If you’re thinking of buying a house in Germany, you will probably need a mortgage. Mortgages are available in Germany for expats and German citizens alike. Qualifying for one is a fairly simple process: you will need to fulfil some basic requirements and prepare several documents in advance.
Who can get a mortgage in Germany?
There are no restrictions on foreigners buying property in Germany. In principle, this means that anyone who meets the following basic requirements is free to apply for a mortgage:
- You hold a valid residence permit which gives you permission to work.
- You are currently working in Germany.
- Your employer or your own business is based and pays taxes in Germany.
- You are being paid in euros.
- You can cover the closing costs with your own equity (up to 15% of the purchase price).
Depending on your personal situation you may also have to fulfil certain additional requirements:
Mortgages for EU citizens
If you are an EU national, you can generally expect the same borrowing limits as German citizens (i.e. up to 100% of the property value). Some lenders, however, might ask you for a larger upfront deposit.
Mortgages for non-EU citizens
Non-EU citizens with temporary residence permits are, in theory, eligible for all types of mortgages, provided you meet the following criteria:
- You have been employed by a German company for at least three months.
- You are out of your probation period.
- You make at least 1.500 - 2.500 euros per month.
However, you are deemed to be a higher risk, compared to German and EU nationals, and, as such, only a few banks will be willing to lend to you. Those that do will require a larger upfront deposit. You can improve your chances of getting approved for a mortgage by getting a permanent residence permit.
Mortgages for self-employed expats
If you are self-employed (i.e. a freelancer), you may find it more difficult to get approval for a mortgage, as banks generally consider entrepreneurs to be riskier investments. You will need to prove that you can consistently make repayments (see documents required below). The longer you have been self-employed for, the easier it will be to get approval.
Mortgages for individuals approaching retirement age
If you are nearing retirement age you may find it difficult to get approved for a mortgage, as loans are generally given on the premise that you will have finished repayment by the time you retire. Mortgage lenders will assess whether your pension meets minimum income requirements.
If you have been contributing to a Riester pension, you can choose to put the savings towards taking out a mortgage or paying off your existing mortgage. Find out more about homeownership schemes.
Documents required for getting a German mortgage
For your mortgage application, you will need to prepare quite a few documents, often going back several years, that prove that you meet the above criteria. A mortgage broker can advise you on exactly which documents you need. This usually includes:
- A form of ID, such as a passport (not a driving licence)
- Copy of residence permit (if applicable)
- Registration certificate
- Proof of German pension scheme, such as a social security ID
- Proof of available equity
- Various documents relating to the property, such as land registry extract, property assessment (if applicable), floor plan and declaration of division (you can get these from the seller or real estate agent)
Additional documents for employees:
- Salary slips from the last three months
- Salary statement (Lohnsteuerbescheinigung) from last year (you can get this from your employer)
Additional documents for freelancers & self-employed workers:
- Two most recent tax returns
- Two most recent tax assessments (Steuerbescheid) from the German tax office
- Profit and loss account for the previous year, verified by your accountant
The German mortgage process
Once you are satisfied that you fulfil the basic requirements and can provide the necessary documents, you can start the process of applying for a mortgage. Most people will seek pre-approval to get an idea of what they can afford before they even start looking for houses. Find out about how the mortgage process works with our easy 10-step guide to German mortgages.