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Learn more →Home Loans with a HECS Debt in Sydney
A HECS debt doesn't stop you buying a home — but it does reduce your borrowing capacity, and by how much depends on the lender. Some lenders treat HECS more generously than others. We compare 60+ lenders to find the ones that calculate your HECS fairly and maximise what you can borrow.
Who this suits
A HECS debt is one of the most common reasons borrowing capacity comes in lower than expected. If any of the following sound like you, we can help:
- You have a HECS or HELP debt and want to know how it affects your borrowing power.
- You've been told your borrowing capacity is lower than expected because of HECS.
- You want to buy a home before your HECS is fully repaid.
- You're a graduate with a good income but a significant HECS balance.
- You're buying with a partner and one or both of you have HECS debts.
- You want to know whether paying down your HECS would help your borrowing capacity.
How HECS affects your borrowing capacity
HECS is treated differently from other debts by most lenders. Because HECS repayments are collected through the tax system and only apply when your income exceeds a threshold, some lenders don't count it as a regular monthly debt. Instead, they reduce your assessable income by the HECS repayment percentage, which has a smaller impact on borrowing capacity.
Other lenders treat HECS more conservatively — they'll add the HECS repayment as a fixed monthly expense, which can reduce your borrowing capacity more significantly. The difference between these two approaches can be tens of thousands of dollars in borrowing power.
How different lenders calculate HECS
Income reduction method
Some lenders reduce your gross income by the HECS repayment rate (currently between 1% and 10% depending on your income). This is generally the more generous approach and results in a smaller reduction to your borrowing capacity.
Monthly debt method
Other lenders treat the HECS repayment as a fixed monthly debt, similar to a personal loan. This can reduce your borrowing capacity more significantly because the full repayment amount is deducted from your available income.
Threshold-based assessment
A few lenders only factor in HECS if your income is above the repayment threshold. If your income is below the threshold, they may not reduce your borrowing capacity at all.
Should you pay down your HECS before applying?
It depends on the numbers. If you have savings above your deposit requirement, paying down part of your HECS can increase your borrowing capacity — but only if the lender uses the monthly debt method. If the lender uses the income reduction method, paying down HECS may not make a meaningful difference.
We'll run both scenarios for you — with and without a HECS paydown — so you can see the actual impact on your borrowing capacity before you decide. Sometimes the answer is to keep the cash for your deposit; sometimes paying down HECS is the better move.
What it costs you
Nothing. The lender pays us a commission for introducing the loan — you don't pay us a fee. We'll tell you exactly what commission we receive before you commit, in writing, as the law requires.
Common questions
No. A HECS debt reduces your borrowing capacity but doesn't prevent you from getting a home loan. The key is choosing a lender that calculates HECS fairly.
It varies by lender. Some lenders reduce your borrowing capacity by $10,000-$30,000; others by more. We'll show you the difference across multiple lenders so you can see the impact.
Not always. It depends on which lender you're using and how they calculate HECS. We'll run both scenarios so you can see whether paying down HECS actually helps your borrowing capacity.
Yes, each person's HECS is factored in. If both of you have HECS debts, the combined impact on your borrowing capacity can be significant — so choosing the right lender matters even more.
Some lenders won't reduce your borrowing capacity at all if your income is below the threshold. We'll identify those lenders if your income is near the threshold.
Not sure whether your situation would pass? The home loan readiness check takes about a minute, involves no credit enquiry, and tells you what would hold up an application before you make one.
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