First-time home buyers grant for South Africans

First-time home buyers grant for South Africans

This government programme offers those earning between R3,501 and R22,000 a month, a realistic prospect of homeownership, in the form of a first-time homebuyers subsidy.

Article summary

  • FLISP is a government programme that grants a subsidy to first-time homebuyers earning between R3,501 and R22,000 a month.
  • However, the homebuyer must first qualify for a home loan and must be either married, cohabiting or single with at least one dependant.
  • Millennials and Gen Z should seize this opportunity to get out of the rent trap.

For first-time homebuyers, and especially millennials who fear being caught in the rent trap, the government programme FLISP (Finance Linked Individual Subsidy Programme) makes acquiring a home a realistic prospect for low-income earners. If you earn between R3,501 and R22,000 a month, you stand to benefit from this programme.

More about FLISP, and how it works as a first-time homebuyer grant

FLISP is a government subsidy, designed to help medium to low-income earners. It originally only provided for those who earned less than R15,000 a month, but since July 2018 that number has been raised to R22,000. In this age of rising house prices and cost of living, this is a significant boon for first-time homebuyers.

What do you mean by a subsidy?

To put it simply, if you meet the criteria, the government provides you with money to help buy a home. This subsidy does not need to be paid back, and there is no catch.

However, you will have to meet the following criteria:

  • A household income that falls between R3,501 and R22 000 per month.
  • Must be a South African citizen over the age of 18.
  • You must be either married, cohabiting or single with at least one dependent.
  • If you’ve benefited from a previous government housing programme or subsidy, this disqualifies you from applying for FLISP.
  • You must have already had a home loan approved by the bank.

You used to have to apply for a home loan and have the application approved before you could apply for FLISP, but as of April 2022, this is no longer necessary. You can now use other sources of finance to apply, including:

  • The beneficiary’s pension/provident fund loan.
  • A co-operative or community-based savings scheme, i.e. stokvel.
  • The Government Employees Housing Scheme.
  • Any other Employer-Assisted Housing Scheme.
  • An unsecured loan.
  • Certified copy of the bond approval / bond quotation.
  • An Instalment Sale Agreement or Rent-to-own Agreement.

If you do choose to apply for a home loan first, you can use our free, online tool, the Bond Indicator, to find out your credit record, and thus determine your chances of acquiring home loan approval. There are also a number of measures you can take to improve your credit record if it is too low.

How big is the subsidy?

This depends on your income and the lower it is, the higher your subsidy. You can use the FLISP subsidy calculator to determine how much you will receive from this programme.

The subsidy ranges from R30 001 to R130 000, depending on where you fall in the income bracket. The lower your income, the higher your subsidy.

Can I use the subsidy granted by FLISP as a deposit?

You can indeed use the subsidy granted to pay for the deposit on the home, earning more favourable interest rates in the process.

If you’re aiming for a 100% home loan, without a deposit, FLISP still benefits you by providing cash that can be paid into the home loan immediately. It also provides resources to help pay additional costs of buying a home, such as transfer fees and conveyancing fees.

How do I apply for a FLISP subsidy?

Once you’ve been approved for a home loan, you can apply for a FLISP subsidy at your local Department of Human Settlement office, or by contacting the National Housing Finance Corporation.

You can also apply with the help of O-YES Home Loans. We can handle the application on your behalf and keep you updated on its progress, just as we do with home loan applications.

Simply contact O-YES Home Loans and a consultant will get in touch with you to submit the necessary paperwork.

Along with the FLISP application form, you’ll need to submit:

  • Certified copies of identity documents (IDs).
  • Certified copies of dependents’ birth certificates.
  • Certified copy of marriage certificate/ Final order of divorce.
  • Original recent payslip/affidavit confirming unemployment/ proof of social grant.
  • Certified copy of the deed of sale / offer to purchase.
  • Certified copy of the bond approval / bond quotation.
  • Original/ certified copy of the statement of transfer cost from transferring attorney.

How FLISP helps millennials, and others stuck in the rent trap

The media consensus on millennials and Gen Z is that they long ago abandoned the prospect of homeownership, and resigned themselves to an eternity of rent. However, FLISP provides them with a means to get out of the rent trap.

Of course, for many millennials, it’s the fear of commitment that makes them reluctant to buy a home, as well as the financial issues. But it makes more sense in the long-term to take the opportunity and buy a home while you can. Rental prices are hard hit by inflation, and you’ll end up paying more in the long term than what you would for a mortgage.

Although you no longer need home loan approval to apply for FLISP, you can still elect to go that route. South Africa’s largest home loan comparison service, O-YES Home Loans, can help you get the best deal by applying to multiple banks on your behalf.

We also offer a range of tools that can make the home buying process easier. Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.