination before making plans can provide a clearer picture of available funds.
Forgetting to align deposit and finance timelines
FHSSS withdrawals, lender approvals and property contracts all operate on different timelines. Coordinating these steps carefully can help reduce delays and keep the purchase process moving smoothly.
Focusing on eligibility instead of affordability
Qualifying for both schemes does not automatically mean a property is financially suitable. Buyers should still consider ongoing repayments, household expenses and long-term financial goals before committing to a purchase.
When is combining FHSSS and the First Home Guarantee the best strategy?
Combining the FHSSS and First Home Guarantee may suit first home buyers who need support with both saving a deposit and securing a home loan. Rather than relying on a single scheme, buyers can use FHSSS savings to strengthen their deposit while using the First Home Guarantee to reduce the upfront amount required.
This approach can be particularly beneficial for buyers who have been making voluntary super contributions, are working towards a deposit goal and want to avoid lenders mortgage insurance when purchasing their first home. It may also appeal to buyers building a new home or purchasing a house and land package, where managing upfront costs is often a key consideration.
For buyers with a clear savings plan, stable income and a realistic budget, combining both schemes can provide a more achievable pathway into home ownership while helping them enter the market sooner.
How Carlisle Homes can help you build using both schemes
If you're planning to use the FHSSS and First Home Guarantee together, having the right home and budget strategy can make all the difference. Whether you're exploring a house and land package or building your first home, we're here to help you find options that align with your goals, budget and pathway to home ownership.
