At a glance: First-time buying on a modest income
- Two numbers matter most: your bond repayment (≈30% of gross income) and the interest rate you qualify for.
- Stress-test affordability: calculate repayments at today’s prime rate and at least +0.5% higher.
- FHF subsidy can change everything: first-time buyers earning R3,501–R22,000 may receive ±R38k–R169k.
- What FHF can pay for: deposit, transfer and bond costs, or to reduce the loan amount.
- Very low incomes: households earning under R3,500 may qualify for BNG/RDP housing (with resale restrictions).
- 100% and 105% loans exist: they remove upfront deposits and sometimes costs, but increase repayments and interest paid.
- Banks must assess affordability: under the National Credit Act they verify income, expenses, and credit behaviour.
- Key documents: ID, payslips, bank statements, proof of income, and signed Offer to Purchase.
- Budget for hidden costs: attorney transfer fees, bond registration, insurance, and moving expenses.
- Transfer duty relief: properties up to R1,210,000 currently pay 0% transfer duty.
- Improve approval chances: protect your credit score, avoid new debt, and reduce short-term loans.
- Follow the process: pre-qualify → check FHF → make an offer subject to finance → submit applications → insure → register → move in.
Buying a first home in South Africa is doable on a modest income, if you use the right tools: a realistic affordability plan, the right loan product, and (often) a once-off government subsidy that can cover your deposit and costs. This guide walks you through every step, with current rules and rates.
Start with the two numbers that decide everything
Your monthly budget
Banks (and most calculators) still use the 30% of gross income rule of thumb for bond repayments, subject to a full affordability check under the National Credit Act (NCA). In practice, your bond instalment should be around 30% of your before-tax income and also fit your real disposable income after expenses.
The interest rate
In the table below, we showcase how different interest rates could influence your repayments. The numbers are based on a 20-year bond term at prime and do not account for deposits.
| Your home loan value | Current repayments (10.50%) | 10.25% | 10.00% | 10.75% | 11.00% |
|---|---|---|---|---|---|
| R750 000 | R7 487 | R7 362 | R7 237 | R7 614 | R7 741 |
| R800 000 | R7 987 | R7 853 | R7 720 | R8 121 | R8 257 |
| R850 000 | R8 486 | R8 343 | R8 202 | R8 629 | R8 773 |
| R900 000 | R8 985 | R8 834 | R8 685 | R9 137 | R9 289 |
| R1 000 000 | R9 983 | R9 816 | R9 650 | R10 152 | R10 321 |
| R1 500 000 | R14 975 | R14 724 | R14 475 | R15 228 | R15 482 |
This matters because even a small rate change shifts your buying power. It is, therefore, advisable that you always run an affordability check at the current prime rate and see what your repayments would be if the rate were increased by 50 basis points. This allows you to make sure that even if rates increase, you would still be able to afford your repayments comfortably.
The game-changer for low-to-moderate incomes: First Home Finance (FHF)
What is FHF? It is a once-off government subsidy for first-time buyers with household income of R3,501–R22,000 per month. It can reduce your loan, cover your deposit, and even pay transfer/bond registration costs, which massively improves your approval odds.
How much can you get?
The current subsidy ranges from R38,911 to R169,265, tapering down as income rises
Who qualifies:
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SA citizen or permanent resident, 18+, never owned a home, never received a housing subsidy, and household income within R3,501–R22,000.99.
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You’ll typically need an Approval in Principle (AIP) from a bank or recognised non-bank lender/community scheme to submit your application.
What the subsidy can be paired with:
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Mortgage bonds, unsecured incremental housing loans, pension-backed housing loans, stokvel/co-op loans, employer housing schemes (incl. GEHS), instalment sale and rent-to-buy agreements, or even your savings.
No fees allowed: NHFC explicitly forbids partners from charging any admin fee for FHF applications; report it if someone tries.
How to apply:
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Check eligibility and pre-approval on the FHF portal
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Get your home-loan AIP or recognised finance approval.
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Conclude your sale (or building) agreement and submit your full FHF application with supporting docs.
Tip: FHF can also be used purely for transaction costs (transfer + bond fees) or as deposit support—not only to reduce the capital amount. That flexibility often turns a decline into an approval.
Other public options for very low incomes
If your household income is R0–R3,500, you generally won’t qualify for FHF but may qualify for BNG/RDP fully-subsidised housing via your province/municipality. Expect waiting lists, and note the 8-year restriction on selling the house.
100% Home loans - worth it?
There are several banks that periodically offer 100% Loan-to-Value for first-time buyers, letting you finance transfer and bond costs too (usually up to 5–9% extra).
While the 100% home loan removes the need for a deposit, the 105% home loan removes the deposit as well as transfer and bond registration costs upfront. Keep in mind that this type of home loan will have higher monthly repayments and interest rates, but it saves money in the short term.
Again, you need to make sure that you can comfortably repay the loan even when interest rates rise.
Keep in mind that even a 10% deposit could make a difference in your repayment amount - the best way to see what this would do to your monthly repayments is by using a bond calculator.
The legal affordability check
Banks must run an affordability assessment under the National Credit Act and Regulation 23A—validating income (often via 3 months’ payslips/bank statements) and applying minimum expense norms before granting credit. This is why documents matter and why the “30% rule” is a guideline, not a right.
What documents do you need?
There is a difference between the documents you would need to provide, whether you are employed full-time or when you are a commission earner/self-employed. We break it down below.
Employed applicants:
- SA ID/Passport
- Latest payslip(s) and 3 months’ bank statements
- Offer to Purchase (once you’ve found the property)
- Simple assets/liabilities and an expense summary. Banks do differ and you will need to make sure you give them all the required documents.
Self-employed/commission earners:
- 6 months’ personal & business bank statements
- Latest two years’ financials (+ up-to-date management accounts if needed)
- Accountant’s letter/IT34 where applicable
FHF add-ons:
- ID/birth certificates for dependants,
- proof of income (or 6 months’ bank statements if self-employed),
- AIP/grant letter,
- PTO (for rural) or building contract if building.
Hidden costs to plan for
Buying a home is not just about the purchase price - you will need to ensure you have the hidden costs covered as well. These hidden costs include transfer duty, attorney and bond registration fees, and insurance costs.
Here is a breakdown:
- Transfer duty: 0% on properties ≤ R1,210,000 (for acquisitions on/after 1 Apr 2025), then sliding up. Great news for first-time buyers
- Attorney transfer & bond registration fees: still payable even when transfer duty is 0%, but some banks cover part via 105–109% offers; FHF can also cover these costs.
- Insurance required by lenders: Homeowners/Building insurance is mandatory for a bonded property, and many banks require that you have life insurance.
Step-by-step: from “thinking about it” to keys in hand
- Pull your credit score and clean up errors/debt. Many banks and originators offer free pre-checks and it is vital to remember that the higher your score the better.
- Run an affordability check at the current prime (aim for ±30% of gross income)
- Get pre-qualified/AIP from a bank or a bond originator. Bond originators will be able to submit to all the banks at once, allowing you to see where you could get the best deal.
- Check FHF eligibility online, note estimated subsidy, and prep evidence (AIP, OTP, IDs, proof of income)
- Shop smart: target homes under the transfer-duty threshold where possible; confirm levies, rates, and transport costs in your budget.
- Make an Offer to Purchase, subject to finance (and FHF if you need it).
- Submit your full loan + FHF applications promptly with clean, certified docs.
- Put insurance in place. This includes homeowners' cover, and any required credit-life before bond registration.
- Sign transfer & bond documents, pay any shortfall costs, and take occupation after registration.
Managing your finances before applying for a home loan
No matter what type of loan or assistance you’re considering, buying a home starts with strong financial health. We would advise starting as early as possible, but at a minimum, the 3 to 6 months before your application is critical—this is when you should take deliberate steps to position yourself for approval and the best possible terms.
Protect your credit score
Your credit score is one of the most important factors lenders consider. In the lead-up to your application:
- Never miss a payment on any account.
- Avoid taking on new credit
- Reduce high-interest debt as quickly as you can.
“High-interest debt, such as credit cards, especially payday loans, will impact your credit score negatively, and financial institutions will see this as an over-reliance on credit to get you through the month. When applying for a home loan, it’s the last thing you want,” says MyProperty bond expert Michael-Anne Abrahams.
Audit your lifestyle and cut back
Before you even start house-hunting, Abrahams suggests doing a lifestyle audit to identify where you can trim expenses.
“The harsh reality is that the cost of living is increasing at an alarming rate, and if you want to own a home, you will need to cut your budget down and pay off as much of your debt as possible,” she says. “In the short term, this might mean fewer nights out or swapping your gym membership for runs in the neighbourhood, but in the long term, you’re building a strong foundation for financial health.”
Work with a bond originator
Finally, consider partnering with a knowledgeable bond originator. They can:
- Get you prequalified so you know exactly what you can afford.
- Identify potential issues before submitting your application to the bank.
- Give tailored advice on improving your credit score and affordability.
“A knowledgeable originator is like having a secret weapon on your side,” Abrahams says. “They will see the issues you might run into before applying, guide you on how to fix problems, and help you strengthen your profile for the best chance of approval.”
Frequently asked questions
Can I buy with no deposit?
Yes, via 100% bonds and, at times, some banks have 100% plus more promotions. FHF can also replace a deposit or cover costs. Approval still depends on your affordability and credit profile.
Do I pay transfer duty on an entry-level home?
If the purchase price is less than R1,210,000 and the deal is concluded on/after 1 April 2025, no transfer duty is payable. However, attorney fees still apply.
Is FHF only for bank mortgages?
No—it can pair with non-mortgage options (unsecured incremental loans, instalment sale, rent-to-buy, pension-backed, stokvel/co-ops, employer schemes), or even be used on its own for costs/deposit where appropriate.
