How HECS-HELP affects a doctor's borrowing power

How lenders count HECS-HELP

Your employer withholds HECS-HELP repayments from your pay once your income passes the ATO's threshold. That money isn't available to pay a mortgage, so lenders treat the repayment as a monthly commitment, alongside any other debts. They work it out from the income they assess, usually using the ATO's repayment schedule. The ATO's own figure is based on your repayment income: your taxable income plus a few add-backs, such as reportable fringe benefits and reportable super contributions.

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The 2026-27 repayment schedule

Since 1 July 2025 the compulsory repayment is worked out on a marginal basis: you repay only on the part of your income above the threshold, until your income reaches the top band, where you repay 10% of all of it. For 2026-27:

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So a resident on $95,000 repays about $3,800 a year, about $320 a month. A registrar on $150,000 repays about $12,500 a year, about $1,040 a month. A specialist on $250,000 repays $25,000 a year, about $2,080 a month. Because the repayment rises with income, HECS takes more off a doctor's borrowing as their pay rises, not less.

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Your balance matters less than your income

The repayment depends on your income, not on how much you owe. Two registrars on the same pay, one owing $30,000 and the other $120,000, repay the same amount each year until the smaller debt is nearly gone. Lenders count that repayment, so in most cases they give both the same borrowing figure.

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This is why the 20% cut to HELP balances in 2025 made little difference to a doctor's borrowing unless it brought the balance close to being cleared. It shortened how long the debt will last, but it didn't change the repayment coming out of each pay. What changes your borrowing is the debt being gone, or nearly gone.

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Salary packaging doesn't reduce it

Salary packaging lowers your taxable income, but the ATO adds reportable fringe benefits back when it works out your repayment income, whether or not your hospital is an exempt employer. So packaging doesn't make your HECS-HELP repayment smaller, even though it can lower your tax.

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Lenders also differ on which income they use when they work out the repayment for their own sums. Some use your gross income, others your taxable income, so the figure a lender counts may not match exactly what comes out of your pay.

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Worked example: a registrar with a HECS-HELP debt

This is an illustration, not a quote. Say Dr Okafor is a single registrar in a public hospital on a base salary of $150,000. She owes $75,000 of HECS-HELP from her medical degree. She has no credit cards or other debts and spends about $2,500 a month. She wants to buy a house for $900,000 with a 20% deposit, so she needs a loan of $720,000.

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We ran her details through the Xandii home loan comparison tool with and without the HECS-HELP debt. This is the range of her indicative borrowing across the lenders:

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Without the debt, every lender's indicative figure reached the $720,000 she needs. With it, almost none did. With almost every lender, her repayment of about $1,040 a month takes between about $121,000 and $160,000 off her borrowing, depending on the lender. If she owed $30,000 or $120,000 instead, the figures would be exactly the same, because her repayment would be the same.

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How the effect changes with income

The same $75,000 debt, run for the same doctor at three salaries:

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A higher salary still lets you borrow more overall. But the HECS repayment grows with it, so the debt's effect on your borrowing is largest just when your income is highest, until the debt is paid off.

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You can see indicative borrowing figures across a range of lenders for your own details with the Xandii home loan comparison tool, which asks for your HECS-HELP balance. Talk the result through with Xaviera.

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Figures from the Xandii home loan comparison tool, 5 November 2026: single applicant, base salary as shown with no overtime, a $75,000 HECS-HELP balance, no dependants, no other debts, declared living expenses of $2,500 a month (each lender applies its own minimum), a 30-year loan of $720,000 on a $900,000 home to live in. Most lenders' calculators use the ATO's 2026-27 repayment schedule; a few use their own. Indicative only: they move with interest rates and lender policy, and are not an offer of credit.

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The 12-month rule

In June 2025 the banking regulator, APRA, updated its guidance to banks. A bank may now decide it is reasonable to leave HELP repayments out of its assessment, and the example APRA gives is a borrower expected to pay off the debt within 12 months through their compulsory repayments. ASIC, which oversees all lenders, updated its responsible lending guidance in the same direction in March 2025.

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Three things to know about it:

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• It is the lender's choice, not a rule they must follow. Several lenders now consider leaving the repayment out when your balance is below a set amount (around $15,000 to $20,000, depending on the lender) or when it will be repaid within 12 months of your application. They will want an up-to-date record of your HECS-HELP balance from your ATO account in myGov when you apply.

• It is for a debt that is nearly gone. The test is whether your compulsory repayments will clear it within a year. On $150,000 of repayment income, that means a balance of under about $12,500. Most doctors early in their career owe more than that.

• When it applies, the whole repayment comes off. For a doctor on Dr Okafor's salary, that lender's figure would go back to the no-HECS range in the table above.

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APRA also stopped counting HELP debt in the debt-to-income measure banks report to it. That helps at the edges, but a lender still counts your repayment when it works out what you can afford.

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Should you pay off your HECS-HELP before you apply?

Usually not before you apply. Whether clearing it is worth doing at all is a trade-off, and it depends on how close you are to clearing the debt and what you need to borrow. Xaviera can help you work that out.

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If clearing it does make sense, Xaviera's usual approach is to ask the lender to make paying it off a condition of approval or settlement, rather than paying it before you apply. You pay it once everything else is approved, then send through your updated HECS-HELP balance.

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• A nearly-cleared debt. If you owe only a little more than the 12-month rule allows, clearing it removes the repayment altogether, and with it the whole effect on your borrowing.

• A larger debt. Paying part of a large balance doesn't change the repayment, so on its own it doesn't change what lenders will offer. What can help is getting it down to less than about a year's repayments, or clearing it, and that can use money you would otherwise put towards the deposit.

• Your deposit. Many doctors can buy with a smaller deposit and no lenders mortgage insurance through a medico LMI waiver. Whether your savings do more as a deposit or as a HECS-HELP payout depends on how much you need to borrow, the price you are looking at and the waiver you qualify for.

• The cost of the debt itself. HELP debts carry no interest, but each 1 June the part of the debt owed for more than 11 months is indexed. That indexation is the cost of keeping the debt, and it is worth comparing with what the same money would save as a smaller loan.

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Buying as a couple

Each person's HECS-HELP repayment is worked out on their own income, and a lender counts each one. If you both have a debt, you both repay, and both repayments come off what you can borrow together. A partner whose repayment income is $69,528 or less repays nothing, so their debt usually doesn't reduce your borrowing while their income stays below it.

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Rural GPs: the HELP debt reduction

The HELP Debt Reduction Program for Rural Health Practitioners can reduce a doctor's HELP debt by 50% or 100% of the lower of the debt for their medical degree and the balance when their eligible work began. It applies to doctors who live and work in a rural or remote area (Modified Monash categories MM 3 to 7), providing general practice services at least 24 hours a week. Work only counts from the date you complete 36 months of postgraduate clinical experience, and never before 1 January 2022. Indexation is also waived for the eligible service period.

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You apply once you have completed the service, not on the strength of plans to do it. We haven't found a lender policy that looks at an approved reduction before the ATO applies it to your HELP account, so plan on a lender seeing the debt and your repayment as they stand until then.

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What to have ready

• Your HELP balance from your ATO account in myGov.

• Your two most recent payslips, which usually show the HELP amount withheld.

• Your last income statement or tax return, and notice of assessment.

• If you are hoping a lender will leave the repayment out, an up-to-date record of your HECS-HELP balance from myGov.

• If you have had a rural HELP reduction, the approval and your updated ATO balance.

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Frequently asked questions

Does a HECS-HELP debt stop me getting a home loan?

No. It reduces how much a lender will offer, because the compulsory repayment is counted as a monthly commitment. On its own it doesn't stop you getting a home loan, but it can leave you short of the amount you need.

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Does a bigger HECS-HELP debt mean I can borrow less?

Usually not. Lenders count the compulsory repayment, which is set by your income, so a larger balance on the same income gives the same borrowing figure. The size of the debt starts to matter when it is nearly paid off.

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Did the 2025 changes remove HECS from home loan assessments?

Only in part. Since mid-2025 a lender may leave the repayment out when the balance is small or the debt is expected to be paid off within 12 months, if its own policy allows. For most doctors with a larger balance, the repayment is still counted.

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Does salary packaging reduce my HECS-HELP repayment?

No. The ATO adds reportable fringe benefits back into your repayment income, whether or not your employer is exempt from fringe benefits tax.

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Should I make voluntary repayments before applying?

Usually not. Paying part of a large debt doesn't change the repayment, so on its own it doesn't change your borrowing. If clearing the debt would help, Xaviera usually asks the lender to make it a condition of approval or settlement, so you pay it once the loan is approved rather than before you apply. Talk to her about whether it is worth more than keeping the money for your deposit.

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Talk it through with Xaviera

Xaviera has spent the last seven years broking with medical professionals, and knows how lenders read a doctor's HECS-HELP and which ones apply the 12-month rule. A short call is the quickest way to see what your debt means for your borrowing.