How the First Home Finance subsidy amount is calculated

Article insights:

• First Home Finance is a government subsidy that can help eligible first-time buyers make homeownership more affordable.
• The First Home Finance subsidy is based on your monthly household income and works on a sliding scale.
• Eligible households earning between R3,501 and R22,000 a month may qualify for a subsidy ranging from R38,911 up to R169,265, depending on their circumstances.
• The subsidy is a once-off, non-repayable contribution that works alongside approved home finance.
• Understanding how much you could qualify for can help you plan your first home purchase and potential monthly repayments.

Buying your first home comes with plenty of questions. How much can you afford? How much deposit will you need? And, if you qualify for First Home Finance, how much financial assistance could you receive?

The good news is that the First Home Finance subsidy is designed to help eligible first-time buyers bridge the gap between what they can afford and the cost of buying or building a home. So, how much could you actually qualify for?

How much is the First Home Finance subsidy?

The amount you could receive depends mainly on your monthly household income. The subsidy works on a sliding scale, which means that applicants with lower qualifying incomes generally receive a larger subsidy, while the amount reduces as household income increases.

For the current programme, qualifying households earning between R3,501 and R22,000 a month may be eligible. The published subsidy ranges from around R38,911 to R169,265, depending on household income and the applicable assessment.

It is important to remember that these figures are not an amount that every applicant in a particular income bracket will automatically receive. Your application is assessed according to your individual circumstances.

Why does your income affect the amount?

First Home Finance is aimed at helping people in the affordable or “gap” market – households whose income may be too high to qualify for certain government housing subsidies, but who can still find it difficult to afford a home without assistance.

The sliding scale is intended to provide more assistance to households with lower incomes within the qualifying range. For example, someone earning towards the lower end of the qualifying income range may receive a larger subsidy than someone earning closer to R22,000 a month.

What can you use the First Home Finance subsidy for?

The subsidy can help make the numbers work when you’re buying or building your first home. Depending on the type of transaction and the applicable requirements, it may be used towards the financing of your home, including helping to reduce the amount that needs to be financed. In some circumstances, it can also help with a deposit or costs associated with the property transaction. This is where the subsidy can make a meaningful difference. Even a once-off contribution can reduce the amount you need to finance, which can in turn reduce your monthly home loan repayments.

Here’s a simple example

Imagine the Mokoena household earns R22,000 a month before tax. They’ve found a R650,000 home and plan to take out a home loan for the full amount. At an interest rate of 10.75% over 20 years, that bond would cost about R6,599 a month. If they qualify for First Home Finance, a household at their income level could receive a once-off subsidy of about R38,911. Using it to reduce the loan brings the amount to finance down to R611,089, and the monthly repayment to about R6,204. That’s a saving of roughly R395 every month, or over R94,000 across the life of the loan. Households earning less receive more. A household earning R5,400 a month could qualify for about R156,229, which makes a much bigger difference to what they can afford.

Note: This example is for illustration only. Actual subsidy amounts, interest rates and repayments depend on your income, the property and your bank’s approval.

Does the First Home Finance subsidy replace your home loan?

No. First Home Finance is intended to work alongside your home finance rather than replace it. Applicants must meet the programme’s requirements and, where home loan finance is being used, have the necessary approval from an accredited lender. The subsidy is a once-off, non-repayable contribution rather than another loan that you have to pay back.

This is also why it helps to look at the bigger picture when working out what you can afford. Your income, expenses, credit profile, deposit, home loan and potential First Home Finance subsidy all form part of the overall picture.

How do you find out how much you could qualify for?

The first step is to check that you meet the programme’s eligibility requirements. These include being a South African citizen or legal permanent resident, being at least 18 years old, being a first-time homebuyer and falling within the qualifying household income range. You’ll also need to provide supporting information and documents as part of the application process. Because the subsidy amount is linked to your household income and individual circumstances, the best way to know what you could qualify for is to have your circumstances assessed rather than relying on a general estimate.

Make your first home more affordable

Buying your first home is a big step, and working out what you can afford can sometimes feel like a puzzle. First Home Finance could provide an important piece of that puzzle if you qualify. Understanding the subsidy amount you may be eligible for can help you plan your purchase, work out your potential home loan and get a clearer picture of what your monthly repayments could look like.

If you’re considering buying your first home, BetterBond can help you understand your home loan options and guide you through the application process. Our home loan consultants can help you explore your options and take the next step towards owning your first home.

Important note: First Home Finance has specific window periods during the year. If the application window is closed, you’ll need to wait until it opens again before you can apply. Our home loan consultants will keep you updated on upcoming window periods as you move through the different stages of your homebuying journey.