Labor’s HECS-HELP mortgage changes for first home buyers

Hope Coumbe, Finance Editor

First published 12 February 2025, 12:00 PM

Treasurer Jim Chalmers has announced a plan to soften home lending rules for first home buyers in a pre-election move designed to help the federal government reach its 1.2m new homes target. Under the plan, banks can exclude HECS-HELP repayments from mortgage serviceability assessments if it is anticipated that the borrower will be able to pay off their debt.

How will the HECS-HELP mortgage changes work?

The HECS-HELP mortgage changes will see banks update their guidance in order to make it easier for Australians with a HECS-HELP debt to take out a mortgage and get on the property ladder.

Example of how the home lending with a HELP-HECS debt plan will work

Below is an example of how the HECS-HELP mortgage changes work in practice.

Scenario 1: Yash

Yash is a pharmacist based in Hobart who finished his Bachelor of Pharmacy degree in 2014. Having been paying down on his HECS-HELP debt for eight years, his current debt totals $23,000. Yash is in a position to buy his first home and his broker has presented him with a finance offer from a big four bank. Yash’s borrowing power is $23,000 higher than it would previously have been, as his university debt has not affected the expected serviceability of managing his mortgage repayments under the HECS-HELP mortgage changes.

What are the eligibility requirements for first home buyers?

Eligibility for home lending with a HECS-HELP debt has not yet been announced. In the case of most schemes and grants for first home buyers, price and income caps are common.

Below is a list of common eligibility criteria for concessions, which may ultimately apply to the HECS-HELP mortgage changes.

Applicants must be aged 18 or over
Applicants must be Australian permanent residents or Australian citizens

When do the changes start?

There is no current start date for the plan as of February 2025. Consultation with the Australian Prudential Regulation Authority is expected to being imminently to clarify regulatory guidance.

How long will the changes last?

No guidance has been provided by the Labor Government yet on how long the HECS-HELP mortgages changes would be in place for, or if they are permanent.

Can HECS-HELP mortgage changes be used with other schemes and incentives?

There is no confirmation as of February 2025 on whether or not schemes and incentives for first home buyers, such as the First Home Owners Grant or stamp duty concessions, will be able to be used in accordance with home lending with a HECS-HELP debt.

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