Ever tried asking a bank "How much house can I actually afford?" You either get confusing jargon or forms longer than your CV. So I dug into the math to figure out how this stuff actually works.
Here's what the research shows: most South African banks use a simple 30% rule - your monthly home loan payment shouldn't exceed 30% of what you earn. With current rates at 10.5%, you need around R32,000 monthly to afford a R1 million house with a 10% deposit. But there's way more to this story.
Quick note: I'm not a financial advisor - just someone who got tired of confusing calculators and started researching how this stuff actually works. Always chat to qualified professionals for advice that fits your situation.
The 30% Rule (And Why Banks Love It)
When you first hear about the "30% rule," it sounds like some arbitrary number banks made up. Turns out, there's actually logic behind it.
Banks discovered that when people spend more than 30% of their income on house payments, they start struggling with other bills. It's like a financial early warning system.
According to SA Home Loans, "Your affordability is determined by using a maximum percentage of provable household income. This is generally a maximum of 30%."
Here's how it works in practice:
- You earn R20,000 per month
- 30% of that = R6,000
- So banks won't approve monthly payments above R6,000
Why 30%? The logic is about leaving you enough money for everything else:
- Food and groceries (because you need to eat)
- Transport (taxis, petrol, car payments)
- Insurance and medical aid
- Emergency savings (load shedding taught us all about backup plans)
- Actually having a life
Think of it as banks protecting themselves AND you from financial disaster.
Real Examples: What Different Salaries Can Actually Buy
Instead of vague examples, here are the numbers for real salary scenarios using current August 2025 interest rates (10.5%):
The Young Professional (R25,000/month)
| What You Have | Amount |
|---|---|
| Monthly salary | R25,000 |
| Maximum payment (30% rule) | R7,500 |
| House you can afford | Around R950,000 (with R95,000 deposit) |
| Reality check | 2-bedroom flat in most areas, maybe a small house if you're flexible on location |
The Power Couple (R40,000/month combined)
| What You Have | Amount |
|---|---|
| Combined salary | R40,000 |
| Maximum payment (30% rule) | R12,000 |
| House you can afford | Around R1,570,000 (with R157,000 deposit) |
| Reality check | 3-bedroom house in most areas, still tight in Cape Town or Sandton |
The Starter (R18,000/month)
| What You Have | Amount |
|---|---|
| Monthly salary | R18,000 |
| Maximum payment (30% rule) | R5,400 |
| House you can afford | Around R640,000 (some banks offer 100% financing) |
| Reality check | 1-2 bedroom flat, small starter home in affordable areas |
Important reality check: These are just math examples. Banks also look at your credit score, other debts, job stability, and whether you look trustworthy in a suit. The 30% rule is just the starting point.
Try Our Calculator (Because Bank Ones Are Still Terrible)
This is literally why these tools exist - every bank calculator you try is either slow, confusing, or missing basic features.
Calculate Your Bond Repayments →
How we designed it: Enter your loan amount, current interest rate, and term. Then you have two ways to explore different scenarios:
Start with "What If I...?" if you're new to this - Pick from common questions like "What if I pay extra on my loan?" or "What if I get a better rate?" Each scenario walks you through the impact with simple explanations.
Use "Loan Optimizer" if you want full control - Adjust multiple variables simultaneously and see detailed comparisons. This is for when you know exactly what you want to test.
Important to know: The results are estimates based on how loan payments work (each payment covers interest plus a bit of the loan amount). Banks might have different criteria, fees, or special conditions that affect your actual approval and terms.
The Provincial Reality Check
Location matters way more than most people realize. The same salary can buy completely different lives depending on where you look.
Here's what current 2025 market data shows:
| Province | Average House Price | Required Monthly Salary | Worth Considering |
|---|---|---|---|
| Free State | R800,000* | R22,000 | Best bang for your buck |
| Eastern Cape | R950,000* | R26,000 | Seriously undervalued, in my opinion |
| Northern Cape | R1,100,000 | R30,000 | Surprising value |
| Limpopo | R1,200,000 | R33,000 | Decent middle ground |
| North West | R1,200,000 | R33,000 | Worth considering |
| Mpumalanga | R1,250,000 | R34,000 | Nature + affordability combo |
| KwaZulu-Natal | R1,100,000* | R30,000 | Coast vs inland varies hugely |
| Gauteng | R1,300,000* | R36,000 | You pay for the opportunities |
| Western Cape | R1,800,000* | R49,000 | Beautiful but brutal on budgets |
*Sources: The Africanvestor (June 2025), ooba Home Loans market analysis
What caught my attention: The Eastern Cape numbers - lowest prices but showing strong growth. Cape Town dominates the Western Cape average, but there are affordable pockets if you look.
Strategy worth considering: Buying where your money goes further, especially if you can work remotely. The price difference between provinces is massive.
The Hidden Costs Nobody Warns You About
This is where things get expensive fast. The house price is just the beginning of your financial adventure.
One-Time "Welcome to Homeownership" Costs:
- Transfer duty: R0 under R1 million, then it gets expensive fast
- Legal fees: R20,000 - R50,000+ (lawyers gotta eat)
- Bond registration: R15,000 - R35,000+ (government paperwork fees)
- Home inspection: R5,000 - R15,000 (finding out what's actually broken)
- Moving costs: R8,000 - R25,000+ (boxes, trucks, breakage, stress)
- Property valuation: R3,000 - R8,000 (bank wants to know it's worth it)
Monthly "Surprise, You're Still Paying" Costs:
- Home insurance: R1,200 - R3,500+ (because bad things happen)
- Municipal rates: R800 - R4,000+ (city services aren't free)
- Maintenance: R1,500 - R3,000+ (that roof will leak eventually)
- Security: R500 - R1,500+ (peace of mind has a price)
- Garden services: R800 - R2,000+ (if you're not into weekend lawn mowing)
Reality check: Budget at least 10-15% extra on top of the house price. This catches most people off guard.
Strategies Worth Considering (In My Opinion)
The 20% Rule: Why Buying Less Can Save More
Here's something interesting the numbers reveal. Just because banks will lend you 30% of your income doesn't mean using it all makes financial sense.
Here's an example using accurate calculations:
Someone earning R35,000 monthly can afford R10,500 payments (30% rule). At current rates (10.5%), this means they qualify for around R1,050,000 loan amount. But what if they bought a cheaper house for R800,000 instead, with monthly payments of R7,988 - and then paid the full R10,500 anyway, putting the extra R2,512 toward the capital?
The comparison using our calculator:
- Standard approach: R800,000 house, R7,987 payments for 20 years = R1,916,889 total
- Alternative approach: R800,000 house, overpaying to R10,500 monthly = pays off in 10.6 years and saves R592,791 in interest
The overpayment strategy can potentially save years of payments and significant interest. Want to test this? Use our bond repayment calculator and click "What If I...?" then select "What if I pay extra on my loan?" to model both scenarios.
Credit Score Impact (This One's Huge)
Credit scores aren't just numbers banks made up. They significantly affect your interest rate.
Here's a real example from the research: someone from Joburg had a 620 credit score - barely qualifying. They spent six months paying everything on time and cleared their maxed-out credit card. Score jumped to 680. Result? 0.75% lower interest rate, potentially saving R210,000 over 20 years.
The breakdown:
- 610+: You qualify, but pay higher rates
- 650+: Standard rates
- 700+: Better rates available
- 750+: Banks compete for your business
Deposit Strategy That Makes Sense
Example worth noting: a teacher saved R50,000 over two years. That 5% deposit was enough to get approved when others with no deposit got rejected.
What the data shows:
- No deposit: Possible but banks want perfect everything else
- 10% deposit: Opens most doors
- 20% deposit: Banks love these applications
Government Help: FLISP Program
If you earn R3,500 to R22,000 monthly, there's a government program called FLISP that provides R30,000 to R130,000 toward your deposit. Worth checking if you qualify, though the rules and availability change regularly.
Current Interest Rates (August 2025)
Good news: Rates are much lower than 2024. The Reserve Bank cut rates five times since September 2024.
- Current prime rate: 10.5%
- Your actual rate: Typically prime to prime + 2%, depending on your profile
What affects your rate: credit score, deposit size, and which bank you choose. Even 0.25% difference saves thousands over 20 years.
Key Takeaways From The Research
- The 30% rule is a starting point, not a hard rule
- Location dramatically affects what you can afford
- Hidden costs add up - budget 15% extra for surprises
- Credit score has a huge impact on your rate
- You don't have to use the full amount banks approve
Common Questions Worth Addressing
Can you get a home loan earning R15,000/month? Yes, but limited options. You might qualify for around R450,000. Consider FLISP assistance or flats instead of houses.
What's the current prime rate? Prime rate is 10.5% as of August 2025. Your home loan rate will typically be between 10.5% and 12.5%, depending on your credit and deposit.
How much can extra payments save? The numbers can be significant. Extra R1,000 monthly on a R1M bond might save over R200,000 in interest and reduce your term by 4+ years. Use our calculator and try the "What If I...?" scenarios to model your specific situation.
What if you're self-employed? Banks need proof your business has operated for 2+ years with steady income. More paperwork required, but possible.
IMPORTANT: I'M NOT A FINANCIAL ADVISOR
I'm someone who built a calculator and researched home loans to figure out how this stuff works. This information is for educational purposes only and doesn't constitute financial advice under the FAIS Act.
What you should do: Always consult with qualified, licensed financial advisors, registered bond originators, or banking professionals for advice that fits your personal situation.
About these numbers: All calculations and examples are estimates based on general market conditions as of August 2025. Your actual approval, interest rate, and terms depend on your individual circumstances and current bank criteria.
Things change: Interest rates, lending criteria, and property prices change regularly. I last updated this in August 2025 - always verify current rates directly with lenders.
No promises: I can't be responsible for decisions made based on this general information. Property buying involves significant financial commitments and risks that vary by person.
Ready to crunch some numbers? Try our bond repayment calculator with current market rates for estimates. Start with "What If I...?" for common scenarios, or use "Loan Optimizer" for detailed analysis. Remember to chat with licensed professionals for personalized advice and current rates.
Last updated: August 2025 - Always verify current information with qualified financial professionals before making decisions.