Borrowing Power
Does HECS debt affect your borrowing power in 2026?
7 min read · By Daniel Lagden · 23 August 2026
Yes, a HECS or HELP debt still affects how much you can borrow in 2026, because the compulsory repayment reduces the income a lender can use to service your loan. It does not appear on your credit file and it does not behave like a credit card or a car loan, but it quietly lowers your borrowing capacity, and the way it is treated changed this year.
Quick summary: two separate things changed. The repayment system moved to a marginal model, so you repay only on income above the threshold rather than on your whole salary. Separately, the prudential regulator stopped requiring banks to include HELP debt in the debt to income figure they report. Neither change removes the effect on serviceability, because the compulsory repayment still comes out of the income a lender assesses.
How does a HELP debt actually reduce your borrowing power?
Lenders do not treat HELP like other debt. There is no interest rate to assess and no minimum monthly payment on a statement. Instead they take your compulsory repayment, which is set by your income, and treat it as a fixed reduction in the income available to service a mortgage. Less assessable income means a smaller loan. Because the repayment scales with what you earn, higher earners often feel it more in dollar terms rather than less.
What changed with the repayment threshold?
From the 2025/26 financial year the system moved to a marginal repayment model. The income at which compulsory repayments begin rose to $67,000, and repayments are worked out on income above that threshold rather than on your entire income. For many borrowers that produces a smaller compulsory repayment than the old system did, which genuinely helps serviceability. It reduces the drag rather than removing it.
Did the regulator not take HELP out of the calculation?
This is where most of the confusion sits. From late 2025 banks were no longer required to include HELP debt in the debt to income ratio they report to the prudential regulator. That is a reporting change. It affects how a bank counts your loan against its own portfolio limits, not how it works out whether you can afford the repayments. The serviceability assessment still subtracts your compulsory repayment, so headlines suggesting HELP no longer counts are half right at best.
Is it worth paying the debt off before you apply?
Sometimes, and sometimes not. Where the balance is small and close to cleared, paying it out can lift capacity by more than the balance itself, because it removes the repayment from the assessment entirely. Regulatory guidance also allows lenders to make exceptions where a HELP debt is expected to be repaid within twelve months, and policy on that varies between lenders. Where the balance is large, using savings to clear it can do more harm than good by shrinking your deposit. Model both before you commit.
Does it matter which lender you use?
Yes. How HELP debt is handled is a policy decision, and policies differ, particularly around small residual balances and how close to payoff a debt must be before it is discounted. Two lenders can produce materially different capacity on the same file for this reason alone. Checking policy before you apply is more productive than applying and hoping.
Policy settings described here are current as at August 2026. Thresholds, prudential rules and individual lender policy all change, so confirm your position before you rely on it.
Run the numbers
Frequently asked questions
Does HECS show up on my credit file?
No. A HELP debt is not reported to credit bureaus and does not affect your credit score. It affects borrowing capacity through the compulsory repayment being deducted from your assessable income.
Will paying off my HECS increase how much I can borrow?
It can, especially where the balance is small, because it removes the compulsory repayment from the serviceability assessment. Where the balance is large, spending your deposit to clear it may leave you worse off overall.
Do all lenders treat HECS the same way?
No. The broad approach is similar, but policies differ on small residual balances and on debts close to being repaid, which can change your maximum loan.
I earn a good income. Does HECS still matter?
Yes, and often more in dollar terms, because the compulsory repayment scales with income. Professionals carrying large balances frequently find it is the single biggest constraint on capacity.
Find out what you can actually borrow
A HELP balance is one input among many, and its effect depends on your income, your other commitments and the lender assessing the file. The useful step is having your position modelled against the lenders whose policy suits it, rather than guessing from an online calculator.
Talk to us about your borrowing powerGeneral information only. This article does not take your personal circumstances into account and is not credit advice.
