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 bank checks how much income you have left after tax, living costs and other repayments. HECS uses some of that income, leaving less for the mortgage. The monthly repayment matters, but so does how soon you'll clear the debt. Some lenders make an allowance when you're close to paying it off.

Enter your income, current HECS balance and savings. The calculator estimates your repayments, how long the debt could take to clear and the savings left if you paid it off now. That remaining cash still needs to cover your deposit and buying costs. The home loan figure shows what a similar monthly repayment could support; it isn't your borrowing limit.

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 these estimates to compare your options before paying extra to HECS. The longer-term figures use the repayments, interest rate and annual indexation shown in the calculator. Indexation increases your student-debt balance. Your lender still needs to assess the home loan.

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. These are separate assessments from the client stories below. The lender, loan term, expenses and other debts can produce different borrowing limits for people on the same salary.

The amount you owe is only part of the decision. Compare what you can borrow and the savings you'd have left before paying extra towards HECS.

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.

Compare keeping HECS, clearing it and making a smaller payment where that could help. For each option, work out what you could spend on a home after the debt payment and buying costs.

If you also have a novated lease, compare which commitment is limiting your borrowing and how much deposit each payout would use.

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.

It depends on how much each repayment affects your borrowing capacity and how much of your savings it would take to clear the debt. I'd run the numbers before paying either one off.

I had a client earning $150k a year with $50k in HECS and car repayments of $1,200 a month. We compared these four positions:

These are rounded figures from one client's assessment, not a borrowing limit for everyone earning $150k. The effect of both debts together can differ from adding up their separate effects.

Clearing either debt made a sizeable difference. Paying off HECS would use $50k of savings. We'd need the car's payout figure too, so we could compare the cash left for the deposit, buying costs and a buffer after settlement.

A larger loan is only useful if you still have enough cash to buy. We can compare the options with suitable lenders before you decide which debt to clear. If your car is through salary packaging, see our novated lease home loan guide.

Yes. HECS repayments can be based on more than your salary. Rental profits, dividends and bonuses can increase the income used for the calculation.

A rental loss may reduce your taxable income, but the ATO adds net investment losses back when working out your HECS repayment income. That includes rental losses.

The bank also has its own rules for the income it accepts. Send us the full picture so we can compare your actual repayments, borrowing capacity and savings before you clear a debt.

Your balance and expected payoff date can change how a lender assesses HECS. Some may leave out the repayment. Others may still count it but use a smaller assessment buffer when checking what you can afford.

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.

CommBank may assess an eligible home loan at 1% above the actual loan rate while still counting HELP repayments. This option applies to HELP debt expected to clear in more than 12 months but within 5 years, when its standard calculation doesn't allow enough borrowing.

You'll need evidence of the balance and must have finished, or nearly finished, studying. The scheme restriction below also needs checking.

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 applications in progress can keep the earlier assessment if they meet its rules about permitted changes. We'll check any changes before you rely on that 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.

Compare the whole loan: the deposit needed, borrowing limit, 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. Before paying, check your current ATO balance, eligibility 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.