- First Home Buyers
- Updated
• 5 min read
Does HECS Affect Borrowing Power?
HECS — the Higher Education Contribution Scheme — can reduce how much you are able to borrow for a home loan. For many professionals who studied for several years, the HECS balance and compulsory repayment amount can have a material impact on what lenders will approve.
Quick Answer
Yes. HECS debt reduces borrowing capacity because lenders include the compulsory HECS repayment in their serviceability assessment. The higher your income, the higher your compulsory repayment, and therefore the greater the impact on assessed borrowing capacity.
How HECS Affects Serviceability
The compulsory HECS repayment is calculated as a percentage of your income above a threshold set by the ATO. As income rises, the repayment rate rises. Lenders include this repayment when calculating whether you can service a home loan, which reduces the amount they are willing to lend.
Example: How HECS Reduces Borrowing Capacity
If your compulsory HECS repayment is $8,000 per year, that is approximately $667 per month counted as a committed expense. Across a 30-year loan, a lender may reduce your borrowing capacity by $120,000–$160,000 or more depending on the rate and their servicing model.
Which Professionals Are Most Affected?
✓ Nurses — often carry HECS from undergraduate and postgraduate nursing degrees
✓ Doctors — often carry significant HECS from medical school, particularly registrars
✓ Dentists — dental degrees typically carry high HECS balances
✓ Lawyers — law degrees often carry significant HECS
✓Accountants — HECS impact varies by degree and income level
Do All Lenders Treat HECS The Same Way?
No. While most lenders include the ATO’s compulsory HECS repayment in their serviceability calculation, some may use different methodologies. The income level used, the rate applied and the overall serviceability model can differ. This means the right lender choice can affect how much HECS impacts your application.
Strategies To Consider
✓ Compare lenders — different serviceability models mean different outcomes
✓ Consider paying down HECS before applying if the balance is close to a threshold
✓ Understand your compulsory repayment rate before applying
✓ Use a borrowing capacity calculator to estimate the HECS impact
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Professional Lending Guide
Frequently Asked Questions
Can I get a home loan if I have HECS debt?
Yes. HECS debt does not disqualify you from a home loan. It reduces assessed borrowing capacity, but many professionals with HECS still borrow successfully.
Should I pay off HECS before applying for a home loan?
It depends on your balance, income, interest rate and savings position. There is no universal answer — this is a decision worth considering carefully.
Is HECS treated the same as credit card debt?
No. HECS is assessed differently to credit card limits or personal loan debt, but it is still included in serviceability calculations as a committed liability.
How Lenders Calculate The HECS Impact
The ATO publishes annual income thresholds and repayment rates for HECS/HELP debt. As income rises, the repayment rate applied to income above the threshold increases. Lenders use these rates when calculating what you can afford to service.
Example: How HECS Affects A Nurse At $90,000
At an income of $90,000, the compulsory HECS repayment rate is approximately 7.5%, giving a repayment of roughly $6,750 per year or $562 per month. Lenders count this $562 as a committed expense, reducing assessed borrowing capacity by roughly $80,000–$100,000 depending on the lender and rate used.
Example: How HECS Affects A Doctor At $150,000
At $150,000, the repayment rate rises to approximately 10%, giving a repayment of roughly $15,000 per year or $1,250 per month. This can reduce borrowing capacity by $150,000–$200,000 depending on lender and assessment buffer.
Do All Lenders Treat HECS The Same Way?
No. While most lenders use the ATO’s published rates, the overall serviceability model — assessment buffer, HEM expenses, income shading — varies. The same borrower with HECS debt can get meaningfully different borrowing estimates from different lenders.
Strategies For Borrowers With HECS
✓ Compare lenders — serviceability models differ and outcomes can vary
✓ Use the borrowing power calculator to estimate the HECS impact on your capacity
✓ Consider whether paying down HECS before applying makes sense for your situation
✓ Understand that HECS does not disqualify you — it reduces capacity, not eligibility
| Annual income | Approx. repayment rate | Approx. monthly impact | Approx. capacity reduction |
|---|---|---|---|
| $70,000 | 3.5% | ~$204/month | ~$30,000–50,000 |
| $90,000 | 7.0% | ~$525/month | ~$70,000–90,000 |
| $110,000 | 8.5% | ~$779/month | ~$100,000–130,000 |
| $130,000 | 9.5% | ~$1,029/month | ~$130,000–160,000 |
| $160,000 | 10.0% | ~$1,333/month | ~$160,000–200,000 |
HECS repayment rates are set by the ATO and change each financial year. These figures are approximate guides only. Confirm current rates at ato.gov.au.
Understand Your HECS Impact
Book a review and we’ll compare lenders and assess how HECS affects your borrowing position.
General information only. Borrowing capacity varies by lender, income and individual circumstances.
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Written by: Simpli Finance Lending Team · Reviewed by: [Broker Name], Mortgage Broker · Last updated: June 2026