If you’ve been struggling to get your foot on the property ladder because of your HECS-HELP debt, there’s some promising news on the horizon. The federal government has announced significant changes to home loan regulations that could make it easier for graduates to secure a mortgage.

What’s Changing?

In February 2025, Treasurer Jim Chalmers instructed Australia’s financial regulators, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC), to relax how banks treat student debt when assessing mortgage applications.

Under the new guidance, banks will be able to:

• Exclude HELP repayments from serviceability assessments when borrowers are expected to pay off their student debt in “the near term”
• Disregard HELP debts when calculating debt-to-income ratios, potentially allowing graduates to borrow more
• Make individual assessments based on each customer’s circumstances rather than applying blanket restrictions

These changes represent “common sense” clarifications designed to help more Australians achieve home ownership.

Where Things Stand in 2026

While the government signalled its intention to ease the treatment of HELP debt in mortgage assessments in early 2025, the changes have largely been implemented through lender policy rather than formal regulatory rule changes. Most banks still include HELP repayments when assessing serviceability, although some are beginning to apply more flexible approaches, particularly where borrowers are close to repaying their student debt.

In addition, reforms to HELP indexation introduced in 2025 now link indexation to the lower of inflation or wage growth, helping stabilise student debt balances after several years of sharp increases. Together, these changes may gradually improve borrowing capacity for some graduates, although HELP debt remains a factor lenders consider when assessing mortgage applications.

Why This Matters

Currently, around 3 million Australians carry outstanding HELP loans totalling more than $43 billion. When applying for a home loan, banks treat this student debt similarly to credit card debt or personal loans, which can significantly impact borrowing capacity.

Home ownership rates among young Australians have fallen to their lowest levels since World War II. High interest rates, soaring house prices, and growing HELP debts have created a perfect storm that’s locked many graduates out of the property market.

As smh.com.au reports, a graduate earning $100,000 with a $60,000 HELP debt could see their borrowing capacity increase under these new rules.

How Much Could You Borrow?

The changes could have a real impact on your borrowing power. By excluding HELP debt from debt-to-income calculations, you may be able to borrow more than you currently can. Banks typically restrict lending when debt-to-income ratios exceed six times your annual income.

While the exact definition of “near term” for debt repayment is still being finalised through consultation between banks and APRA, lenders will make judgments based on individual circumstances.

Additional Housing Measures

The government isn’t stopping at HELP debt changes. APRA will also update lending rules for housing developers to clarify that apartment blocks don’t need to be fully sold off the plan to qualify for construction loans. This move aims to unlock more finance for housing projects and get them started faster.

“We’re tackling this housing challenge from every possible angle,” Dr Chalmers said. “These are commonsense clarifications that will help more Australians into a home.”

What Should You Do Next?

While these changes are being implemented, now is an excellent time to review your financial position and understand your borrowing capacity. The lending landscape is evolving, and these regulatory changes could open doors that were previously closed.

At Peel Finance Brokers, we stay on top of all regulatory changes and work with a wide range of lenders to find the best solution for your circumstances. Whether you’re a first home buyer with HELP debt or looking to upgrade your property, we can help you navigate the changing lending environment. Contact us today to discuss how these changes might affect your borrowing capacity.

Related posts:

• Home Loan in Australia – Current Market Update (2022)
• How a Mortgage Broker Can Help You Secure a Home Loan
• Rising Investor Interest and Falling High-Debt Borrowing in Australia

Terry Boag

Dip. of Management (Deacon University)
Dip. of Finance/Mortgage Broking Mgt.
Assoc. Cert. of Business (Real Estate)
Assoc. of Mort. Ind. Assoc. of Aust. (AMIAA)

Terry Boag is the founder and CEO of Peel Finance Brokers and has been providing professional and loyal service to the Mandurah and southwest area for 25 years. With a long history of financial experience, Terry is reliable and dedicated to his clients, always ensuring the highest customer service and delivering strong lender relationships.