Bond affordability: What you need to earn to qualify for a bond

Article summary

• As a rule of thumb, you should be setting aside 30% of your salary for home loan repayments.
• This could change depending on interest rates, and whether you are applying for joint bond ownership with a spouse.
• There is a range of tools that can help you determine your bond affordability, such as the ooba Home Loans Bond Calculator.

What proportion of your salary should you be spending on the monthly repayments for that home loan? This number must take into account monthly living expenses, income, and the current interest rates.

Note Before continuing, be aware that our Bond Calculator can help you determine what you’ll pay on a bond, along with your monthly repayment amount. This will make it easier to determine your budget relative to your salary.

How much do I need to earn to qualify for a bond?

Research from Lightstone property showed the minimum salary for buying a home to be around R22 600 (assuming a 20-year repayment term).

This is a good starting point for determining how much of your salary you’ll need to set aside.

What if you earn below the minimum salary?

Don’t lose hope just yet. The government program First Home Finance is aimed at low-income first-time buyers, specifically those who earn R3 501 to R22 000 per month.

The percentage of your salary required for the home loan

• As a rule of thumb, you should expect about 30% of your monthly income to be used for bond repayments. Anything above that, and you are entering risky territory.
• 30% has been settled upon as the safe number because it leaves lots of room for living expenses, and it is a realistic amount to set aside for a home loan.

Additional factors to take into account

1. Interest rates.
2. Joint bond application.
3. The location of the property.

1. Interest rates

• A lower interest rate means you’ll be able to spend a slightly lower percentage of your salary.
• You should still keep the 30% rate in your mind when searching for a property you can afford, but the interest rate obviously will play a role in your decision-making.
• As of November 2024, the interest rate is 11.25% (below the average of 13%-15.5%).

Joint bond application

• If you’re applying for a joint bond with a spouse, the percentage of your salary devoted to the home loan repayments can be a little higher, as you’ll both presumably be pooling your resources to cover living expenses.

The location of the property

• Lightstone’s estimated minimum salary of R20 000 doesn’t take into account the location of the property. In truth, your required monthly income for safely paying off a loan will depend on average house prices in that region.
• However, they do provide estimated minimum salaries for properties in certain locations.

Minimum salary according to area:

• Western Cape: R22 600 (30% is R6780).
• Eastern Cape: R12 600 (30% is R3780).
• Gauteng: R20 600 (30% is R6180).

Tools that can help you determine bond affordability

Knowing what home loan you can afford will help you budget for a home purchase. You can find that out by getting prequalified with ooba Home Loans.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.