HECS and Joint Home Loans — How It Affects Borrowing as a Couple (Australia 2026)

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HECS and Joint Home Loans — How It Affects Borrowing as a Couple (Australia 2026)

When a couple applies for a home loan together, each borrower’s HECS repayment obligation is assessed individually and added to the combined expense picture. Here is how it works and how to manage the impact.

How Joint Applications Work With HECS

In a joint home loan application, lenders assess:

  • Combined income — both borrowers’ incomes are added together
  • Individual HECS repayments — each borrower’s compulsory repayment obligation is deducted separately
  • Combined committed expenses — all debts, repayments, and living expenses
  • Combined serviceability — can the household collectively service the loan?

The HECS repayment for each borrower is calculated based on their individual income — not the combined household income.

Scenario Comparison — One vs Two Borrowers With HECS

Couple profile:

  • Partner A: $110,000 income, $45,000 HECS balance
  • Partner B: $75,000 income, $22,000 HECS balance
  • Combined income: $185,000

Partner A HECS repayment: 6.5% × $110,000 = $7,150/year ($596/month) Partner B HECS repayment: 3.5% × $75,000 = $2,625/year ($219/month) Combined monthly HECS obligation: $815/month

Approximate borrowing capacity reduction due to HECS: $815/month × ~$14,500 per $100 = ~$118,000 reduction

Without HECS, this couple’s borrowing capacity at $185,000 combined income would be approximately $1,000,000–$1,100,000. With HECS, borrowing capacity reduces to approximately $880,000–$985,000.

These are indicative estimates only. Actual figures depend on lender policies, living expenses, and current rates.

When Only One Partner Has HECS

If only one partner has HECS debt, only that partner’s repayment obligation affects serviceability.

Example:

  • Partner A: $95,000 income, no HECS
  • Partner B: $80,000 income, $35,000 HECS (repayment rate 4.0% → $3,200/year → $267/month)

The borrowing capacity impact is smaller than if both partners had HECS at equivalent balances — but still material.

Optimisation consideration: If only Partner B has HECS, and Partner B’s HECS balance is repayable with surplus savings, the borrowing capacity gain may justify repayment — particularly if the deposit is sufficient.

Structuring the Loan — Does It Matter Whose Name It’s In?

If only one partner’s HECS is the concern:

Some couples consider putting the loan in only the non-HECS partner’s name to avoid the HECS repayment obligation affecting serviceability.

Implications:

  • Only Partner A’s income is used → lower combined borrowing capacity (single income, not joint)
  • Only Partner A is on the title → different property ownership and legal implications
  • If Partner A’s income alone doesn’t support the required loan, this doesn’t help

In most cases, using combined income (even with both HECS repayments) produces a higher borrowing capacity than one income alone. Calculate both scenarios with a broker.

De Facto Couples and HECS Disclosure

Lenders assess joint applications on a combined basis. If you apply jointly, both HECS obligations are disclosed and assessed. There is no mechanism to “hide” one partner’s HECS from the joint application.

Repaying HECS Before a Joint Application

If your combined borrowing capacity is the constraint (and you are close to an important price threshold), consider whether one partner’s HECS repayment improves the position materially.

Quick calculation:

  • Identify the partner with the higher monthly HECS obligation
  • Calculate the borrowing capacity improvement from repaying their HECS (using ~$14,500 per $100/month)
  • Compare to the deposit reduction from using those savings

If the borrowing capacity gain exceeds the deposit requirement impact, repayment may be worthwhile.

FHSS — Both Partners Can Use It

The First Home Super Saver Scheme (FHSS) allows each partner to contribute to super and withdraw up to $50,000 individually — so a couple can potentially access up to $100,000 combined for a first home deposit, each with their HECS intact. This can boost the deposit meaningfully without sacrificing HECS repayment decisions.

Frequently Asked Questions

Does my partner’s HECS affect my borrowing capacity if we apply jointly?

Yes — in a joint application, both borrowers’ HECS repayment obligations are assessed. Your partner’s HECS repayment is treated as a household expense, reducing joint serviceability.

What if we apply separately and then both go on the title?

Ownership (title) and the loan are two separate things. You cannot be on the title of the property without being on the loan (in most standard structures) — lenders won’t allow someone to own a property without being liable for the mortgage secured on it.

My partner’s HECS is huge ($80,000+). Does this prevent us from buying?

A large HECS balance doesn’t prevent buying — but it does mean a higher repayment obligation at higher income levels. Model the serviceability impact with a broker and identify your realistic purchase price range.

This article provides general information about joint home loans and HECS debt in Australia. For advice tailored to your combined financial situation, speak with a licensed mortgage broker. Find one through MoneySmart.