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The government home loan for first-time buyers with bad credit

People with a low credit score (below 610) still have a chance of home loan approval thanks to a government subsidy.

Prequalify Home Loan

Article summary

  • A credit score of at least 610+ is required for home loan approval, but the First Home Finance subsidy makes home loan approval attainable for people below this number.
  • The subsidy strengthens the bank’s confidence in your ability to repay the home loan, making them more likely to approve a lower credit score.
  • You can use the subsidy as a deposit to reduce home loan interest rates.

The credit record is the most important aspect banks take into account when deciding whether to grant a home loan, and a credit score of at least 610+ is recommended for a chance to obtain home loan approval.

So what do you do if your income is low and your credit score is below this critical cut-off point? Well, homeownership isn’t out of your reach, because low-income earners have the option to acquire a government home loan in the form of First Home Finance (formerly known as FLISP).

How does First Home Finance help?

It provides a subsidy that you can use as a deposit or pay directly into your home loan.

If the bank knows you have a subsidy from First Home Finance, they know you have resources available upfront for the home loan.

This makes the bank more willing to grant home loan approval, even in the face of a low credit score.

How much is the subsidy?

The subsidy ranges from R30 001 to R130 000 depending on your income. The lower your income, the higher the subsidy.

See more detail in the chart below:

Housing Subsidy South Africa

How to use the subsidy

  • You can use the subsidy as a deposit. Large deposits compensate for low credit scores and reduce the interest rates of the home loan at the same time.
  • Or you could pay the subsidy into your home loan as a lump sum payment. Find out what subsidy you’ll receive using the chart above, then enter it into our Extra Payments Calculator to determine what effect this will have on your remaining bond term and repayments.

How do I qualify for the subsidy?

You need to meet the following criteria:

  • Your income must range from R3 501 to R22 000 per month.
  • You must be a South African citizen with permanent residency in South Africa.
  • You must not have received a government housing subsidy before.
  • You must be married or cohabiting OR single with financial dependents.
  • You must be over 18 years old.
  • You must not have owned a fixed residential property before.

How do I apply for the subsidy?

Apply online with ooba Home Loans. You can fill in the application form in a matter of minutes. We submit the paperwork for you and monitor the status of your application, updating you as needed.

Are you interested in applying for First Home Finance (formerly known as FLISP)? Get all your questions answered, such as whether you qualify, how to apply and how First Home Finance can be used to acquire your first home.

Apply for a housing subsidy

First Home Finance offers homebuyers a subsidy on their first home.


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