Understanding the salary requirements for home loan approval

Many aspiring homeowners wonder whether they earn enough to qualify for a home loan. According to property experts, understanding how lenders assess affordability is one of the most important steps buyers can take before beginning their property search.

Factors banks use to determine whether a loan application will be approved

Before setting their sights on a dream home, buyers need to consider a range of factors that banks use to determine whether a loan application will be approved. These include take-home income, credit score, employment stability and the size of the deposit that can be provided upfront.

Running an affordability check or securing pre-approval through a bond originator can help prospective buyers understand the price range they should realistically consider.

According to Adrian Goslett, CEO and regional director of REMAX Southern Africa, gaining clarity on affordability early in the homebuying journey can save buyers time and help them make more informed decisions.

“Buying property is one of the most significant financial commitments many people will make in their lifetime. By understanding how lenders determine affordability and by getting pre-qualified before beginning their search, buyers can approach the process with confidence and focus on homes that are realistically within their budget.”

Salary requirement

While there is no universal minimum salary required to qualify for a home loan, lenders typically determine the amount they are willing to offer based on income and existing financial obligations. As a general guideline, homeowners should avoid spending more than roughly a third of their net monthly income on bond repayments to ensure the loan remains affordable in the long term.

For buyers with lower incomes, government initiatives can also help bridge the gap. The Finance Linked Individual Subsidy Programme (FLISP) assists qualifying first-time buyers earning between R3 501 and R22 000 per month with a once-off subsidy that can be used toward the purchase of a home.

Goslett adds that, while affordability is a key factor in securing finance, buyers should also plan for additional costs associated with purchasing property, including bond registration fees, transfer duties and other once-off expenses. Being financially prepared for these costs can help ensure a smoother transaction and reduce unexpected financial strain once the purchase is underway.

For those unsure about where they stand financially, speaking to property professionals and running an affordability assessment can provide valuable guidance before entering the market.

Issued by Kesia Abrahams