Can I use superannuation to buy a home in Australia?

Yes! It's possible to use your superannuation to buy property, even though it's meant to be a retirement saving account.
Dawn Teh
Written by
Dawn Teh
Imogen Baxter
Reviewed by
Imogen Baxter
Last updated
April 11, 2024
0 minute read
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Australian house purchased with super with backyard view of pool

Yes! It's possible to use your superannuation to buy property, even though it's meant to be a retirement saving account.

But here's the thing - it's not as easy as just withdrawing your entire super balance and heading off to purchase a home (unless you're a retiree, over 65 years old, or have reached the preservation age). If you're older than 65 or retired, you're entitled to withdraw your entire super savings and use it to buy property if you wish.

Luckily, we’re breaking down all you need to know about using your super contributions to get into the property market.

(Bonus: We even go into some alternatives if using your super doesn't work out for you!)

Utilising your super to buy property has to be done in two ways:
  1. Through the government's First Home Super Saver Scheme (FHSSS) — The FHSSS is open to first home buyers.
  2. A self-managed super fund — This is for those who do not have a nominated superannuation account and are looking to buy an investment property.

Remember: These options aren't for everyone and there are conditions you have to meet.

The new option: An OwnHome Deposit Boost Loan

You can buy your own home now and still save your super for later down the road!

OwnHome provides the opportunity for customers to get a foot on the property ladder, without hundreds of thousands of dollars upfront.

Backed by some of Australia’s most trusted financial institutions, OwnHome is working alongside the big players to help you get ahead in the game.

What is it?

With an OwnHome Deposit Boost Loan, all you need is 2% upfront, and we’ll cover the rest of your 20% deposit - so you don’t pay Lenders Mortgage Insurance (LMI)! Plus, once you're ready to start the house-hunt, you'll be supported by our team of expert Buyer's Agents - at no additional cost!

Here's how it works:

  1. Bridge your deposit gap - For just 2%* upfront, we’ll cover the deposit you need to unlock your very own 80% LVR mortgage.
  2. Hello, pre-approval - There's no restrictions on which lenders you can pair with your OwnHome deposit.
  3. Find your dream home - Our qualified team of home-buying experts will help you every step of the way—from search to settlement.
  4. Low monthly repayments - You repay your OwnHome Deposit Boost Loan over time, just like you would with your mortgage. Think of it as paying for your deposit while you live in your home. Plus, there are no penalties for paying off your loan early.

Who is eligible?

OwnHome exists to help aspiring homeowners who need a boost to their deposit. Key requirements for a Deposit Boost Loan are:

  • Credit in good standing
  • Proof of employment
  • Permanent residency or citizenship for at least one applicant
  • Looking to buy an owner-occupier property
  • Savings to cover 2% (+GST) Starter Fee
Can you afford mortgage repayments but not the deposit? Learn more about a deposit boost loan.
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Option 1: First Home Super Saver (FHSS) Scheme

Can I use super for a home deposit?

Yes, you can use some of your superannuation funds for a house deposit. But, in most cases, it has to be done under the First Home Super Saver Scheme (FHSSS) set up by the Australian government.

The scheme was designed to help first-time home buyers build up their home deposits as quickly as possible.

There are some conditions and limits you need to be aware of — you can't just take out everything that's currently in your super and use it to buy a home.

How does FHSS work?

The FHSS scheme allows first-home buyers to make extra (voluntary before-tax or after-tax) superannuation contributions, which can then be withdrawn to help with the purchase of a property. You can't use the compulsory contributions from your employer.

It was set up by the Australian Federal Government in 2017.

You can make contributions to your FHSSS through:

  • Salary sacrifice: You'll need to make an agreement with your employer to allow part of your salary to go to your super instead. These are pre-tax amounts, and the contribution frequency needs to be discussed with your employer.
  • Personal voluntary contributions: These contributions can come directly from you or from after-tax pay made by your employer. You can make the contributions as lump sums or regular, smaller payments.

How much of the FHSS can I use to buy a house?

Here are the limits for how much super you can save for your first home through the FHSS scheme:

  • A maximum of $15,000 in one financial year.
  • A maximum of $50,000 in total over all years.

FHSS tax considerations

There are some tax benefits and tax deductions that make FHSSS an appealing choice to many first-home buyers:

Going into your super

Your super fund will only tax 15% (as opposed to the regular marginal tax rate) of contributions coming in through salary sacrifice.

Coming out of your super

When your FHSSS amount is released to you from your fund, the tax on this fund will be withheld by the Australian Taxation Office (ATO). The amount withheld will be the marginal tax rate minus a 30% offset.  

Who is eligible to use super to buy a home with FHSS?

These are the eligibility requirements that must be met for you to use FHSS.

  1. Individuals must be at least 18 years of age.
  2. Be a first home buyer. You must not have owned any Australian property before (including commercial property).
  3. You intend to be the owner-occupier of the home. You have to live in it as soon as you can and stay there for at least 6 months for the first 12 months after buying it. So, this is not the best option for prospective property investors.
  4. You can only apply once for your super to be released under the FHSS scheme.

How to apply for FHSS

Withdrawing your super savings under the FHSS scheme can be done online through myGov. Here's a quick summary of the steps:

  1. Apply for your FHSS determination. Log into your myGov account, then go to ATO account > Super > Manage Super > First Home Saver. You'll be able to see the maximum amount you're allowed to withdraw straight away.
  2. Request to withdraw your money. This is also called the FHSS release request. The total FHSS amount will be deposited into your nominated bank account.
  3. Notify myGov within 28 days after you've signed a contract to purchase your new home. If you don't notify the ATO that you've signed the contract to purchase, you might be subject to FHSS tax.

Before you start this process, make sure you're eligible for the FHSS scheme first before making any contributions.

Also, don’t sign any property contract before you request an FHSSS determination.

Pros and Cons of using super to buy a house through FHSS

  • Your FHSS amount can go towards your home deposit, helping you reach your goals faster.
  • Salary sacrifice contributions benefit from the 15% (rather than marginal) tax rate.
  • Couples are allowed to make an FHSS withdrawal each so it's twice as beneficial.
  • You will be taking home less pay by salary sacrificing.
  • Depending on the value of the property you want to buy, the FHSSS amount may not be able to cover the full deposit.
  • Government policies can change anytime.
  • Your money is locked into your super account and won't be easy to take out if you change your mind.

Option 2: Self-managed super fund

Can I use my self managed super fund to buy a house?

Yes, you can only use your self-managed super fund (SMSF) to buy property — but only for investment purposes and not to live in it.

Some of the benefits of this include:

  • Paying less capital gains tax (it's generally capped at 10%).
  • Accelerating the growth of your superannuation savings as any income goes to your SMSF.

However, there are some rules that you need to be aware of before using your SMSF to buy a property. For instance:

  • You cannot live in the property or use it for business purposes.
  • While you can buy residential property, fund members (or any parties related to members) cannot live in it.  

What if super doesn't work? Are there low-deposit home-buying options?

For many people looking to buy a home, a guarantor is one of the best ways to avoid needing a hefty 20% deposit.

To secure a guarantor home loan, you'll need someone (usually a close family member) to act as a guarantor for the loan. As a guarantor, they pledge a portion of the equity in their own property as security for your loan. In most cases, the guarantor will need to own their own home outright or have a significant amount of equity in it.

While having a guarantor can help to get you into your dream home sooner, it is important to remember that you're taking on responsibility for someone else's financial situation, as the guarantor’s equity is on the line if you default.

Things can get messy very quickly emotionally and relationally if you stop making your monthly repayments. So this route involves not just financial risks, but relational risks as well.

While it's true that most lenders like to see a 20% deposit before they approve a home loan, there is another way to do it with a smaller deposit — by paying lenders mortgage insurance (LMI).

In Australia, lenders mortgage insurance (LMI) is insurance that protects the lender if the borrower defaults on their home loan.

It is usually required if the borrower has a loan-to-value ratio (LVR) of more than 80%.

LMI is a one-off premium that is added to the loan and paid when the loan is first established. The premium is based on the size of the loan and the LVR. In the event that the borrower does default, the insurance pays out a benefit to the lender which can be used to cover any losses.

The insurer will then pursue the borrower for recovery of any outstanding amounts. LMI provides important protection for lenders and helps to ensure that people who might not otherwise be able to obtain a home loan are able to do so.

Apart from the FHSS, the government has another scheme to help first-home buyers secure their dream homes with a smaller deposit (and without paying LMI).

It's called the First Home Guarantee (FHBG) Scheme, but you might have also heard of it being termed the First Home Loan Deposit Scheme (FHLDS) in the past.

With this scheme, you come up with 5% of the deposit and the government will guarantee the remaining 15% to make up a 20% deposit. This is why you also avoid LMI under this program.

So what's the issue with FHBG? It's only open to 35,000 people (or couples) each year!

Additionally, applicants need to fulfil other criteria like being Australian citizens and falling within certain income brackets.  

Is using your super for a house deposit a good idea?

For many first-time homebuyers in Australia, the idea of using their superannuation as a deposit on a home loan is an attractive option. After all, super is designed to be a nest egg for retirement, so why not use it to help purchase a property now?

But, like any real estate decision, there are some pros and cons to this option too. On the plus side, it can help you build your deposit faster because of favourable tax rates.  

On the downside, using your super as a deposit means that your money is locked up in there. And if you change your mind about it down the road, there's no withdrawing it till you're 65 or retired.

Ultimately, whether or not using your super as a deposit is a good idea depends on your personal situation and financial goals.

If you're ready to learn more about how long it will take you to save towards buying a home, the time to save calculator and savings planner calculator can help you get fast answers.


Can you use super as a house deposit?

Yes, first home buyers can use superannuation to pay for some of the house deposit.

It comes under the first home super saver (FHSS) scheme.

Am I still a first-time home buyer if my partner has owned property before?

The definition of a first-time home buyer will differ depending on what it is being used for, and generally, if your partner has owned property, you will not qualify for assistance.

For instance, if you apply for the First Home Owners Grant, home ownership is looked at for yourself and your partner. If your partner has owned property before, you will not be eligible.

The same goes for the First Home Guarantee.

However, the First Home Super Saver scheme is determined on an individual basis, so you may be eligible to use this scheme even if your partner has owned properties before.

Will I pay CGT if I sell my property as a part of a self-managed super fund?

Self-managed superannuation funds, or SMSFs, have more complex regulations around the sale of property and capital gains tax. There are also strict regulations around the property that can be bought and sold, which means you cannot sell your primary place of residence through an SMSF - no PPOR exemption here.

However, if your SMSF trust deed allows it, it may buy and sell a property. These transactions will incur capital gains tax.

SMSFs can still access the CGT discount, where you can reduce 1/3 of the capital gains for tax purposes if the SMSF owns the property for 12 months before selling it.

An SMSF can claim an exemption for a property sale if a member has entered the retirement phase, as the income generated by the asset sale will be used to pay the member’s income stream. This is called an Exempt Current Pension Income.

It’s important that your SMSF is a complying SMSF, as funds that are found to be non-complying will be taxed at a higher rate on all assessable income, including capital gains.

This article is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation, or needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS), or other offer documents before making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).
Prepared by OwnHome Services Pty Ltd ACN 664 492 059. This information does not take your personal objectives, circumstances or needs into account. Always read the disclosure documents for products and services before deciding on a product or service, and consider seeking independent legal, financial, taxation or other advice for your unique circumstances.

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