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.
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.
Close to paying it off?
Some lenders may leave the repayment out if your HECS is expected to be paid off within 12 months.
Have $20k or less left?
NAB may leave out your HECS repayment if you qualify for its offer. I'd check whether that loan suits you before you pay extra towards HECS.
Thinking of paying extra?
Check how much you'd gain in borrowing power and how much cash you'd have left for the purchase.
Client story
He kept $18k for his deposit and could borrow about $50k more
I had a client with about $18k left on his HECS debt. He was on track to clear it through his normal repayments in roughly 18 months and was expecting a tax refund that might help him finish sooner.
We compared home loans over a 30 year term. One lender's assessment gave him about $50k more borrowing capacity than the other options, without using $18k of his deposit to clear HECS first.
His HELP repayment still counted. The difference was a lower assessment rate because he was close enough to paying the debt off. He kept the cash available for the purchase and continued making his normal compulsory repayments.
That's the comparison I'd want before you pay extra to the ATO: what can you borrow, and how much cash will you have left to buy?
Client outcome
He kept the money available for his purchase while continuing to repay his HECS.
Want to see what HECS could mean for your budget? Enter your income and current balance to estimate your repayments, the effect on borrowing power and how long the debt could take to clear.
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.
The results help you compare options. Your lender uses its own assessment to decide what you can borrow, and the longer-term results depend on the rates, repayments and indexation assumptions shown in the tool.
HECS Impact Calculator
How the 2026/27 repayment estimates work
Compulsory repayments use your repayment income, which can include more than salary. The marginal rates apply to income within each band; the top band uses 10% of total repayment income.
| Annual repayment income | Annual compulsory repayment |
|---|---|
| $69,528 or less | Nil |
| $69,529 to $129,717 | 15c for each $1 above $69,528 |
| $129,718 to $186,050 | $9,028 plus 17c for each $1 above $129,717 |
| $186,051 or more | 10% of 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.
How much can HECS reduce your borrowing power?
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.
| Annual salary before tax | Estimated HECS repayment each month | Borrowing without HECS | Borrowing with HECS | Difference |
|---|---|---|---|---|
| $75k | About $68 | $393k | $384k | $9,000 |
| $100k | About $381 | $534k | $487k | $47k |
| $120k | About $631 | $627k | $550k | $77k |
| $150k | About $1,040 | $785k | $658k | $127k |
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.
Can you buy with an $80k HECS balance?
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.
Should you pay off HECS before buying?
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.
| Option | When it could help | What I'd compare |
|---|---|---|
| Keep the debt | You need the cash for your deposit, or a suitable lender can assess HECS more favourably. | Borrowing power, mortgage repayments and the cash available to buy while you continue repaying HECS. |
| Clear it completely | Removing the repayment gives you enough borrowing capacity and still leaves the deposit and costs covered. | The purchase budget before and after paying the balance. |
| Pay off part | A smaller payment brings you within a lender's balance limit or expected repayment period. | Whether the lender will accept the result before you transfer any money. |
Client story
Layla borrowed an extra $75k without clearing HECS
Layla was a junior doctor earning $105k a year. She'd saved a $90k deposit for her first home in Melbourne and had $15k left on her HECS debt.
Clearing HECS would have used $15k of that deposit, leaving $75k for the purchase. Before making that trade, I'd want to know whether a lender could give her enough borrowing power while she kept the savings.
One lender we compared continued to count her HECS repayments but used a smaller assessment buffer because of how soon the debt was expected to clear. Her borrowing capacity increased from roughly $535k to $610k without paying HECS off first.
That extra $75k helped her buy a 2 bedroom apartment closer to the hospital where she worked. She kept the full $90k available for her deposit and continued repaying HECS through her income.
Layla's outcome
More borrowing capacity, with her deposit still available for the purchase.
Why paying an extra $5,000 might not improve your budget
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 the cash you'll want left after settlement. Voluntary HECS repayments aren't refundable, so it's worth getting that comparison before you pay.
Which lenders assess HECS differently?
Some lenders can leave the repayment out when you're close to clearing the debt. Others have a balance-based exception or can use a smaller assessment buffer.
The assessment buffer is the extra interest rate used to test what you could afford. Reducing it can increase borrowing power. It doesn't change the interest rate you pay or your compulsory HECS deductions.
| Lender | Where its HECS rules may help | What needs checking |
|---|---|---|
| CommBank | Debt expected to clear within 12 months may have its repayment excluded. More than 12 months but within 5 years may qualify for a smaller assessment buffer. | With the reduced-buffer option, the HECS repayment still counts. CommBank checks your expected repayment period and eligibility. |
| NAB | Eligible borrowers with a HECS balance of $20k or less may have the repayment excluded. | You need current ATO evidence of the balance and must meet NAB's lending requirements. |
| Westpac | A repayment may be excluded if the debt is expected to clear within 12 months. | Confirm the expected payoff date against the lender's application-assessment date. |
| St George | A repayment may be excluded if the debt is expected to clear within 12 months. | Confirm the evidence needed for the balance and expected repayment period. |
Tell us if you're still studying or adding new HELP debt. We need to check whether the particular lender exception applies to you; being eligible for a home loan and qualifying for an exception are separate questions.
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.
Client story
Sarah's unused credit card was worth checking too
Sarah earned $85k a year and had $60k in savings. Her HECS balance was down to $1,450, but she also had an unused credit card with a $20k limit.
She cleared the remaining HECS and reduced the card limit to $2,000. That removed the student-debt repayment and reduced her available card credit by $18k, while using only a small part of her savings.
The card mattered even with nothing owing. Lenders allow for repayments based on the available limit; they don't simply subtract that limit from your borrowing power.
For someone in Sarah's position today, I'd also check whether a suitable lender could exclude the HECS repayment without requiring the balance to be paid off.
When a smaller HECS payment could be enough
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.
For options based on how soon the debt will clear, we also need to allow for indexation, tax timing and income changes. Dividing the balance by your annual repayments gives an estimate, but it doesn't settle the lender's decision.
Check your current HECS balance before deciding
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.
Repayment threshold and indexation
For 2026/27, compulsory repayments start above repayment income of $69,528, up from $67k in 2025/26.
The indexation rate applied on 1 June 2026 was 2.8%, for debt that had been unpaid for more than 11 months. It uses the lower of national inflation and wage-price growth. Your own pay rise doesn't determine the indexation 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.
Watch our HECS and home loans discussion
Common questions about HECS and home loans
Can I get a home loan without paying off HECS?
Yes, if you meet the lender's requirements. The decision depends on your income, expenses, other commitments and how the lender treats the HECS repayment.
Is there a fixed amount HECS takes off borrowing power?
No. The shortcut above comes from one worked comparison. The lender's assessment rate, your remaining HECS debt, loan term and other commitments can change the result. Use it to get a sense of the impact, then compare your own figures before setting a property budget.
Does CommBank ignore HECS?
It has two different options worth checking. A debt expected to clear within 12 months may have the repayment excluded. For more than 12 months but within 5 years, eligible applications may use a smaller assessment buffer while still counting the repayment. Both need lender approval.
Does NAB ignore HECS of $20k or less?
NAB has an exception for eligible borrowers within that balance limit, supported by current ATO evidence. Confirm that the exception and loan fit before using deposit savings to get under the limit.
Does HECS affect my credit score?
HECS-HELP isn't listed on your credit report like a credit card or personal loan. It can still affect how much you can borrow because the lender checks your ongoing repayments.
Can you hide HECS debt from your bank or mortgage broker?
You need to include your HECS debt in the application, even though it doesn't appear on your credit report. The lender may check your payslips and ask for your ATO loan balance or other tax records.
Having HECS doesn't rule you out of buying. Tell us the balance upfront so we can compare lenders using the right figures. Leaving it out can delay the application or put the approval at risk.
How does HECS affect couples buying a home together?
Your HECS repayments are worked out separately using each person's repayment income. The lender then looks at both incomes, repayments and household expenses when assessing your joint home loan.
Say you earn $120k and have HECS, while your partner earns $90k and has none. If salary is your only repayment income, your estimated HECS repayment is about $631 a month under the 2026/27 rules. Your partner has no HECS repayment to allow for. I'd check each balance separately because a lender's exception might apply to one of you.
Does HECS count in the bank's total-debt check?
APRA excludes HELP balances from the debt to income, or DTI, figures banks report. The repayment can still count when the lender checks affordability. Those are different calculations, and the lender also applies its own credit rules. APRA explains the treatment of HELP debt.
Can I use the 5% Deposit Scheme with HECS?
HECS doesn't automatically exclude you. You need to meet the scheme rules and the participating lender's repayment assessment. The scheme has no income cap, but property caps and other conditions apply. See our 5% Deposit Scheme guide.
Can I refinance while I still have HECS?
Yes, if the new lender approves the loan. Compare its HECS assessment with the rate, fees and loan term. Moving student debt into a mortgage can add mortgage interest and spread the repayments over much longer. Our refinancing guide explains the other costs to compare.
What if I'm studying or earn below the repayment threshold?
You may still qualify for a home loan. Tell us about your studies, any additional HELP debt and your income. The lender needs to assess the full position, including whether any special HECS exception applies.
Compare both options before paying extra to the ATO
Send us your current ATO balance, recent payslips, savings and other debts. We'll compare keeping HECS, clearing it and making a smaller payment where that could help. You'll see the borrowing amount and cash left for your purchase before deciding.
Tell us if you're changing jobs, still studying or close to paying the debt off. Remove your tax file number from documents you share.
Check whether paying off HECS would help me buyWe'll explain your options and any costs before you proceed.
Related guides
Experience and sources
About the figures and sources
The borrowing examples were calculated by Hunter Galloway on 9 September 2026. Results depend on the lender, loan term, living costs and other debts. The HECS repayment estimates assume salary equals repayment income and enough student debt remains. Monthly amounts are rounded annual repayments divided by 12; payslip deductions may differ.
CommBank's public explanation and NAB's published balance-based exception support their entries. The Westpac and St George entries use lender information reviewed on 28 July 2026. We confirm those details before recommending a payment or application.
Jayden Vecchio is a mortgage broker at Hunter Galloway. Joshua Vecchio reviews this guide.
- StudyAssist: current repayments, income threshold and ATO timing
- StudyAssist: 2.8% indexation on 1 June 2026
- Department of Education: 20% debt reduction and indexation changes
- APRA: final HELP debt guidance and reporting changes
- CommBank: 12-month and 1 to 5 year HECS options
- NAB: its published $20k HECS option
- How Hunter Galloway reviews lenders
General information only. Lender policies can change, and applications are subject to credit approval. Borrowing calculations are estimates and client outcomes depend on their circumstances.
