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Home Housing Buying & Selling Getting a mortgage in Germany
Last update on 05/07/2022

If you’re looking to buy property in Germany, learn about the quirks of German mortgages and get some special tips for expats looking to buy a home in their new country.

If you’re looking to buy a German property as an expat, you won’t find any restrictions. However, make sure you’re up to speed on the German mortgage system before you go ahead.

Hypofriend, a mortgage broker that specializes in loans for foreign buyers in Germany, gives advice on the best course of action for getting a mortgage.


Buying a home in Germany? The certified German mortgage broker Hypofriend can help. They combine advanced algorithms to tailor the right mortgage product to your personal circumstances. Unlike most comparison websites, they do not solely focus on the cheapest product, but on the product that is right for you, ensuring long-term financial security.

Is now a good time to buy property in Germany?

While German economic policies traditionally favor renting over buying, house prices in Germany rose significantly – and some say unsustainably – over the last few years.

Indeed, in late 2018, the German government hosted a housing summit amid protests at the rising costs of buying and renting homes in major cities.

At the same time, mortgage rates fell to historic lows, with the influence of the negative Euribor rate resulting in cheaper deals for home buyers and people looking to remortgage.

Buying property as an expat in Germany

The primary buyers of German homes are local real estate investors. There is still plenty of room for foreign buyers – especially if you intend to rent the property out. Find out more in our guides on how to buy a property in Germany and where to live in Germany.

It remains to be seen whether the continuing uncertainty around the UK’s departure from the European Union – and the decline of the pound – will have a significant effect on UK residents looking to buy German property.

How much can you borrow in Germany?

There are no restrictions on foreigners purchasing German real estate, regardless of whether or not their country of origin is a part of the EU.

The maximum amount you can borrow, however, does depend on your residency status. German residents can borrow up to 80% of the property value. Non-residents can be limited to approximately 55–60% of the assessed value.

Borrowers must also have an annual income in excess of €20,000. What’s more, your monthly mortgage payments can never exceed 35% of your monthly income.

Mortgage calculators

Online mortgage calculators for Germany can help you determine how much you can borrow and estimate your monthly rate:

Cost of getting a German mortgage

A combination of the low default rate on German mortgages with historically low Euribor rates led German mortgage rates to be among the lowest in the world. In 2018, the average mortgage rate was 1.85%, according to data from Statista.

Mortgage application fees are typically 1–2% of the total loan amount. If the property value is more than €500,000, then the buyer must pay for a property assessment. This typically costs around €300–€600.

Upon signing the deed, fees will be due:

  • the notary’s fees and registrations fees at around 1.5% of the assessed property value,
  • the real estate agent’s fees ranging from 3-6% of the sale price. In Germany, buyers often pay estate agent fees (or split them with the sellers) – though this is subject to negotiation.

Thereafter, the buyer will have up to four weeks to pay the real estate transfer tax. This ranges from 3.5–6.5% of the property value, depending on the state where you are buying.

Tax deductions for German mortgages

Interest on German mortgages for owner-occupied properties is not tax-deductible.

However, if you rent out your property in Germany, expenses for generating rental income can be offset on your tax bill. Allowable expenses include mortgage charges, maintenance, repairs and home improvements that cost less than 15% of your property’s value. Major home improvements are subject to different taxes.

Rental interest is taxed at the standard progressive German income tax rates. In 2019, the first €9,169 (€18,338 for married couples) is tax-free. For earnings above this amount, rates start at 14%, rising to 42% for earnings above €55,961.

After rental income tax is calculated, a 5.5% solidarity surcharge is placed on the levied tax.

In addition, foreign property owners are subject to capital gains tax if you hold the property for fewer than 10 years. Hence, if you sell your property after nine years and show a gain of €60,000 as an individual, that amount is subject to a 42% tax rate. However, if you hold your property for 10 or more years, any capital gains are not counted as taxable income.

Requirements for a German mortgage

The mortgage application in Germany is straightforward. However, the level of scrutiny of the applicant’s financial and other records is daunting.

The documents you will need to provide – translated into German – include:

  • German self-disclosure (Selbstauskunft) questionnaire;
  • property assessment;
  • proof of employment (2–12 months of payslips);
  • freelancers must provide additional proof of income and net worth including two years of balance sheets, business, and economic evaluation, and prior year’s tax returns;
  • latest tax returns;
  • documentation of rental income (if the property has been previously leased out);
  • proof of available equity;
  • extract from the Land Register for the previous six weeks.

In addition, foreign buyers will need to provide copies of their passport and, in some cases, a residency permit.

How to apply for a German mortgage

Applying for a German mortgage is similar to other countries, the main difference being that financial institutions will typically investigate your financial status more thoroughly. Part of that due diligence process will require obtaining a Schufa report – the equivalent of a credit report.

As a foreigner, you may not have a Schufa record. As a result, you may need to prove your creditworthiness from your home credit reporting agency.

There are a number of German banks that welcome foreign real estate buyers. In some cases, they offer translation services. Furthermore, there are a number of These include the following:

Expats could also consult a German mortgage broker, who will compare the rates of multiple lenders on your behalf. There are a number of brokers available in the German market, including:

Types of German mortgages

A common German mortgage is a fixed-interest loan. The borrower can set the terms for the rate of principal repayment (typically between 1% and 10% of the principal amount over the term of the loan), and whether to make additional principal-only payments (up to 10% of the outstanding amount).

At the end of the loan term, any outstanding principal must be paid in full either with cash or further financing.

Interest-only loans

Interest-only mortgages are favored by investors seeking rental or buy-to-let properties. During the term of the loan, only the interest portion is paid; the principal is due in full at the completion of the loan term.

It is possible for German residents to deduct the interest payments from their annual income taxes.

Building Society loans

Building Society mortgages are a hybrid of fixed-interest and interest-only loans. During the course of the loan term, in addition to paying the loan interest, the borrower pays into an annuity which goes towards paying the principal balance when the loan term is reached.

Variable rate loans

Variable rate loans are linked to the Euribor and adjusted every three months. Additional principal payments can be made quarterly as the loan’s rate is adjusted.

If the borrower believes the rate is going to rise above a certain amount, the variable rate loan can convert into a fixed-rate loan.

German mortgage guarantees

One peculiarity of the German mortgage industry is the lack of mortgage guarantees. This makes it incredibly difficult to get a mortgage in Germany in certain situations, for example, if your:

  • credit is subprime;
  • time until retirement is less than five years;
  • cashflow cannot cover the down payment and closing costs;
  • current and past income cannot be verified as being above the bank’s threshold.

Instead, individuals may purchase private mortgage default insurance from their bank or a private insurance company.

Other peculiarities of German mortgages

The German government offers special subsidies for individuals living in and paying taxes in Germany.

The most important is the Riester Pension Program (available to anyone under the German statutory pension program) and the Kreditanstalt für Wiederaufbau Bank Home Ownership Program (KfW).

The pension program provides certain pension subsidies – paying for some of the mortgage costs or providing tax incentives for purchasing used real estate.

The KfW Program can offer loans of up to €50,000 for those buying new-build homes or existing properties. The program can combine with a mortgage bank’s products and often comes with a lower rate of interest than the bank’s mortgage.