Links Property Finance · Worked example from a Sydney mortgage broker: Can I Buy With a 5% Deposit and a HECS Debt?

Three things interact here and none of them is obvious from a calculator. Second, the Australian Government 5% Deposit Scheme has its own eligibility rules and a property price cap that must be met on the contract.

First, HECS is assessed as the compulsory repayment, which since 2025-26 is charged only on income above the repayment threshold at marginal rates, so it still reduces borrowing capacity meaningfully at their income level, but paying out the whole balance would consume most of the deposit, which is usually the worse trade.

Third, apartment choice matters: scheme eligibility plus a lender plus an apartment the lender will accept must all line up for the same property.

Both credit files, pulled before anything is lodged. Actual living expenses against declared ones. Where each income sits against the HECS repayment threshold, and what capacity looks like with the debt left in place versus partially cleared. Scheme eligibility and the property price cap.

And the shortlist of lenders whose serviceability treatment of HECS is kindest at exactly this income level, the spread between the tightest and most generous lender on an identical file is regularly tens of thousands of dollars.

Keeping the HECS debt and buying with 5% usually beats clearing the debt and waiting: the repayment drag on capacity is real but modest at this income, while four more years of price growth is not.

Their own serviceability, not the scheme cap, sets the price band. The main risks to manage are apartment acceptability (size, building, strata) and not exhausting the deposit to zero, settlement costs and a buffer still need to exist on the day.

If HECS is the thing stalling you, get the number modelled rather than guessing, the answer is usually "leave it and buy" but it depends on income tier and timing, including the indexation date.

If the 5% scheme is the plan, remember that scheme eligibility, the price cap and lender acceptance are three separate hurdles; clearing one is not clearing all three.

Run your own numbers in the borrowing power calculator and the HECS guide, then have the file checked properly before you fall for a property.