Does HECS debt affect your home loan?

You've saved a deposit, but you still have HECS. Should you use some of that money to clear it before applying for a home loan?

Skip the theory — jump to the HECS Impact Calculator and see your estimated repayment, borrowing-power impact and payoff timeline.

Here, HECS means your government student debt under the Higher Education Loan Program (HELP). Before you use your deposit savings to clear it, I'd compare a few lenders. Some may leave the repayment out when you're close to paying it off. Others can let you borrow more while you keep repaying HECS through your income.

If you owe $30k in HECS, it doesn't mean the bank takes $30k off your home loan. The effect can be bigger than the debt itself.

The lender works out how much income you have left for the mortgage after tax, living costs and other repayments. A HECS repayment uses some of that income each month, which can reduce the loan you can afford over many years. I'd check both the monthly repayment and how soon the debt will clear, because lenders can treat a balance you're close to paying off differently.

Enter your income, current HECS balance and savings. The calculator estimates your repayments and repayment period, then shows the savings left if you cleared the debt, before your deposit and buying costs. Its home loan figure compares repayments; the lender still needs to work out what you can borrow.

Use your own annual income before tax. If you only earn a salary, leave out employer super. For other income or salary packaging, follow the calculator's income guidance.

Use the estimate to compare your options before paying extra to HECS. The lender makes its own borrowing assessment. Longer-term results depend on the rates, repayments and assumed annual increases to your HECS balance, called indexation, shown in the calculator.

Your compulsory repayment is based on your repayment income, which can include more than your salary. Up to $186,050, the rates apply to the part of your income within each band. Above that, the repayment is 10% of your total repayment income.

Monthly estimates divide the annual amount by 12 and round it. The amount withheld on your payslip may differ. These estimates assume you have enough HECS debt remaining for the calculated repayment. StudyAssist explains repayment income and links to the ATO thresholds.

Hunter Galloway borrowing examples calculated on 9 September 2026. The monthly repayment estimates use the 2026/27 rules. Borrowing amounts depend on the lender, loan term, expenses and other debts; the assumptions are explained at the bottom of this guide.

These examples show why I'd run the borrowing figures before deciding how much extra to pay towards HECS. The size of the student debt alone won't tell you which option leaves you with a better buying budget.

A large balance doesn't automatically rule you out. Your income, deposit, repayments and other commitments matter too.

Two people with the same repayment income can have the same compulsory repayment even if one owes $40k and the other owes $80k. The balance affects how long the debt will take to clear and whether a lender's HECS exception could apply.

I'd compare keeping it, clearing it and making a smaller payment where that could help. The aim is to work out your purchase budget after any voluntary repayment and buying costs.

Before you transfer money to the ATO, check what it changes for your home loan. Say you owe $40k and pay an extra $5,000 from your savings. You now owe $35k, but that payment alone won't reduce your regular HECS deduction while your income and repayment obligations stay the same.

Compulsory repayments are based on your repayment income, which can include more than your salary. Paying off part of the balance can still help if it brings you within a lender's balance limit or expected payoff period. I'd check that with the lender before using your deposit money.

Otherwise, you could have the same borrowing limit and $5,000 less for your deposit, buying costs or cash left after settlement. Voluntary HECS repayments aren't refundable, so compare the figures before you pay.

I'd check how much you owe and when your normal repayments are likely to clear it. Depending on the lender, you may qualify to have the repayment left out of its borrowing calculation, or to be assessed using a smaller buffer.

A smaller assessment buffer may increase what you can borrow. It does not reduce the rate you pay on the home loan or your compulsory HECS repayments.

For eligible HELP debt expected to clear in more than 12 months and within 5 years, CommBank may assess repayments at 1% above the actual loan rate while still counting your HELP repayments. It considers this alternative when its standard calculation doesn't allow you to borrow enough. You'll need balance evidence and must have finished, or nearly finished, studying.

Using the 5% Deposit Scheme with CommBank?

From 25 September 2026, new CommBank applications under the 5% Deposit Scheme cannot use the smaller-buffer option for HELP expected to clear in more than 12 months but within 5 years. The separate option to leave out repayments when HELP is expected to clear within 12 months still applies, subject to its eligibility rules.

Already have a CommBank application or Home Seeker pre-approval underway? CommBank says it will honour applications in progress that meet its rules about which changes are allowed. We'll check your proposed changes before you rely on the earlier borrowing amount.

Tell us if you're still studying or adding new HELP debt. You may qualify for a home loan without qualifying for a lender's special HECS rule, so we need to check both.

I wouldn't choose a lender on its HECS rule alone. I'd compare the deposit needed, loan amount, rate, fees and repayments. A lender that counts HECS could still give you the better overall result.

If you owe $22k, a $2,000 payment could bring you within NAB's $20k balance limit. I'd first check the latest ATO figure, whether you meet the exception and whether the proposed loan suits you.

The balance can change with indexation and the timing of your tax return. Your repayments can change with your income too. Dividing today's balance by your annual repayments gives a rough repayment period; we still need the lender to confirm whether its rule applies.

Sign in to myGov and open your linked ATO account to check the study-loan balance. Employer deductions are generally credited after you lodge your tax return, rather than after each payday.

That timing matters if you're close to a lender's balance limit. Indexation can increase the debt, while processing your tax return can reduce it. Use the current ATO record when we compare your options.

For 2026/27, compulsory repayments start above repayment income of $69,528, up from $67k in 2025/26.

On 1 June 2026, indexation added 2.8% to student debt that had been unpaid for more than 11 months. The rate uses the lower of national inflation and wage-price growth. Your own pay rise does not set the rate, and next year's rate may differ. StudyAssist explains the 2026 indexation.

The ATO has also processed the one-off 20% student-debt reduction. Use the updated balance rather than deducting another 20% yourself. The Department of Education explains the reduction.