Being declined for a home loan can be one of the most disappointing experiences in the property-buying journey. The good news is that most declines are preventable. Banks are looking for specific criteria, and understanding what they are — and how to meet them — significantly improves your chances of approval.
This guide explains exactly how to qualify for a home loan in South Africa. We cover the credit score requirements, income thresholds, debt-to-income ratios, and the practical steps you can take to strengthen your application. Whether you are a first-time buyer or have been declined in the past, these insights will help you approach the process with confidence.
Credit Score Requirements
Your credit score is one of the most important factors in a home loan application. It tells the bank how likely you are to repay the loan based on your past behaviour. South African banks use credit scores from TransUnion, Experian, and Compuscan, with scores typically ranging from 0 to 999.
What scores do banks look for?
- Excellent (750+) — the best interest rates and terms
- Good (650–749) — strong approval chances
- Fair (550–649) — possible approval, but likely at higher rates
- Poor (below 550) — high risk of decline
If your score is below 650, improving it before applying is strongly recommended.
Debt-to-Income Ratio
Banks use your debt-to-income ratio (DTI) to assess whether you can afford the new loan. This ratio compares your total monthly debt repayments to your gross monthly income.
How DTI is calculated:
- Add up all your monthly debt repayments — including credit cards, personal loans, vehicle finance, and existing bonds.
- Divide this total by your gross monthly income.
- Multiply by 100 to get your DTI percentage.
South African banks typically require a DTI of 30% or lower for bond approval. This means your total monthly debt repayments should not exceed 30% of your gross income. If your DTI is higher, consider paying down debt before applying.
Income and Employment
Banks look for stability and consistency in your income. A permanent, full-time position with a regular salary is the most favourable profile. If you are self-employed, you will need to provide at least two years of audited financial statements.
What banks look for:
- Minimum income: Typically R15,000–R20,000 per month, depending on the bank and the loan amount.
- Employment stability: At least 6–12 months in your current role.
- Income consistency: Regular, predictable income is preferred.
If you are self-employed, keep detailed financial records and work with a reputable accountant. Clean, well-documented financials make a significant difference in your application's success.
Property Valuation
The property you are buying also needs to meet the bank's requirements. The bank will commission an independent valuation to confirm that the property is worth the purchase price. If the valuation is lower than the asking price, the bank will only lend against the lower value.
What banks look for in a property valuation:
- The property must be worth the purchase price
- The property must be in a saleable condition
- There must be no significant structural or legal issues
How to Improve Your Chances
Even if you do not meet all the criteria today, there are steps you can take to strengthen your application:
- Improve your credit score — pay bills on time, reduce credit card balances, and correct any errors on your credit report.
- Reduce your debt-to-income ratio — pay off existing debts before applying.
- Save for a larger deposit — a 20% deposit reduces the loan amount and improves your approval chances.
- Get pre-approved — as explained in our pre-approval guide, this is the first step.
- Use a bond originator — they can help you find the best deal and prepare a strong application.
- Consider a joint application — applying with a partner or spouse combines your income and can increase your borrowing capacity.
Frequently Asked Questions
What credit score do I need for a home loan in South Africa?
Most banks prefer a credit score of 650 or higher. Scores above 750 typically qualify for the best interest rates.
How much income do I need to qualify for a home loan?
There is no fixed minimum, but most banks prefer a gross monthly income of at least R15,000–R20,000. The key factor is your debt-to-income ratio.
What is a good debt-to-income ratio for a home loan?
Banks typically require a DTI of 30% or lower. If your DTI is higher, you may still qualify but at a higher interest rate.
Can I get a home loan with a low credit score?
It is possible, but you may be offered a higher interest rate, a lower loan amount, or both. Improving your credit score before applying is strongly recommended.
Does my employment status affect my chances?
Yes. Permanent, full-time employment with a consistent income is the most favourable profile. Self-employed applicants need to provide at least two years of audited financials.
How can I check my credit score in South Africa?
You can get a free credit report once a year from TransUnion, Experian, or Compuscan. It is worth reviewing your report for errors before applying.
How long does the home loan approval process take?
The approval process typically takes 5–15 working days, depending on the bank and the complexity of your application.
What documents do I need for a home loan application?
You will need your ID, three months of payslips, three months of bank statements, an ITA34 tax clearance letter, and a signed Offer to Purchase.
- Maintain a credit score of 650+ — this significantly improves your chances of approval and helps secure better rates.
- Keep your debt-to-income ratio below 30% — pay down debt before applying if necessary.
- Have a stable income — permanent employment with consistent earnings is preferred.
- Save for a deposit — a 10–20% deposit reduces the loan amount and strengthens your application.
- Get pre-approved first — read our pre-approval guide to get started.
- Use a bond originator — they help you compare offers and prepare a strong application.
- Consider a joint application — combining incomes can increase your borrowing capacity.
