First Home Buyers Savings Account

Posted June 21st, 2010 and last modified April 2nd, 2014

Deciding what account to use when saving for a home is a decision no potential first home buyers should take lightly.

Saving for your first home is a challenging task for many, though the Australian Government is offering first home owner grants to assist in buying or building your first home, you can also set up a first home buyers savings account which is designed specifically to help you save for your first home, while also offering government contributions and tax breaks on your savings. Read on to learn more about with our general guide on First Home Saver Accounts.

FHSA cutting red tape

So, what is a First Home Saver Account?

A First Home Saver Account is an account backed by a Federal Government scheme put in place late 2008 to help first time buyers save for a home by giving government contributions and low taxes for savings towards a home. First home buyers are run through selected banks, credit unions and building societies and others that offer the accounts. These accounts come with stringent conditions which partly explains the low uptake.

These contributions are made in return for meeting some criteria, including:

  1. Depositing at least $1,000 per financial year for at least four financial years before you can access your money. These years don’t need to be consecutive.
  2. Using the money only to purchase a home. Failure to use the funds in the account for your home means they’ll be transferred to your super account to be accessed when you retire or meet a condition for release.

There are also some other features of this account you should be aware of, such as:

  1. The maximum amount you can hold in an FHSA is $90,000, but this will be indexed in future.
  2. If you purchase a home before the four years is up, you can still put the money in your FHSA towards your home, but you’ll still need to wait the four years until you can do this.
  3. You’re only charged a tax rate of 15% on the interest earned in an FHSA.


  • Government will contribute 17% on the first $6,000 deposited each financial year. This equates to $1,020 of free money
  • Interest is only taxed at 15%, instead of your marginal income tax rate
  • Family, employers and friends can all contribute after tax income to your FHSA
  • Maximum government contribution and balance cap are periodically increased (indexed upwards)


  • Savings are locked in your account for a minimum of four financials years. You have to deposit at least $1000 over four financial years and use the balance for a deposit on a house.
  • Interest rate is usually lower than online savings accounts
  • Max balance capped at $90,000. This is a 20% deposit on a $450,000 property
  • Joint accounts aren’t permitted
  • Low availability of FHSA providers

Features and Benefits of a First Home Buyers Savings Account

A first home saver account is similar to a term deposit account in that you are required to leave your funds in the account for a certain length of time, and when the term ends, you must withdraw the entire amount and close the account.

Other features which can benefit first home buyers:

  • Government contributions and interest earned are tax free and you don't have to report them on your tax return; the earnings from your first home buyers savings account are still taxed at 15%, but this tax is paid by the account provider. Any government contributions and interest earned won't affect any pensions you receive from Centrelink either.
  • When you have held your first home buyers savings account for four financial years, you can withdraw the funds, tax free.
  • You can make personal contributions at any time from your wages by setting up a regular transfer, or through bulk deposits from your tax refund or money from an inheritance.
  • You could still be eligible for the first home owner grant, but you must apply for the grant in a separate application.
  • Contributions can only be made to your first home saver account after tax, meaning you can't salary sacrifice some of your wages into your account.
  • Family members or friends can contribute funds to your first home buyers savings account too, to help you along.
  • You have 14 day cooling off period which allows you to withdraw your personal contributions and close the account if you change your mind, while still being eligible to open a new first home saver account in the future.
  • If you close the account outside of the 14 day cooling off period, savers over 60 years old will receive their funds back, while those under 60 will have the funds transferred to their nominated superannuation account.
  • The Australian government will make a 17% contribution on the first $6,000 you deposit each year. This means that if you deposit $6,000 in one financial year, you will receive $1,020 from the government.
  • The financial institution offering the account will also offer you a high interest rate, generally higher than their standard high interest savings account rates.

First Home Savings Accounts are available at:

  • AMP
  • Credit Union SA
  • Hume Building Society
  • Hunter United Employees Credit Union
  • IMB
  • ME Bank
  • Police Bank
  • Police Credit
  • Railways Credit Union
  • Teachers Mutual Bank
  • Victoria Teachers Mutual Bank
  • Wyong Shire Credit Union

Institutions which no longer offer FHSA’s to new customers:

  • ANZ
  • CBA
  • Beyond Bank Australia
  • Defence Bank
  • MyState Financial
online comparisons of First Home Savers

How the savings stack up: Online savings account vs First Home Saver Account

Online Savings Account

    interest rate 4.80% 0.048  
Year Yearly deposits Interest Tax


1 $6,000 $288 $94 $6,194
2 $6,000 $585 $190 $12,589
3 $6,000 $892 $290 $19,192
4 $6,000 $1,209 $393 $26,008
Total $24,000 $2,975 $2,975 $26,008

First Home Saver Account

    interest rate 3.50%   0.035  
Year Yearly deposits Govt. Bonus Interest Tax


1 $6,000 $1,020 $210 $32 $7,199
2 $6,000 $1,020 $462 $69 $14,611
3 $6,000 $1,020 $721 $108 $22,244
4 $6,000 $1,020 $989 $148 $30,105
Total $24,000 $24,000 $2,382 $357 $30,105

For this calculation we have made some assumptions of

  • Taxable income $50k
  • One annual contribution of $6k
  • Marginal tax rate is 32.5%
  • FHSA taxed at 15%


FHSA earns $4,097 more than an online saver account over four years

Legislative moves:

Changes were made on 25th May 2011 to allow the purchase of a property without the minimum of four financial years of deposits (if four financial years have elapsed). There is also now an allowance for the balance of a FHSA to be contributed to a mortgage in a lump sum rather than reverting to a super balance if not used for a deposit.

Although these changes do increase flexibility somewhat, and are welcomed, not being able to use the balance of a FHSA for a deposit on a first home within four financial years is a huge (and at times hurtful) barrier for consumers. It seems that plenty of consumers lock into these accounts without fully knowing these conditions and are shocked when they realise they can’t use their savings in this account when they decide to purchase their first home.

First home buyer stats:

First home buyers bought 429,000 homes from June 2007 to June 2010 according to the most recent ABS statistics. FHSAs totalled 35,200 as of March 2012 according to APRA - a pretty measly representation of Australia’s future first home buyers.

Is a First Home Saver Account for you?

Piling your savings into a First Home Saver Account can provide a big boost towards your deposit. But if you don’t meet the account rules, you will end up red-faced and unable to use the balance as a deposit on your first home.

Information on opening a First Home Savers Account

Who is Eligible for a First Home Buyers Savings Account?

Of course you must have not already owned a home in Australia to be eligible to receive the benefits of a first home buyers savings account, but there are several other criteria too:

a first home loan
  • You must be over 18 and under 65 years old.
  • You must have a tax file number and this must be included in your application.
  • You may not have owned a home in Australia or Norfolk Island which was your main residence.
  • You cannot have previously opened a first home buyers savings account.
  • You may transfer the funds from one first home saver account to another first home saver account.
  • If the purchase or construction of your first home did not eventuate after you closed your first home saver account, you may open a new first home saver account within six months.
  • There is a 14 day cooling off period in which you can close the account and still be eligible to open a new first home saver account.
  • You may only open one first home buyers savings account.
  • A first home saver account is an individual account, and cannot be opened in joint names.

How to Apply for a First Home Saver Account

Not all financial institutions will offer a first home saver account, and not all high interest savings accounts can be used as a first home saver account, so make sure you are opening an account designated for first home buyers, to ensure you are eligible for the government contributions and tax incentives. Once you have compared the first home saver accounts on offer, choose one with a provider you are happy with, and one which offers the features you need and want, not all first home saver accounts are the same and some will have different fee structures and offer different interest rates.

The FHSA VS HISA debate

With the conditions explained above, many of you may wonder if an FHSA would really suit you, and for some, it won’t. There are a few examples where a regular High Interest Savings Account (HISA) may serve you better than an FHSA.

  • Time requirement. You may want the flexibility of an account where you’re free to use your money to buy a home in less than four financial years.
  • You want the ability to access your money in an emergency. This is self-explanatory - you may want an account where you can get your money in the event that you need it for sudden, unexpected expenses.

  • You want to be able to use your money for a different investment. A lot can change in four years, including your investment preferences. If you want to invest in shares rather than property for example, but your funds are tied up in an FHSA, then a HISA might be the way to go.

Case Study

Julia wants to save up for a deposit for her first home and wants to know whether a high interest savings account will suit her financial situation better, or a first home saver account. She knows she will be able to deposit $500 per month, meaning she will be eligible for the maximum standard variable rate for the RAMS Saver account and she can get maximal government contributions.

She is also a member of an eligible superfund to apply for the ME Bank FHSA. After doing her calculations, she decides that the extra $942 she’ll receive from the first home saver account is worth the inflexibility of the account as she doesn’t plan to buy her first home until 2018.

ME Bank First home saver account RAMS Saver Account
Deposit $6000 $6000
Government contributions $1,020 N/a
Maximum standard variable rate N/a 4.51%
Interest rate 3.25% 3.21%
Interest earned $198 $276
Total earned for the year $1218 $276
Difference - $942

*Rates are current as of 27/08/13. This example is general and does not take into your account your personal situation.

High interest savings accounts have a number of basic benefits which make them a useful tool when saving for a home.

  • Think before you spend. Because most savings accounts require approximately two to three days to transfer funds to your transaction account, you have a buffer to stop you from making any impulse purchases using your savings.
  • High interest. A HISA might not provide the financial benefits an FHSA does, but many still offer competitive interest rates. Earning interest is one way to get closer to your goal of owning a home.

Picking the right HISA

Selecting the right savings account has a number of steps which are best gone into in depth, but here are a few quick tips to keep in mind.

  1. Don’t pay fees. Many competitive savings accounts have no bank fees, so don’t get sucked into paying bank fees for an account because the advertising tells you it’s special.
  2. Take advantage of bonus interest. Many HISAs today offer a bonus interest rate for a short period of time (usually a number of months). When this bonus interest rate ends, move your savings into a new HISA account from another bank and take advantage of their bonus interest rates. There’s no fees associated with this, and no limits to the number of HISAs you can have.

Realising your dream to own a home and reach financial independence can be that much easier with the right bank account backing you up. Start comparing today.

To compare the high interest savings accounts which can be used as first home saver accounts, view the Savings Account Finder™ comparison tables here, and follow our secure links to find out more about each providers' accounts and services.

Ask a Question

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27 Responses to First Home Buyers Savings Account

  1. Default Gravatar
    jayme | April 12, 2014

    If you didn’t close the account and you reached the $90,000 cap, how much would you get in government contributions in total?

    • Staff
      Marc | April 14, 2014

      Hi Jayme,
      thanks for the question.

      Provided you fulfilled the conditions, you would receive a total of $1,020 per year in government contributions until you reached this cap. This means that depending on how much you were saving per year, the amount of government contributions you’d receive would change.

      I hope this helps,

  2. Default Gravatar
    Peta | February 18, 2014

    does having this acc. effect the first home buyers grant? can you receive both or is it just one?

    • Staff
      Marc | February 19, 2014

      Hi Peta,
      thanks for the comment.

      Opening an FHSA doesn’t make you ineligible for the First Home Buyers Grant – you can use both of these when purchasing your first home, provided you fulfil the eligibility requirements listed for both.


  3. Default Gravatar
    Harry | February 7, 2014

    Hi There,

    We plan to open 2 accounts one on my name and one on my wife’s name. Can both of us get govt benefit? we will register the house on both our names that’s not a problem.


    • Staff
      Marc | February 7, 2014

      Hi Harry,
      thanks for the question.

      This is perfectly fine. As long as you fulfil the eligibility requirements each buyer can open an first home savers account.

      I hope this helps,

  4. Default Gravatar
    grace | January 10, 2014

    If I want to buy a house at the second year, do I have to withdraw the balance with the new rule of abolishing the 4 year rule.

    Or do I have the choice of keep contributing $6000 a year until the 4th year to get the government contribution.

    If so, does the government stop contribute at the 4th year because I bought a house within 4 years?

    Many thanks

    • Staff
      Shirley | January 13, 2014

      Hi Grace,

      Thanks for your comment.

      We can’t find any reference that the 4 year rule has been abolished. The MoneySmart website states that “If you buy your first home before the 4 year period is up, you can withdraw the money in your account at the end of the 4 year period to put towards your mortgage. You will not be able to make any more deposits once you have built or bought a property.”

      The Government will make a contribution each year, you don’t need to wait until the 4th year for the Government to make one. The Government contributes on the first $6,000 you deposit each year.


  5. Default Gravatar
    Loren | September 14, 2013

    I am not sure if I am just reading too many sources but can you clarify…
    My partner and I are hoping to purchase a home anywhere between 2-5 years, depending on how much we are able to save. If we buy before the 4 years are up, can we use this saved money towards the deposit? Thanks

    • Staff
      Shirley | September 16, 2013

      Hi Loren,

      Thanks for your comment.

      I’ve taken this from the MoneySmart website – “If you buy your first home before the 4 year period is up, you can withdraw the money in your account at the end of the 4 year period to put towards your mortgage. You will not be able to make any more deposits once you have built or bought a property”.

      Hope this helps,

    • Default Gravatar
      Jason | September 17, 2013

      Hi Loren

      I would definitely recommend against opening a First Home Savers account. I have one at the moment and the deteriments far outweigh the benefits unless you really don’t intend to buy a home in the next 4 years.

      If you purchase a home before the 4 years are up, the financial institution freezes your account from any additional deposits and then once you have reached 4 financial years, the balance will be direct debited into your loan.

      Reasons why this is bad:
      I opened an account and have $21,000 locked away in it until 1 July, 2015.

      I just purchased my first home for $445,000 with a 10% deposit of $45,000 instead of $66,000 all up.

      This resulted in me having to pay $8600 in mortage insurance instead of $4600 if I could tap into these funds and a less competitive interest rate.

      Also, the interest incurred from less of a deposit far outweighs the interest earned from this account.

  6. Default Gravatar
    Patricia | June 21, 2013

    Im really confused now. I read before that if somebody is eligable to open a first home buyers account then can use the money after 4 years. It doesnt matter if you are buying the property with a partner that owned a house before as long as this is the first property for YOU (the account holder)and your name is in the contract.
    But you are saying here that if you are buying with a partner both have to be first time home buyers?? both have to have the first time buyer account? is that correct?
    Thanks in advance for your answer.

    • Staff
      Shirley | June 24, 2013

      Hi Patricia,

      Thanks for your comment.

      This has been taken directly from the ATO website.

      You can close your account and withdraw the balance to build or buy your home if one of the following applies:
      You contributed at least $1,000 per year to your account in at least four financial years – the four-year rule.
      Your account balance has reached the cap and you have held the account for at least four years.
      You are building or purchasing a home with another first home saver account holder who is eligible to access their funds.
      You have a mortgage and have built or bought your home before meeting the four-year rule but you have now met your minimum qualifying period (for homes purchased after 25 May 2011).
      You have turned 60 years of age.

      Please note the bolded text, you are required to be building or purchasing with another first home saver account holder.

      Hope this helps,

  7. Default Gravatar
    Michael | June 16, 2013

    If my partner owns a property and I do not am I still eligable for this and would I also still be eligible for the first home buyers grant?

    • Staff
      Shirley | June 17, 2013

      Hi Michael,

      Thanks for your comment.

      Please check here if you’re eligible for a FHSA. Keep in mind that when you access the funds of the FHSA you need to be building or purchasing a home with another first home saver account holder who is eligible to access their funds.

      For the FHOG, eligibility requirements will depend on which state you live in. Please see this page for VIC requirements.


  8. Default Gravatar
    Kien | June 14, 2013


    Thanks. Very interesting read. I have a few quick questions

    1. As Valerie pointed out about the residency status requirements. There’s no mention of it so I’m assuming it doesn’t matter if you are on your TR visa or PR or citizenship. Please let me know if I’m wrong.

    2. Can I open one account and my partner open her account, and then we use the money from both accounts to purchase the same house?


    • Staff
      Shirley | June 17, 2013

      Hi Klen,

      Thanks for your comment.

      There are few residency requirements; you need be an Australian resident for income tax purposes (for at least part of the financial year) to receive the government contribution and live in the home you buy for at least six months within 12 months of becoming the owner or construction being complete.

      You can open one account and your partner open another – you need to be building or purchasing a home with another first home saver account holder who is eligible to access their funds.


  9. Default Gravatar
    Jason | May 30, 2013


    i’m just wondering it says for a minimum of 4 years, will the government keep contributing if you complete 5,6 7 years etc?

    • Staff
      Shirley | May 31, 2013

      Hi Jason,

      Thanks for your comment.

      There is a cap to how much Governments can contribute to. In 2013, the maximum government contribution threshold is $1,020.


  10. Default Gravatar
    Mick | May 17, 2013

    The info is a little outdated.
    The gov’t will now contribute 17% on the first $6,000 you save each financial year, so you have the ability to earn an extra $1020 a year in government contributions.

    My question is, Who provides these accounts now? The big banks cut them a while back and now just a few building societies and others offer them….. I know AMP do, but not sure who else. List?


    • Staff
      Shirley | May 17, 2013

      Hi Mick,

      Thanks for your comment. The information has now been updated to reflect this.

      As well as AMP, ME Bank and the Police Bank offer first home saver accounts as well.


  11. Default Gravatar
    Valerie | May 8, 2013

    Hi there,

    I cant find anywhere what residency status you have to be on when you apply for a first home saver account.
    Do you have a quick answer for me?

    thank you

    • Staff
      Shirley | May 10, 2013

      Hi Valerie,

      Thanks for your comment.

      This page contains all the information about the eligibility of a FHSA.

      Hope this helps,

  12. Default Gravatar
    Jenny | April 3, 2013


    I am confused about ING’s bonus interest rate p.a.
    On the table it says 1.75% but in the page which was taken by click the variable bonus rate is 0.75%.
    I understood after 4 months the ING’s interest rate is 3.25+1.75 = 5%, but where does 0.75% need?

    • Staff
      Shirley | April 5, 2013

      Hi Jenny,

      The loyalty bonus applies after the promotional period (4 months), so when you open it, you get the maximum interest for 4 months and then after that 4 months it goes to the bonus standard rate but only if you deposit $200 a month. If you don’t deposit up to $200 a month, it reverts back to the standard variable rate.

      Hope this clears things up,

  13. Default Gravatar
    Treezie | December 16, 2012


    If I start a first home owner savings account and then become ready to buy my first home before the four years is up, am I able to withdraw the money early and use it on the deposit? Or, if not, can I purchase the home and then use the money in the savings account to go towards the mortgage after the four years is up?

    Basically, I think I’ll be ready to buy my first home in a year or two and am wondering if I can still use this account to my advantage.



    • Staff
      Adrian | December 17, 2012

      Hi Treezie. My understanding of First Home Saver Accounts is that the balance cannot be used towards a deposit for a home if the full four years of contributions have not occurred. In this circumstance, the balance can be used towards repayments but not a deposit. All the best with this decision.

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