Financial questions you should ask before applying for a home loan

For many first-time buyers, applying for a home loan can feel overwhelming. But the better prepared you are before submitting your application, the better your chances of securing bond approval and, in some cases, even negotiating a more competitive interest rate.

Before you apply for a home loan, take some time to assess your financial position and make sure you can confidently answer the following questions.

What is my credit score?

Your credit score is one of the first things lenders consider when assessing your home loan application. A strong credit history demonstrates that you manage debt responsibly, while missed payments, defaults or judgments can reduce your chances of approval.

Before applying, obtain a copy of your credit report and check it for any errors or outdated information. South Africans are entitled to one free credit report per year from each registered credit bureau. If you find inaccuracies, have them corrected before submitting your application.

It's also worth paying any overdue accounts, settling judgments where possible, and making all payments on time in the months leading up to your application.

How much do I earn?

Your income determines how much you may be able to borrow, but lenders look at more than just your monthly salary.

If you receive regular bonuses, commissions, rental income or other consistent sources of income, these may also be considered when assessing affordability. Ensure your payslips, bank statements and tax information are up to date, as lenders will require proof of income.

Self-employed applicants should have at least two years of financial statements and tax returns available.

How much debt do I have?

One of the most important factors lenders consider is your debt-to-income (DTI) ratio, which compares your monthly debt repayments to your income.

Existing vehicle finance, personal loans, credit cards and store accounts all reduce your disposable income and affect how much you can borrow.

Before applying, consider paying down high-interest debt and avoid taking on new credit. A lower DTI ratio improves your affordability and can strengthen your application.

What is my overall financial position?

Lenders also consider your overall financial health. Assets such as savings, investments, retirement funds and other properties demonstrate financial stability and can strengthen your application.

Building an emergency fund before purchasing a home is also advisable, as it helps you manage unexpected expenses after taking on a bond.

How much deposit can I afford?

Although many banks still offer 100% home loans to qualifying buyers, having a deposit can improve your chances of approval and may help you secure a better interest rate.

Aim to save at least 10% of the purchase price if possible. Remember that you'll also need to budget for additional costs such as attorney fees, bond registration costs, moving expenses and insurance. Depending on the property's value, transfer duty may also apply.

If you're a first-time buyer, it's worth checking whether you qualify for the First Home Finance (FHF) subsidy, which may help cover your deposit or some of your transaction costs.

What can I realistically afford?

Buying at the very top of your budget can leave little room for future interest rate increases or unexpected expenses.

As a general guideline, your total monthly housing costs, including your bond repayment, rates, levies and insurance, should remain comfortably within your budget. Before making an offer, use a home loan affordability calculator or get pre-qualified through a bond originator to understand exactly what you can afford.

Working with MyProperty Home Loans allows you to compare offers from multiple banks with one application, identify any potential obstacles before you apply, and secure the most suitable financing for your circumstances.

Being financially prepared before applying for a home loan doesn't just improve your chances of approval—it also gives you greater confidence throughout the home-buying journey. The more organised your finances are before you start house hunting, the smoother the process is likely to be.