Great news for first home buyers or simply those with any student loans in Australia, with changes to HECS home loan rules just announced. If you’re juggling a student debt and dreaming of owning your own home or even upgrading, recent changes in home loan rules might just help make that dream a reality.
On February 12, 2025, Federal Treasurer Jim Chalmers announced that the government is working to make it easier for Australians with student debt, such as HECS or HELP loans, to secure a home loan. Until now, these loans were treated like any other debt, such as personal loans or credit card debt, when banks and lenders assess whether you can afford a mortgage.
But for many buyers, this has often meant a big hurdle, with HECS home loan rules preventing people from getting approved for a home loan. That student debt could reduce your borrowing capacity by tens of thousands of dollars, sometimes even hundreds of thousands, making it harder for you to get approved for a loan. The debt was impacting borrowing capacity even for those who hadn’t yet started paying back the debt due to not having reached the income threshold ($54,435 in 2024-25 or $67,000 in 2025-26).
So, what does this announcement mean?
What’s New for First Home Buyers with student loans?
In response to concerns raised by industry groups like the Mortgage & Finance Association of Australia (MFAA), Australian Federal Treasurer Jim Chalmers has instructed regulators like the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) to update how HECS and HELP loans are treated when assessing home loan applications. This means that your student debt won’t automatically count against you the way other debts do.
“We’re working with the regulators to make sure people with a HECS or HELP debt are treated fairly when they want to buy a house,” Chalmers said. The goal is to unlock more finance, making it easier for first home buyers to get the support they need to enter the housing market. We realise that many second and third home buyers may still carry a level of student debt and these new HECS home loan rules will also have a positive impact for them.
What Does This Mean for You?
This change to HECS home loan rules could make a real difference in your home buying journey. Lenders will now consider your student debt more reasonably, which could mean higher borrowing capacity and a better chance of getting approved for a mortgage.
Other Changes to Boost Housing Supply
But that’s not all. The government is also looking to make it easier to build more homes, particularly apartments, to help with the ongoing housing shortage across Australia. Some lenders have been hesitant to finance the construction of new units, requiring developers to pre-sell 100% of the units before construction can start. This has slowed down the creation of new housing, particularly in areas where apartment living is in high demand.
APRA is clarifying its guidance, and banks will now be encouraged to be more flexible, which will help developers get projects off the ground faster. The result? More housing options for first home buyers and others looking to buy.
Industry Reactions
Industry leaders are welcoming these changes. The Australian Banking Association (ABA) sees it as a step toward making it easier for people to enter the property market. Westpac CEO Anthony Miller also highlighted how the new rules could help improve housing supply by encouraging faster development of new homes.
The Property Council of Australia also supports the changes, especially when it comes to getting more apartments built in high-demand areas. “This is the right balance for regulators and the government to strike,” said Property Council CEO Mike Zorbas. “We need more affordable housing options, and these changes will help.”
Bottom Line for First Home Buyers
If you’re a first home buyer with student debt, this is a game-changer. The update to how your HECS or HELP debt is assessed could open up new opportunities for you to secure the home loan you need. Plus, with more homes being built, you might find more options that fit your budget and lifestyle.
Talk to one of the best mortgage broker Perth has to offer about how much you can borrow for your first home, or your next home, or even an investment property. We are here to help streamline and simplify the home loan process for you.
Apart from student loans, here are some other less obvious factors that can impact your borrowing capacity.
If you’re ready to chat about your options, please give our mortgage broker Daniel a call or book an appointment for a chat today.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute financial or professional advice. While we strive to provide accurate and up-to-date information, mortgage laws and regulations can change, and individual circumstances may vary. We recommend consulting with a qualified financial advisor or mortgage broker to assess your specific situation and needs. Base Home Loans is not responsible for any actions taken based on the content of this blog. Always conduct your own research and consider seeking professional advice before making financial decisions.
