Home loan deposit requirements: why location and lender matter

Although banks have been demanding higher upfront payments following the September interest rate hike, the deposit squeeze is not being felt equally across the country. BetterBond’s regional data shows that home loan deposit requirements can vary considerably depending on where buyers purchase, their financial profiles and which lender they approach, says Dr Roelof Botha, economic advisor to BetterBond.

“The deposit requirement for all buyers increased by an average of 21.7% year-on-year, but this does not tell the full story. Lender appetite is uneven, with banks demanding higher deposits depending on the buyer’s financial profile, the province they live in or even the type of property they’re buying,” says Botha.

Lower interest rates tend to lead to a lowering of deposit requirements and vice versa. Since September 2025, banks have been playing yo-yo with this key indicator of homebuying activity, notes Botha, with requirements lowering seven times and increasing five times since then.

The latest repo rate increase, which took the prime lending rate to 10.75%, prompted banks to adjust their deposit requirements for all buyers. Rising deposit requirements means prospective buyers may need to save more before entering the property market.

“Fortunately, the impact on first-time buyers has been considerably smaller, with their average deposit requirement increasing by just 5.6%,” says Botha. “Although most banks will require a deposit of at least 10%, how much a lender will require depends on various variables.”

Buyer’s financial profile

Banks consider a buyer's risk profile when determining the home loan-to-value ratio they are prepared to offer. Factors include the buyer's credit record, affordability, the nature and stability of their income, and the location of the property.

One bank may be satisfied with a deposit of 15% while another may ask for more upfront, says Botha. This means, for example, on a R1.7m home, a 10% deposit is R170 000. If the bank asks for a 15% deposit, the upfront payment will increase to R255 000.

A larger deposit lowers the loan-to-value ratio, reducing risk for the lender. “Buyers should not assume that a deposit requirement from one bank represents the only option available to them. Different lenders assess risk differently, and a buyer who does not qualify for a 100% bond at one bank may still receive a more favourable offer from another.”

Fortunately, BetterBond’s application data shows that buyer incomes have increased steadily, helping to offset the negative impact of higher deposit requirements. The annual increase in incomes in real terms over the past five years has been 4.7%, with BetterBond recording an average homebuyer income of R74 000 during the third quarter of this year.

Regional differences

Regional lending trends can also offer useful insights into the home loan market, although approval ratios should not be viewed as a direct indicator of the deposit requirements buyers can expect in a particular province, says Botha.

According to the latest BetterBond Property Brief, North West was the only region to have experienced a decline in the number of loans granted as a percentage of loan applications in the 12 months up to September. Greater Pretoria consolidated its position as the region with the highest ratio of loans granted, namely 75%, with the Western Cape and KwaZulu-Natal sharing second spot with a 72% ratio.

“However, a higher approval ratio does not always mean that buyers in a particular region will face lower deposit requirements. A region can have improving approval volumes while still requesting higher deposits from buyers,” says Botha.

Local house prices and buyer profiles

Property prices are another consideration when banks assess lending risk. “A 10% deposit on a Western Cape home, where BetterBond recorded an average price of R2.26 million in the 12 months to January 2026, with prices subsequently growing 13.8% year on year, will be materially higher than in provinces with lower average prices.

“Banks may ask for more conservative loan-to-value terms on high-value or less liquid properties,” says Botha. In premium areas such as Bishopscourt in Cape Town or Sibaya in KwaZulu-Natal, the deposit is likely to be much larger in rand terms because house prices are higher. Whether the percentage of this required for the deposit is higher will depend on the buyer’s credit and affordability profile, as well as the property’s resale risk.

The income profile of buyers in an area can also influence lending decisions, notes Botha. Banks consider affordability and income stability when assessing applications, as well as the property's value and resale potential.

Deposit requirements can also vary by property type. Established freehold homes and sectional-title units are assessed mainly on the buyer’s credit and affordability, while vacant land, self-build projects, off-plan developments and unusual properties can attract more conservative loan terms because they carry higher valuation, construction or resale risk.

Homebuyers active despite deposit squeeze

Despite the uneven application of deposit requirements, there has not been a corresponding drop in home loan applications, says Botha. BetterBond’s data shows that home loan applications rose 2.4% quarter-on-quarter in the third quarter of this year, while average house prices reached the R1.7 million mark.

The data suggests that buyers remain active, even as affordability pressures and deposit requirements create additional hurdles. With the final Monetary Policy Committee (MPC) meeting of the year scheduled for 19 November, prospective buyers have an opportunity to review their financial position and prepare for the possibility of further changes in lending conditions.

What should buyers do before the next repo rate decision?

Rather than rushing into a property purchase ahead of the MPC announcement, aspirant buyers should use this time to strengthen their financial profiles and understand what they can afford, advises Botha.

Seeking home loan pre-approval is a good starting point. It gives buyers a clearer indication of their affordability and what they may qualify for, while also helping them identify any potential issues with their credit profiles.

Buyers should also:

• Check their credit reports and address any errors or outstanding issues.
• Reduce short-term debt to improve affordability and strengthen their credit profile.
• Gather the necessary financial documents, including proof of income and bank statements.
• Work with a bond originator who can approach several banks on their behalf to compare lending rates, deposit requirements and loan terms.

If possible, buyers should also plan ahead and be financially prepared should deposit requirements increase again following a rate increase this month. “Even buyers who qualify for a low-deposit or 100% bond should prepare for transfer and bond registration costs. There is also a risk that a bank could revise terms before final approval, so always build in a deposit buffer.”

Botha adds that being able to pay a larger deposit than required can improve a buyer’s chance of bond approval and help reduce their monthly bond repayments. “There is also a greater likelihood of securing a more competitive interest rate.”

Bottom line for buyers

The deposit squeeze does not mean that homeownership is moving out of reach, concludes Botha. "But it does require buyers to be more strategic about how they approach the market.”

Deposit requirements are not uniform, and the same buyer could receive very different offers from different lenders. “Understanding what banks are prepared to offer, comparing home loan options and getting the right guidance can make a significant difference.”