How Much House Can You Afford in South Africa? Complete Guide

Most South African banks use a simple rule: your monthly home loan payment should not be more than 30% of what you earn each month. With current interest rates (10.5% as of August 2025), you need to earn around R32,000 per month to afford a R1 million house with a 10% deposit. But everyone's situation is different.

Interest rates and property prices change regularly - always check current rates with lenders.

The Simple 30% Rule

Banks in South Africa use a simple rule when deciding how much money to lend you for a house: your monthly home loan payment should not be more than 30% of your monthly salary (before taxes).

According to SA Home Loans, "Your affordability, or the maximum loan amount you could qualify for, is determined by using a maximum percentage of provable household income. This is generally a maximum of 30%."

Let's say you earn R20,000 per month. Using the 30% rule:

• 30% of R20,000 = R6,000
• So your monthly home loan payment should not be more than R6,000

Why do banks use 30%? This leaves you enough money for:

• Food and groceries
• Transport (taxi, petrol, car payments)
• Insurance and medical aid
• School fees if you have children
• Emergency savings
• Other daily expenses

Think of it as a safety net to make sure you can afford your house payment and still live comfortably.

Real Examples: What You Might Be Able to Afford

Here are real examples showing what people earning different salaries can afford (using August 2025 interest rates at 10.5%):

Young Professional Earning R25,000/Month

Couple Earning R40,000/Month Combined

First-Time Buyer Earning R18,000/Month

Important: These are examples only. Banks look at many things when deciding whether to give you a loan - your credit record, other debts, and how long you've been working.

Use Our Free Calculator

Calculate Your Bond Repayments →

How to use: Enter your loan amount, interest rate, and term to see estimated monthly payments. Use the "What If" button to compare different scenarios, including extra payment amounts, to see how changes might affect your total costs and loan term.

Note: Calculator results are estimates only. Always speak to a bank or bond originator for accurate numbers for your situation.

House Prices Across South African Provinces

House prices vary significantly depending on where you're considering buying. Here's what you might need to earn based on current 2025 market data:

*Sources: The Africanvestor (June 2025), ooba Home Loans market analysis (2025)

Important notes:

• Property prices vary significantly within provinces and change over time
• Western Cape figures are heavily influenced by Cape Town's premium market
• Eastern Cape showing strong growth potential despite lower entry prices
• Required salary calculations based on 30% affordability rule at current interest rates

What this means for you:

• Eastern Cape & Free State: Best value for money with strong growth potential
• Gauteng: Higher prices but more job opportunities and economic activity
• Western Cape: Most expensive but highest property values and international demand
• KwaZulu-Natal: Coastal areas more expensive, inland areas more affordable

Smart tip: Consider looking in different areas or provinces where your money goes further, especially Eastern Cape which is experiencing significant price growth.

Hidden Costs You Should Be Aware Of

The price of the house is just the beginning. You'll also need to budget for:

One-Time Costs When You Buy:

• Transfer duty: R0 on houses under R1 million, then it increases on a sliding scale
• Legal fees: R20,000 - R50,000+ (attorney handles the paperwork)
• Bond registration: R15,000 - R35,000+ (registering your loan with government)
• Home inspection: R5,000 - R15,000 (checking the house condition)
• Moving costs: R8,000 - R25,000+ (moving truck, boxes, etc.)
• Property valuation: R3,000 - R8,000 (bank requires house value assessment)

Monthly Costs Every Month After You Move In:

• Home insurance: R1,200 - R3,500+ (protects your house)
• Municipal rates: R800 - R4,000+ (local government tax - varies significantly by area)
• Maintenance: R1,500 - R3,000+ (repairs, painting, garden)
• Security: R500 - R1,500+ (armed response, if desired)
• Garden services: R800 - R2,000+ (if needed)

Bottom line: Budget an extra 10-15% on top of the house price for all these costs.

How to Afford a More Expensive House

Want to buy a better house? Here are smart ways to stretch your budget and get more house for your money.

But first, let me share the smartest home-buying strategy most people never consider...

The 20% Rule: Why Buying Less Can Make You Richer

Here's something banks won't tell you: just because you can afford to spend 30% of your income on a house doesn't mean you should.

Meet David from Pretoria. He earns R35,000 per month, so banks happily approved him for a R1.2 million house with monthly payments of R10,500. But David was smart. Instead, he bought a R900,000 house with payments of R7,900 - and then paid R10,500 anyway, putting the extra R2,600 toward the capital.

The result? David will pay off his house in 15 years instead of 20, and save R380,000 in interest. That's like getting a free car just for being disciplined.

Here's the comparison:

• Standard approach: R1.2 million house, R10,500 payments for 20 years = R2.52 million total paid
• Alternative approach: R900,000 house, R10,500 payments for 15 years = R1.89 million total paid
• Potential savings: R630,000 (that's more than half the original house price!)

Want to see how this works for your situation? Use our bond repayment calculator and click the "What If" button. Set up two scenarios - one with a R1.2 million loan and another with a R900,000 loan, but use the same monthly payment amount for both. The calculator will show you exactly how much faster you might pay off the smaller loan and how much interest you could potentially save. The numbers might surprise you.

The key is finding a house that costs about 20-25% of your income instead of 30%, then paying as if you bought the expensive one. You might own your house years earlier and save a substantial amount in interest.

Fix Your Credit Score First

Here's something most people don't realize: your credit score is like your financial reputation. It's a number between 300 and 850 that tells banks how good you are at paying back money.

Think of it this way - would you lend money to someone who's always late paying you back? Neither would the banks. But here's the good news: even small improvements can save you serious money.

Take Thabo from Johannesburg. His credit score was 620 - barely qualifying for a home loan. He spent six months paying all his bills on time and paid off his maxed-out credit card. His score jumped to 680. The result? The bank offered him 0.75% lower interest rate, saving him R210,000 over 20 years. Just for being more reliable with money.

Here's where the banks draw their lines:

• 610+: You qualify, but you'll pay higher rates
• 650+: Much better chances and standard rates
• 700+: Now you're talking - lower rates and better terms
• 750+: Banks fight over customers like you

Want to improve your score fast? Pay every bill on time (even if it's just the minimum), don't max out your credit cards, and check your credit report for mistakes. You'd be surprised how many people have errors dragging their scores down.

Save Smart for Your Deposit

Everyone knows bigger deposit equals lower monthly payments. But here's what they don't tell you: even a small deposit can be the difference between getting approved or getting rejected.

Sarah from Cape Town saved R50,000 over two years - not easy on a teacher's salary. But that 5% deposit was enough to convince the bank she was serious. More importantly, it meant she wasn't competing with the no-deposit crowd (where banks are much pickier).

Here's how deposits change your game:

• No deposit: Possible, but banks want perfect credit and high income
• 10% deposit: Standard requirement that most banks expect
• 20% deposit: Now you're in the "low risk" category - banks love you

Pro tip: Don't just save the deposit. Banks also want to see you can handle the monthly payments, so save a bit extra to show you're financially stable.

Advanced strategy: Once you buy, don't stop the saving habit. Take the money you were saving for deposit and consider putting it toward extra bond payments instead. Even small additional payments can help you save years of payments and substantial amounts in interest.

Think Beyond the Obvious Areas

Everyone wants to live in Sandton or Camps Bay. But smart buyers are looking where others aren't - yet.

Remember when Woodstock in Cape Town was considered rough? People who bought there 10 years ago are laughing all the way to the bank. The same is happening right now in places like Germiston or parts of the Northern Suburbs.

Here's your strategy: Look for areas where young professionals are starting to move, where new developments are going up, or where the government is investing in infrastructure. Buy before the word gets out.

Consider these options:

• Emerging neighborhoods: Buy the worst house on the best street that's improving
• Smaller towns: Your R1 million goes much further in Potchefstroom than Pretoria
• Fixer-uppers: That house with the 1980s kitchen? Perfect - cosmetic fixes add huge value
• Townhouses instead of freestanding: Often 30-40% cheaper for similar space

Don't Go It Alone - Get Professional Help

Here's something that will save you time and probably money: use a bond originator. These are people who know every bank's current appetite and criteria.

Instead of you walking into one bank and hoping for the best, they apply to multiple banks simultaneously. It's like having someone shop around for the best deal while you get on with your life. And here's the best part - it costs you nothing. The banks pay them.

Government Programs You Should Know About

If you earn between R3,500 and R22,000 per month, the government wants to help you buy your first house. The FLISP program can give you between R30,000 and R130,000 towards your deposit.

But here's the catch - the rules change, the budget runs out, and not all banks participate. Don't rely on it, but definitely check if you qualify. It could be the difference between buying now or waiting another two years to save.

Current Interest Rates (August 2025)

Positive development: Interest rates are significantly lower now than they were in 2024. The South African Reserve Bank has implemented five consecutive rate cuts since September 2024.

• Current prime rate: 10.5% (August 2025)
• This means: Lower monthly payments for the same loan amount

What might affect your interest rate:

• Your credit score: Better scores often qualify for lower rates
• Your deposit: Larger deposits often qualify for better rates
• Which bank: Different banks may offer different rates

Always compare rates from multiple banks - even 0.25% difference saves you thousands over 20 years.

Source: South African Reserve Bank current market rates as of August 2025

Key Things to Remember

• The 30% rule is a common guideline - your individual situation might be different
• Location significantly affects affordability - same salary buys different houses in different places
• Hidden costs add up - it's advisable to budget 10-15% extra for legal fees and other costs
• Credit score is important - consider working on improving it before you apply
• Professional help is available - registered bond originators can help you apply to multiple banks

Calculate Your Bond Repayments →

Frequently Asked Questions

Can I get a home loan earning R15,000 per month?

Yes, but your options are limited. You might qualify for around R450,000. Look into FLISP government help or consider buying a flat instead of a house.

What is the current prime interest rate in South Africa?

The prime interest rate South Africa is currently 10.5% as of August 2025. Your home loan interest rate South Africa will typically be between prime (10.5%) and prime + 2% (12.5%), depending on your credit score and deposit amount.

How much can extra payments potentially save me?

Extra payments can potentially save substantial amounts. For example, paying an extra R1,000 monthly on a R1 million bond might save you over R200,000 in interest and could reduce your loan term by 4+ years. Our bond repayment calculator can help you model these scenarios.

Can I calculate my bond payoff with extra payments?

Yes! Our bond repayment calculator lets you model different scenarios. Enter your current bond details and try different extra payment amounts to see how they might affect your payoff time and total interest.

What if I'm self-employed or work for myself?

According to ooba Home Loans, banks need to see that your business has been running for at least 2 years and that you have a steady income. You'll need extra paperwork like financial statements.

How long does it take to get approved?

According to ooba Home Loans, "Most banks give you an answer within 48 hours. If they need to value the property or want more documents, it could take 7 days to 2 weeks."

Should I use a bond originator?

Yes - they're free to use and they apply to multiple banks for you. This gives you better chances of approval and helps you get the best interest rate.

IMPORTANT LEGAL DISCLAIMER:

This information is for general educational purposes only and does not constitute financial, legal, or professional advice as defined under the Financial Advisory and Intermediary Services (FAIS) Act 37 of 2002. We are not licensed financial services providers and cannot provide personal recommendations for your specific circumstances.

YOU NEED PROFESSIONAL CONSULTATION: Always consult with qualified, licensed financial advisors, registered bond originators, or banking professionals for advice that fits your personal financial situation.

ESTIMATES ONLY: All calculations, examples, and affordability guidelines in this content are estimates based on general market conditions as of August 2025. Your actual loan approval, interest rate, and terms will depend on your individual circumstances, credit profile, and current bank criteria.

INFORMATION CURRENCY: Interest rates, bank lending criteria, and property prices change regularly. We last updated this information in August 2025. It's essential to verify current rates and requirements directly with lenders.

NO LIABILITY: We accept no responsibility for decisions made based on this general information. Property purchase and financing decisions involve significant financial commitments and risks that vary by individual circumstances.

Ready to see what your monthly payments might be? Use our bond repayment calculator with current market rates for illustrative estimates. Remember to consult with licensed professionals for personalized advice and current market rates.

Information current as of August 2025 - Always verify current rates and requirements with licensed financial professionals.