Home loan deposit requirements: what buyers need to know

Published July 2026

Article insights:

• Home loan deposit requirements have increased as banks adopt a more cautious lending approach, meaning buyers may need to save larger deposits before purchasing a home.
• A larger deposit can improve a buyer’s chances of bond approval, reduce monthly repayments and increase the likelihood of securing a more competitive interest rate.
• Banks assess several factors when considering a home loan application, including deposit size, affordability, income stability and credit history.
• Buyers can strengthen their applications by understanding their affordability, improving their financial profile and planning ahead for higher deposit requirements.
• Working with a bond originator gives buyers access to multiple lenders, helping them compare offers and improve their chances of securing the best home loan despite tighter lending conditions.

While lower interest rates in recent months have improved affordability for many buyers, banks’ requirements for larger deposits are creating a new hurdle for those hoping to enter the property market.

“Banks have become increasingly cautious amid ongoing economic uncertainty and inflationary pressures. While deposit requirements did not rise significantly in May, the average deposit required from buyers in the second quarter of this year was 21% higher than a year ago,” says Bradd Bendall, BetterBond’s National Head of Sales.

At the same time, rising house prices are putting additional pressure on aspiring homeowners. BetterBond’s June Property Brief reports year-on-year house price growth of 8.6% for all buyers and 9% for first-time buyers – well above inflation. In May, the average home price for all buyers remained above R1.7 million, while the average purchase price for first-time buyers was R1.4 million.

The upward trend in deposit requirements widens the gap between those who are ready to buy and those who remain on the sidelines while building up sufficient savings. “Fortunately, the impact of higher deposit requirements has been less severe for first-time buyers, whose average deposit requirements increased by only 7.3% year-on-year,” says Bendall.

Conservative lending

While banks remain financially strong, many are taking a more conservative approach to new lending as a safeguard against economic uncertainty. “It was hoped that despite inflationary pressures and geopolitical uncertainty, banks would maintain a more accommodative lending stance,” says Bendall. Major banks have reported solid financial results and steady growth in net assets. The proportion of default loans relative to total assets has also declined by 15% since 2020, leaving loan books in their healthiest state this decade.

Risk assessment

Banks typically consider several factors when assessing a home loan application, including a buyer’s deposit, affordability, income stability and credit record. A stronger financial profile generally improves a buyer’s chances of securing a bond and may also result in a more favourable interest rate. BetterBond Home Loans recommends a deposit of at least 10% when applying for a bond. This not only improves a buyer’s risk profile but also signals serious intent to purchase, says Bendall. For a first-time buyer purchasing a R1.4 million property, a 10% deposit equates to R140 000. A 7.3% increase in deposit requirements would push this to approximately R150 220 – an additional R10 220 that buyers would need to save before entering the market.

Overcoming the challenge

Higher deposit requirements create challenges on several fronts, says Bendall. Prospective buyers need to save more before applying for a bond, while higher deposits could also dampen demand and suppress buying activity if some buyers delay their purchasing decisions. “However, although more demanding, higher deposit requirements need not derail the homebuying journey,” says Bendall. Buyers who can contribute a larger deposit will have to borrow less, reducing monthly repayments and the total cost of the loan over time. “Furthermore, the higher the deposit, the better the chance of securing a bond as it signals to banks that a buyer has a lower lending risk. They will therefore be more likely to offer a lower interest rate.”

Improved chances of bond approval

There are several ways buyers can improve their chances of approval despite tighter lending conditions. “It is important to start the homebuying journey with a clear understanding of how much you can afford and what you can realistically save for a suitable deposit,” says Bendall. BetterBond’s online affordability calculator provides an indication of what buyers can afford based on monthly income. As a general guideline, bond repayments should not exceed 30% of gross monthly income.

Working with experts, including a bond originator, can also significantly improve a buyer’s chances of securing finance. “By approaching more than one bank, a bond originator may be able to secure a more favourable lending rate, which could soften the impact of a higher deposit requirement,” he adds. “While one bank might require a strict 10% or 15% deposit based on their current risk appetite, another may be willing to look at a 100% loan product for the same financial profile.” Working with a bond originator ensures an application is considered by multiple lenders.

Although increased deposit requirements contributed to a marginal decline in home loan applications during May, the market remains resilient. Bond applications for the period from April to June were 12% higher than in early 2020. Encouragingly, home loan applications have also increased by 12.5% since the low point following the interest rate hiking cycle that began in November 2021.

“Housing demand remains strong, and while the market is adjusting to changing lending conditions, buyers who plan carefully, strengthen their financial position and seek expert guidance can still find opportunities to realise their homeownership aspirations,” concludes Bendall.