Mortgage Affordability Calculator
How much house can you afford based on your income and debts?
// 1/3 Rule (South Africa)
South African banks generally approve a home loan where the monthly repayment does not exceed one-third (33.3%) of your gross monthly salary, minus existing debt obligations. This is stricter than the US DTI approach.
// DTI Ratio (US / International)
The Debt-to-Income ratio measures total monthly debts (including housing) as a percentage of gross income. US lenders typically cap this at 36%, with some allowing up to 43% for qualified borrowers.
// Down Payment / Deposit
A larger deposit reduces your loan amount and monthly repayment. In South Africa, banks may finance up to 100% but a 10-20% deposit secures better rates. In the US, 20% avoids PMI (Private Mortgage Insurance).
// Interest Rates
The SA prime lending rate is currently around 11.5% (linked to the repo rate). US mortgage rates sit around 6.5%. Even a 0.5% difference dramatically affects total cost over 20-30 years.
// Loan Term
In South Africa, home loans (bonds) max out at 20 years. In the US, 30-year fixed mortgages are standard. A longer term means lower monthly payments but significantly more interest paid overall.
// Be Conservative
Just because you qualify doesn't mean you should spend the maximum. Factor in rates and levies, maintenance (budget 1% of property value per year), utilities, and keep an emergency fund of 3-6 months of expenses.
// Additional Costs (SA)
Don't forget transfer duty (use the Stamp Duty Calculator), bond registration fees (R20-40k typically), conveyancing attorney fees, and moving costs. These can add 8-10% to the purchase price and are not financed.
// Pre-Approval
Getting pre-approved gives you a clear budget and strengthens your offer. In SA, apply through multiple banks or use a bond originator like ooba (free service). In the US, get pre-approved from 2-3 lenders to compare rates.