If you're saving for a first home, a new type of investment is available that's specifically designed to help you get ahead with a deposit.

First Home Saver Accounts were initially proposed in the federal government's May budget, and they have just become available through several of the big banks.

First Home Savers offer some valuable perks, but there are also strings attached that first timers should be aware of.

Let's start by having a look at how First Home Saver Accounts (FHSAs) work.

Like a normal savings account, your money earns interest on the accumulated funds.

As a guide, the Commonwealth Bank's FHSA earns 6.5% p.a. while the ANZ is paying up to 7.0%p.a.

You can find some online savings accounts paying better rates, but unlike other savings deposits, the interest earnings on FHSAs are only taxed at 15%.

For anyone earning more than $34,000 a year, this is well below your personal tax rate, representing a generous tax saving.

On the other hand, if you earn between $6,000 and $15,000 annually, you'd pay 15% on any interest earnings anyway, and if your annual income is below $6,000, any interest earned on a traditional savings account could be tax free.

So from a tax angle, at least, these accounts may not be as appealing to low income earners.

But there's much more to FHSAs than light taxation.

A real sweetener is that the first $5,000 you deposit into a FHSA each year will be matched by a government contribution of 17%.

For example, if you save $1,000 in a FHSA over the next 12 months, the government will add an extra $170.

If you can deposit $5,000 in a single year, the government will contribute $850.

That's a real helping hand.

In order to enjoy these benefits some strict conditions are imposed.

Most notably, there is a 'four year rule' that says you must save $1,000 each financial year for four years before you can withdraw the funds to purchase a home.

This works out to $20 each week, which may not be a problem for committed first home buyers.

More importantly though, you can't use the funds accumulated in a FHSA for any other purpose beyond buying a first home.

If you decide against a home purchase, the funds can only be transferred to your super fund, where the cash can't usually be accessed until you retire.

This is a significant restriction, so be very sure about buying a home before you commit to one of these accounts.

And it may not be a bad idea to hold additional savings in a separate account so that you have access to cash in an emergency.

There are also limits imposed on how much cash you can accumulate in a FHSA.

For the 2008/09 financial year, the upper threshold is $75,000 though this will be indexed annually.

The account can be kept account open until you buy your first home, or turn 65.

For more information on First Home Saver Accounts take a look at www.firsthomesaver.com.au as well as the consumer site of investment watchdog ASIC at www.fido.gov.au.