The outlook for first home buyers is finally improving
First home buyers have just been handed two major wins: the federal government is expanding access to its 5% deposit scheme, and the financial regulator has confirmed that lenders can take a more flexible approach to HECS-HELP debt.
Together, these changes could make it easier to borrow more, buy sooner and avoid the upfront costs that often hold buyers back – especially for those who have been on the sidelines due to borrowing limits or rising deposit requirements.
APRA guidance could boost borrowing power
Lenders use your debt-to-income ratio to assess how much you can borrow. Until now, HECS-HELP debts were often treated like any other personal debt – even though they’re interest-free and repayments only kick in once your income passes a certain threshold.
Because these repayments reduce your gross income, this approach significantly lowers your borrowing capacity, especially if you’re a first home buyer with a steady income but limited savings – a common scenario for young professionals and recent graduates.
In early 2025, Treasurer Jim Chalmers called on the Australian Prudential Regulation Authority (APRA) to address this issue, stating that people with a HELP debt should not be unfairly disadvantaged when trying to buy a home. In response, APRA released updated guidance to give lenders more flexibility.
Under the changes, APRA-regulated lenders may now:
Exclude HELP debt from debt-to-income (DTI) reporting
Choose to disregard HELP repayments in serviceability assessments if the borrower is likely to repay the loan within 12 months
Continue to consider HELP debt in most assessments, while allowing more discretion based on individual circumstances
The new rules take effect from 30 September 2025. They’re designed to improve access to credit, without compromising responsible lending – and could help some buyers get approved for a larger loan or qualify sooner than expected.
A reputable mortgage broker in Sydney can help you understand how these changes apply to your situation and which lenders have adopted the new approach.
Deposit support is expanding too
At the same time, the federal government is widening access to its First Home Guarantee scheme. This initiative currently enables eligible first home buyers to purchase property with just a 5% deposit and avoid paying lender’s mortgage insurance, potentially saving tens of thousands of dollars.
At present, there are income and price caps. But from 1 January 2026, the scheme is set to expand. Proposed changes would:
Remove income caps
Raise property price thresholds
Open eligibility to all first home buyers
With higher price thresholds and broader eligibility, the expanded scheme could make properties in more desirable locations accessible to a wider range of buyers.
Of course, you don’t have to wait until 2026 to get help. There’s the current First Home Guarantee – if you are eligible – as well as additional benefits at the state level. For instance, NSW buyers may also qualify for a $10,000 First Home Owner Grant on new or substantially renovated homes, along with stamp duty concessions or exemptions through the First Home Buyers Assistance Scheme.
Now’s the time to act
With lender policies shifting and support programs expanding, it’s worth getting advice tailored to your situation. The right guidance from a reputable finance broker in Sydney can help you act with confidence. They can also help you navigate the evolving lender policies and find the best fit for your circumstances – especially if you're comparing options beyond the major banks.
With new lending flexibility and expanded deposit support on the horizon, now is the time to explore your options as a first home buyer. As an award-winning mortgage broker in Sydney with 440 five-star Google reviews, Eventus Financial can help you understand what’s possible, even if you have a HECS debt. Schedule a no-obligation consultation with Alex to get started.