Money

How much must I earn to buy a R500 000 house?

About R16 500 a month before deductions, on your own or combined with someone else. A R500 000 bond over 20 years at 10.5% costs around R4 992 a month, and banks generally want that to sit near 30% of your gross income.

About R16 500 a month before deductions. That is the short answer, and it is the one most people want first, so here it is up front. Now the part that actually matters: why that number, and what moves it up or down for you.

Where R16 500 comes from

Banks work backwards from your repayment. A R500 000 bond over 20 years, at the 10.5% we use across this site, costs about R4 992 a month. Most South African banks want your bond repayment to land somewhere near 30% of your gross monthly income, which is what you earn before tax and deductions come off. Divide R4 992 by 0.3 and you get roughly R16 500.

That 30% is a guide, not a law. Some banks stretch further for a strong credit record, and some pull back if you are already carrying debt. It is the reason two people on identical salaries can get different answers.

What pushes your number up

• Existing debt. A car instalment, a clothing account or a personal loan all come off what the bank thinks you can afford, rand for rand.
• A thin or damaged credit record. Missed payments in the last two years make banks cautious, and caution shows up as a smaller loan or a higher interest rate.
• A higher interest rate. Your rate is set off prime, and a weaker profile earns a rate above it. Half a percent on R500 000 is roughly R160 a month.
• A shorter loan term. Fifteen years instead of twenty means a bigger monthly payment, so you need to earn more to qualify.

What brings it down

• Buying with someone. Banks allow up to twelve people on one bond, and combining two incomes is how a large share of first-time buyers get in. Everyone on the bond is jointly responsible for the repayment.
• A deposit. You do not need one on most new developments, but every rand you put down is a rand you are not borrowing, which lowers the monthly figure.
• First Home Finance. If you earn between roughly R3 501 and R22 000 a month, this government subsidy pays a lump sum toward your home, which shrinks the bond you need.
• Clearing one account. Paying off a small store card can move your affordability more than people expect, because the full instalment comes back into your budget.

Earning less than R16 500?

Then a R500 000 home on a single income is probably not this year's purchase, and that is worth knowing early rather than after a declined application. It does not mean never. A joint application, a subsidy, or six months of clearing debt changes the picture more than most people expect. We have watched buyers go from a no to a yes inside a year by doing nothing more complicated than settling two accounts and keeping every payment on time.

None of these figures are a promise from a bank. They are the same maths the bank does, so you can walk in knowing roughly what to expect.

Get your real number

Everything above is a guide built on averages. Your number depends on your income, your debts and your credit record, and the only way to know it is to check. The check is free, it takes a few minutes, and it is a soft check, so it leaves no mark on your credit record. You come out the other side knowing what you can spend, which means you stop guessing and start looking at homes you can actually buy.