Are you considering buying a house or apartment in Germany? Then you most likely will need to take out a mortgage since real estate prices in Germany are one of the highest in Europe.
Foreign citizens can get a mortgage in Germany, providing they have a German residence permit and work permit. EU citizens will only need to prove their residency in Germany. Having a stable income is another requirement for a mortgage in Germany.
In Germany, it’s normal for people to take a mortgage at the bank; only a few can afford to buy a house with their savings. Home prices are rising every year, especially in top German cities such as Munich, Hamburg, and Berlin.
In this article, we will explain if foreign citizens can obtain a mortgage in Germany and under which conditions.
Mortgages in Germany
Germany has always been the strongest economy within the EU and one of the strongest economies worldwide. For this reason, German mortgage rates are the lowest in the European Union.
Moreover, in Germany, people commonly take a mortgage at the bank, and only a few can afford to buy a house with their savings. Real estate prices in Germany are one of the highest in Europe. However, terms for loans are very beneficial for borrowers.
Germans can also enjoy one of the lowest interest rates on house loans, so borrowing money won’t cost you that much.
For example, the average interest rate in Germany is 1,5% for residents and between 2,39% and 4,6% for non-residents.
Nonetheless, the homeownership ratio in Germany is less than 50%, and it’s one of the lowest among the European countries.
Mortgages in Germany are usually obtained at classic banks and financial institutions, assuming applicants have justified the reason for borrowing.
Also read: How to get a personal loan in Germany.
Mortgages for Foreigners in Germany
Firstly and most importantly, loans, mortgages, and personal loans in Germany are possible for foreigners.
Banks don’t discriminate accordingly to your nationality, but they might offer different conditions to different people based on their residency and citizenship.
Nonetheless, when a foreign citizen (non-EU) applies for a mortgage, most banks will ask for a residence permit and work permit.
Find out how much a house costs in Germany, so you can budget your money in a better way.
At most credit institutions in Germany, EU citizens only need a residence in Germany to get a mortgage or loan.
EU citizens and PR holders have higher success rates in getting a loan or mortgage in Germany.
The situation is different for non-EU nationals. Here, you must be able to present a residence permit and a work permit when applying for a mortgage.
The period of validity of the residence permit or work permit also plays a role.
A stable income is the most crucial factor for non-EU citizens when obtaining a mortgage in Germany. Likewise to German nationals, foreigners must prove their income with wage slips or tax notices.
In general, the higher your salary and the longer the employment agreement, the higher your chances of getting a mortgage and getting it at better terms&conditions.
Foreign citizens can also use the help of a guarantor. It can be their relatives or acquaintances, for example. The guarantor should have a decent salary and no debts. They will pay your loan installments in case you can no longer cover it on your own.
Overall, foreign nationals can get a mortgage in Germany if they fall under the following criteria:
- Having a residency in Germany
- Having a current account with a German bank
- Having a regular income
Nonetheless, according to the law, foreigners have a right to get a mortgage in the country, but it will mostly depend on the bank and your life situation.
For example, your residence status greatly impacts how much you can borrow and for how long. The loan approval and conditions will also depend on your employment and income.
Read more about loans for foreigners in Germany in this article.
To get the help of English-speaking professionals in getting a mortgage in Germany, check out Loanlink24. They will guide you from selection up to receiving your financing!
The duration of your mortgage depends on the amount of your loan and the annual repayment you will make. A mortgage period in Germany usually lasts for 25 or 30 years.
In many cases, the interest rate is fixed for the first 10 years. Afterward, you have to make a new mortgage contract based on the circumstances by then.
Requirements for getting a mortgage in Germany
To get a mortgage, you need to meet several criteria in Germany. The bank will prove your creditworthiness; this is the most important factor when it comes to loans and mortgages in Germany. The following will be considered by the bank:
- Savings and capital
- Schufa – credit score
If you are planning to take out a mortgage in Germany, you should reside in Germany. You must also be able to prove it by providing a German residence permit and address registration.
To get a mortgage in Germany, one should have a stable income. Loans are granted for employees but also for self-employed people.
The minimum requirement for employees is to be employed at the company for three to six months.
Self-employed persons, business owners, and freelancers are usually required to have been self-employed for a longer time. Many banks want to see that you have been working for yourself for at least two years.
Moreover, information about your work and income is not sufficient for getting a mortgage and determining your creditworthiness. Bank also will consider:
- Your rent plus utilities costs
- Child support costs
- Living expenses
- Installment payments for existing financing, loans
After calculating all these expenses, the bank will decide on whether an applicant can pay a mortgage in a sustainable way.
Your monthly mortgage payments should never exceed 40% of your monthly income.
Employees should have an income that is sufficient for taking a mortgage. The higher the income, the highest your chances of getting it.
People on probation period will have difficulties obtaining a mortgage or loan. However, a fixed-term employment contract won’t be a big problem. They are very common in Germany.
As a self-employed, your monthly income will determine your creditworthiness for granting the mortgage.
Banks also want to see your current tax statements to verify the accuracy of the income information. Sometimes they also look into books to see your revenues.
Moreover, people who have been self-employed successfully for a long time will have better chances.
How much money do you have?
Applicants with some savings and equity will indeed have advantages when getting a mortgage in Germany. Yet keep in mind that you need to have some amount beforehand because banks usually don’t pay a 100% price of the property you want to purchase.
In the case of construction financing, some banks require not only a good credit rating but also equity capital amounting to 20% of the purchase price. If you are taking a small consumer loan, no equity is required.
Required documents for the mortgage in Germany
When applying for a mortgage, most banks will ask you to provide these documents:
- Employment contract
- Income proof for employees – payslips for the last 2–12 months
- Self-employed and freelancers – balance sheets for last 6-24 months, prior year’s tax returns
- Last three years’ annual accounts for self-employed
- Current expenses and liabilities
- Property assessment
- Proof of available equity – savings accounts, financial investments, life insurance policies, shares, etc.
- Extract from the Land Register for the previous six weeks
Plus, as a foreigner, you need to provide a copy of your passport and residency permit.
Your credit score
Credit score plays a detrimental role when applying for a mortgage in Germany. All German banks will check your SHUFA or credit score.
Your credit score in Germany depends on a lot of things, such as:
- Annual gross income
- Length of the work contract
- The length of the overall stay in Germany
- The number of loan applications already made
- The number of loan refusals
- Missed loan payments
- The number of loan approvals
SHUFA score will also depend on your disposable income, which is calculated by taking your monthly net income and deducting all recurring fixed costs, like rent, insurances, etc.
After the SHUFA check is made, the bank will tell you if they would offer you a mortgage and under what conditions. The credit check can also be a factor in the interest rate you are given and the mortgage amount.
Real estate buyers from abroad with foreign income
Do you live in the EU and want to buy real estate in Germany by taking a mortgage in the country?
Financing in Germany can be possible if the foreign buyer has their income in EUR currency and reside within the EU.
Generally, only a small group of banks are willing to offer real estate financing for non-residents in Germany. Anyone who earns their income abroad and wants to purchase and finance a home in Germany will rely on those banks.
Most banks are giving mortgages only to applicants who live within the EU and earn their salary in euros. This means financing is no longer possible for people who live and work in the UK or Denmark, for example.
For all those who live and work in Switzerland, on the other hand, the situation is much better, and they can get a loan in Germany.
Moreover, people living in an EU country with a different currency than EURO have no opportunity to get a mortgage to buy a house in Germany.
Besides that, people residing in Germany and employed by companies abroad (non-euro currency) will have difficulties getting a mortgage in Germany.
The amount of needed equity will depend on the location of the property. For houses in top German cities such as Munich, Stuttgart, Hamburg, and especially Berlin, you will need to contribute more of your savings.
Also read: How to get a personal loan in Germany.
How much money can you borrow in Germany?
So by now, your chances of getting a mortgage in German banks look pretty good, but how much will they lend you?
Here we can see some differences between German residents and non-residents, e.g., foreign buyers from abroad. If you live in Germany, you can get up to the 80% of the total costs (including notary costs and broker fees), while non-residents will be financed only to 55-60% of the final costs.
In the table, you can see how much German banks typically lend with a given salary.
|Net Salary||Maximal Mortgage Amount||Monthly Installment|
|1.000 €||90.823 €||300 €|
|1.500 €||128.666 €||425 €|
|2.000 €||174.078 €||575 €|
|2.500 €||211.921 €||700 €|
|3.000 €||257.333 €||850 €|
|3.500 €||302.744 €||1.000 €|
|4.000 €||340.588 €||1.125 €|
|4.500 €||385.999 €||1.275 €|
|5.000 €||423.842 €||1.400 €|
You can estimate your maximum loan amount on this website.
Tips on getting a mortgage in Germany
To increase your chances of getting a loan in Germany as a foreigner, be sure you have a long-term residence permit first. Applicants with a settlement permit (PR) will have the best chances.
- Establish a good creditworthiness history.
- Provide income and financial proof – you can support yourself and are able to pay back the money.
Places Where You Can Get a Mortgage in Germany
Home mortgages can be obtained at traditional banks, savings banks, specialized real estate banks (Bausparkassen), insurance companies, or home financing companies like Interhyp. In addition, you can finance some part of the home price through KfW*.
*KfW is a German state-owned investment and development bank.
As a property owner or buyer, you can receive such a subsidy at KfW if you are planning the following:
- an energy-efficient renovation of the house
- conversion into an energy-efficient house, or
- a reconstruction due to the age of the building
Another option to get a mortgage in Germany would be with the help of intermediaries. They work with numerous banks and look for the best offer for you.
Loanlink24 – best place for foreigners
Loanlink24 is basically a comparison tool for mortgages in Germany. You can see offers from over 400 German banks. The best thing about this platform is that it’s 100% in ENGLISH.
Besides, the largest home financing company Interhyp offers financing options for individuals who plan to buy or build a house in Germany.
Alternatives for taking a mortgage in Germany
Smava is another favorable solution for a loan in Germany. It’s the biggest online platform where you can:
- and receive a loan in Germany
Smava will give you an overview of 70 loans from more than 20 leading credit banks, online lenders, and peer-to-peer lenders. For any help, you can reach out to one of the 200 loan advisors.
To apply for a loan, you have to meet at least the following requirements:
- Majority age (= full legal age, minimum 18 years)
- (Registered) Residency in Germany
- Bank account in Germany
- Sufficient regular income (Employment or self-employed or pension)
- No negative entries in your SCHUFA (German credit score)
Benefits of personal loan with Smava:
- decent and legitimate loan offers with favorable conditions
- neutral SCHUFA request: your loan application does not affect your credit score
- loans from 500 EUR to 120,000 EUR
- loans for the self-employed
- it’s 100% free!
- no additional or hidden costs
- effective APR from 0,68%
- fast processing time (max. 2 working days)
- fast loan payment
Smava is Germany’s largest loan comparison website, which is offering quick, easy, and affordable loans since 2007.
Steps to get a loan with Smava
- Submit all information after you will receive loan offers from different banks in Germany
- Select the bank and apply for a desirable credit directly from the platform
- If your documents are complete and all requirements are met, you will receive your money within a very short time
If you don’t have enough savings to get a mortgage in Germany
If you don’t have enough savings or equity to get a mortgage, you can apply for a loan. For example, one can easily get a loan of 50,000 EUR to add to the final price of the house.
Auxmoney is the most accessible place to get a loan; the process is simple and doesn’t involve much paperwork.
Besides that, they provide money for different categories of people, including self-employed, students, freelancers, and of course, employees.