Mortgage Home LoanCalculator

Does HECS affect how much I can borrow?

By admin. Updated .

Quick answer: yes. Lenders treat your compulsory HECS-HELP repayment as a regular expense, which reduces what you can borrow. On a $100,000 salary, a HELP debt cuts borrowing power by about $45,000 in our example, from $470,000 to $425,000.

What matters to a lender is not your HELP balance but the compulsory repayment taken from your pay. That repayment changed on 1 July 2026, and APRA’s new debt-to-income limit treats HELP debt differently again. Here is how it all fits together. Run your own numbers in the borrowing power calculator by ticking the HECS-HELP box.

How much HECS reduces borrowing power

Gross income HELP repayment per year Borrowing power without HELP With HELP Difference
$80,000 $1,571 $371,000 $355,000 $16,000
$100,000 $4,571 $470,000 $425,000 $45,000
$120,000 $7,571 $581,000 $506,000 $75,000
$150,000 $12,476 $737,000 $613,000 $124,000
Single applicant, 6.50% rate over 30 years, assessed at 9.50%. Living costs $2,200 to $3,000 a month, no other debts. 2026-27 HELP repayment rates.

The impact grows with income, because higher earners repay more each year. At $150,000, HELP repayments of about $1,040 a month cost around $124,000 of borrowing power.

How HELP repayments are worked out in 2026-27

Since 1 July 2025, compulsory repayments use a marginal system: you only repay on income above the threshold. For 2026-27:

  • Income up to $69,528: no compulsory repayment.
  • Above $69,528: 15 cents for each dollar over the threshold.
  • Above $129,717: an extra 17 cents for each dollar over that level.
  • Repayments are capped at 10% of repayment income.

The threshold was $67,000 in 2025-26, so most borrowers repay slightly less this year. Balances were also cut by 20% on 1 June 2025, but because lenders look at the repayment rather than the balance, that cut did little for borrowing power unless it brought your debt close to being paid off.

Exceptions that can help

  • Debt nearly paid off. APRA guidance allows lenders, by exception, to ignore HELP repayments if the debt will be repaid soon, for example within 12 months. Policies vary by lender.
  • Debt-to-income limit. APRA’s 6 times income limit, in place since February 2026, leaves HELP debt out of the calculation. Lenders still count the repayment when checking your budget. See how the serviceability buffer and DTI limit work.
  • How the repayment is measured. Some lenders use the HELP deduction on your payslip, others estimate it from your income. If you earn bonuses or overtime, the method can change the result.

Should I pay off HECS before buying a home?

It depends on your balance and your deposit.

  • Small balance: clearing a small debt removes the repayment from your assessment and can lift borrowing power by tens of thousands. That can be good value.
  • Large balance: using deposit savings to pay down a large debt can leave you short of a deposit, which may mean paying LMI or missing the 20% mark. HELP debt is indexed rather than charged interest, so it is usually cheaper than a mortgage.
  • First home buyers: the 5% Deposit Scheme and Help to Buy can lower the deposit you need, leaving room to deal with HELP separately.

A mortgage broker can compare how different lenders treat your HELP debt before you decide. Then check the full cost of buying with the upfront costs calculator.

Frequently asked questions

Do banks count my HECS balance or my repayments?

Your compulsory repayments. A lender treats them as a monthly expense when it works out how much you can afford.

How much does HECS reduce borrowing power on $100,000?

About $45,000 in our example, from $470,000 to $425,000, based on a 6.50% rate assessed at 9.50% and $2,500 a month in living costs.

What is the HECS repayment threshold for 2026-27?

$69,528. Above that you repay 15 cents for each dollar over the threshold, plus 17 cents for each dollar over $129,717.

Will paying off my HECS increase my borrowing power?

Yes, because the repayment no longer counts as an expense. Some lenders will also ignore a debt that will be cleared within about 12 months.

Does HECS count towards APRA’s debt-to-income limit?

No. APRA excludes HELP debt from its 6 times income limit, though lenders still include the repayment in their serviceability test.

Sources

  • Australian Taxation Office, study and training loan repayment thresholds and rates 2026-27
  • APRA, debt-to-income limits and serviceability guidance, 2026
  • Figures calculated with our borrowing power calculator. Updated 17 October 2026.