HECS–HELP debt can affect your borrowing power when buying a home, even if repayments feel manageable. Planning and the right strategies can help first-time buyers.
Sydney, 14 May 2025 — For many Australians, the Higher Education Contribution Scheme (HECS–HELP) has made tertiary education more accessible. But while the scheme eases the financial burden of university fees, it can quietly influence another major life milestone: buying a home.
Unlike traditional loans, HECS–HELP repayments are income-contingent, meaning they only kick in once a graduate earns above a certain threshold. This feature makes the debt feel less immediate, but experts warn that it still plays a significant role in home loan assessments.
How HECS–HELP Affects Borrowing Power
Although HECS–HELP debt doesn’t appear on credit reports and doesn’t accrue interest in the traditional sense, lenders still treat it as a financial obligation. When assessing a borrower’s capacity, banks factor in HECS–HELP repayments as part of regular expenses, which can reduce the amount a person is eligible to borrow.
Many first-time buyers are surprised to learn that their HECS–HELP debt can limit their borrowing power. It’s not just about how much you owe, but how much of your income is tied up in repayments.
Key Factors That Influence the Impact
Several variables determine how significantly HECS–HELP debt affects a loan application:
Strategies to Improve Loan Eligibility
Despite the challenges, financial experts say there are ways to mitigate the impact of HECS–HELP on home loan applications:
Should You Pay Off HECS–HELP Before Applying?
The decision to pay off HECS–HELP debt before applying for a mortgage depends on individual circumstances. While doing so can improve borrowing capacity, it may not always be the best move.
Advice for First-Time Buyers
For those navigating the property market with HECS–HELP debt, preparation is key. Experts recommend:
With the right strategy, HECS–HELP debt doesn’t have to be a roadblock to homeownership. Instead, it’s one of many factors to consider in a well-rounded financial plan.
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