HECS Debt and Home Loans: How Your Student Loan Affects Borrowing Power
Your HECS Debt Doesn't Just Disappear When You Want a Mortgage
This might feel like a long way off if you're 17 and thinking about uni. But here's why it matters now: the HECS debt you take on today will affect how much a bank will lend you when you want to buy a home. Not in a hypothetical "one day" way. In a real, dollar-for-dollar way.
Understanding this upfront gives you the power to plan for it, not get blindsided by it.
How Banks Currently Treat HECS
When you apply for a home loan, banks look at your borrowing capacity, which is basically how much debt they think you can handle based on your income and existing commitments.
HECS-HELP repayments reduce your disposable income, which means banks factor them in. Even though HECS isn't a traditional loan with interest rates and monthly bills, the compulsory repayments still come out of your pay, so lenders treat them as an ongoing commitment.
According to Finspo (a digital mortgage broker cited by SBS News), maximum borrowing power typically reduces by around 10 times the value of your annual HECS repayment. So if you're repaying $4,000 per year, that could mean roughly $40,000 less borrowing capacity.
That's a meaningful number when you're trying to get into the property market.
What Changed in 2025
The federal government has directed APRA (Australian Prudential Regulation Authority) and ASIC to update their guidance on how lenders assess HECS debt. These changes took effect from 30 September 2025.
Here's what's different now, based on the updated regulatory guidance:
Banks can now exclude HECS repayments from borrowing assessments if the debt is expected to be fully repaid within 12 months. Some lenders have also started reducing the buffer they apply for debts expected to clear within 2-5 years.
NAB has publicly stated that if your student debt is $20,000 or less, it won't impact how much you can borrow with them.
Commonwealth Bank (CBA) rolled out changes ahead of the regulatory update, excluding HELP debt from serviceability assessments if it's being repaid in under 12 months.
These are significant shifts for first-home buyers who were previously knocked back or had their borrowing capacity cut because of student debt.
What This Means for You Right Now
If you're still deciding whether to go to uni, or how much debt to take on, this is worth thinking about:
- A $25,000 HECS debt with a $70,000 salary means annual repayments of about $450 — relatively small impact on borrowing.
- A $50,000 HECS debt with a $90,000 salary means annual repayments of about $3,450 — that could reduce your borrowing power by $30,000-$40,000 or more.
- The longer your debt takes to pay off, the longer it sits on your borrowing assessment as a liability.
None of this means "don't go to uni." It means go in with your eyes open and understand the downstream effects.
Model your specific scenario: Use the HELP Loan Calculator → to see how long your debt will take to repay based on your expected income, and when you'd be clear of it before applying for a home loan.
Where to Learn More
This guide summarises publicly available information. For the full details, go straight to the source:
- NAB — HECS and Home Loans
- Aussie — HECS Home Loan Changes 2025
- SBS News — How HECS Affects Borrowing Power
- APRA Guidance Updates
This guide is for educational purposes only. It is not financial, legal, or mortgage advice. Always speak to a licensed mortgage broker or financial adviser about your personal circumstances.