- The minimum required salary varies from area to area, as location affects the average property price.
- The minimum required salaries listed below take into account VAT, and monthly expenses such as petrol and food.
- You can use our Bond Calculator to determine the home loan you’re likely to qualify for based on your monthly income.
How far away is the dream of ownership? Many people are asking this question, and one of the primary factors they need to take into account is their salary. Just how much do I need to earn before I can consider applying for a home loan?
The minimum salary to buy a house: The short answer
Research from Lightstone Property shows that the minimum salary to buy a home would be:
- R22 600 in the Western Cape, where the average property price is R680 000 (the most expensive out of all the provinces).
- R12 600 in the Eastern Cape, where the average property price is R380 000 (the lowest of all provinces).
- R20 600 in Gauteng, where the average property price is R620 000.
The research assumes a 20 year home loan term, with the buyer using 30% of their gross monthly income to fund it, thereby taking into account other expenses that their earnings would have to cover, such as petrol and groceries.
It also assumes a solo buyer; a couple buying a house would obviously be able to combine their incomes in order to buy a more expensive property.
Our Bond Calculator is an invaluable tool that enables you to calculate the home loan you would qualify for, as well as your monthly repayments; based on your net income and monthly expenses.
What about the location’s influence on the price?
Lightstone’s research deliberately does not take into account the influence that location has on the property price.
However, it does present the estimated monthly income required for properties in certain areas.
For example, a luxury beach property in Llandudno would cost R11 700 000 on average, requiring a monthly salary of R389 400.
Other examples include:
- Fresnaye, Cape Town: Average property price is R6 400 000, requiring a monthly income of R213 000.
- Tableview, Cape Town: Average property price is R1 250 000, requiring a monthly income of R41 600.
- Dunkeld, Johannesburg: Average property price is R9 850 000, requiring a monthly income of R327 800.
- Parkhurst, Johannesburg: Average property price is R3 200 000, requiring a monthly income of R106 500.
- Umhlanga Rocks, Durban: Average property price is R3 200 000, requiring a monthly income of R106 500.
- Waterfall, Durban: Average property price is R1 500 000, requiring a monthly income of R49 900.
What about the deposit?
The required deposit is usually 10% of the property price. Of course, the higher your deposit, the more you can afford to pay on a home loan. In other words, a high deposit will enable you to buy a more expensive property.
Many first-time buyers opt for the 100% home loan, which removes the need for a deposit. This will result in higher monthly repayments, but it makes homeownership a possibility for those who can’t scrape together the funds to pay for a deposit.
But if you have time and patience, you should save up money to pay for a deposit on a home purchase, as it will benefit you in the long term. Our Deposit Savings Calculator will help you determine how much you need to save over a period of time to pay for a deposit on a property.
Afford a more expensive property by saving on home loan interest rates
Getting a home loan with low interest rates will make it possible for you to afford a property that may initially have seemed above your paygrade.
At ooba Home Loans, South Africa’s largest home loan comparison service, we can help you achieve this by submitting your home loan application to multiple banks, allowing you to compare packages and get the best possible deal. We also provide insurance packages such as vehicle and home insurance (one of the additional expenses you’ll need to take into account when buying a home).
In addition, we provide a range of tools that make the home buying process easier. Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.
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