Big changes have come into place that make it easier for Aussies with student debt to boost their borrowing power — meaning you might be able to get the keys to your own place sooner than you thought.

Here’s the lowdown on what’s changing, how it could work in your favour, and simple steps to help you take advantage of the update.

What’s changed with HECS in 2025

Some lenders have adjusted how they access HECS debt, making it less of a hurdle for many first home buyers.

•  If your HECS debt is under $20,000, it may no longer be included in certain borrowing capacity calculations by some lenders.
• If your HECS debt is over $20,000 but can be paid off within five years, it may be assessed more favourably by some leanders, giving some buyers a boost in borrowing power.
• These changes acknowledge that HECS debt is very different from other types of loans — and it shouldn’t be the thing holding you back from stepping into your first home.

What’s still to come

The Labor Government has promised a 20% reduction to HECS balances before the end of 2025. For many borrowers, this will bring their debt under the $20,000 mark — unlocking even more borrowing potential under the current rules.

How HECS affects your borrowing power

In the past, lenders treated HECS repayments like any other debt, reducing the amount they’d be willing to lend you. Even though HECS doesn’t charge interest and is repaid automatically through your tax, it still counted as a regular monthly expense because it’s deducted from your pay as a higher tax component, which could make a big dent in your borrowing limit.

With the new changes, smaller debts or balances close to being repaid could be excluded entirely in the lenders calculations.

For first home buyers, that could mean:

• Qualifying for finance sooner.
• Being able to buy in your preferred suburb.
• Choosing a bigger or more feature-packed home design.

Tips to improve your borrowing power with HECS debt

If you’re planning to buy your first home, here are practical steps to help put yourself in the best position:

• Check your HECS balance Log in to your myGov account (linked to the ATO) to see your current HECS balance. Keep an eye on any policy updates or reductions that might drop your balance below the $20,000 threshold.
• Understand your repayment rate Your repayment rate depends on your income, not the size of your debt. Knowing what percentage of your salary is going towards HECS will help you understand the impact on your borrowing capacity.
• Speak to your broker about making small top-up payments If your balance is slightly above $20,000, a voluntary repayment could get you
• Under the threshold, or help you qualify with a lender that accepts debts able to be cleared within five years.
• Boost your overall financial profile Lenders look at your full financial situation, so reducing other debts, building a savings buffer, and showing consistent income can all help increase your borrowing power.
• Chat to Westgate Finance Easystart Homes’ in-house finance team, Westgate Finance, knows the ins and outs of these HECS changes and how lenders assess your borrowing capacity. They can run the numbers for you, explain your options, and help create a plan to get you into your first home faster.

These changes to how HECS debt is assessed could open the door for more first home buyers in WA to enter the market sooner. If your balance is under $20,000, or will be after the expected 20% reduction, you may be in a stronger position than you think.

Even if you have more than $20,000, some lenders may still approve your loan, especially if you can show you’ll pay off your debt within the next five years.

By understanding your HECS balance, planning your repayments, and improving your overall financial profile, you can take advantage of these changes and move one step closer to owning your first home.