How do mortgages work in Germany?
Mortgages in Germany typically last 25 to 30 years, with a fixed interest rate for the first few years. You can also choose to have fixed interest for 10, 20 or even 30 years in exchange for a higher overall rate.
Mortgage interest rates in Germany
Mortgage interest rates in Germany vary from region to region, and depending on the profile of the person applying. As a general rule of thumb, the higher the deposit you are able to put down on the mortgage, the lower your interest rate (and therefore your monthly repayments) will be.
As of 2025, mortgage interest rates in Germany are somewhere between 3,5 and 4,5%, depending on the federal state.
How much can I borrow?
Mortgage lenders in Germany allow you to borrow up to 100% of the property value (although you will have to cover some of the other costs of buying a house, such as purchase fees, with your own equity).
While some German banks will be willing to finance the full amount, loans of around 80% are more common. Non-German citizens are considered riskier investments and consequently will usually be required to pay a larger deposit upfront, especially if you are not a resident or employed in Germany.
To prevent anyone from taking out a mortgage they cannot afford, mortgage providers ensure that your monthly mortgage payments will not exceed 35-40% of your salary.
Mortgage calculator for Germany
Before you start house hunting, you’ll need to have a budget in mind. For this, you can use a mortgage calculator for Germany. MLP and Hypofriend both offer mortgage calculators in English that can give you a quick idea of how much you could potentially afford, taking into consideration deposits, taxes and other fees.
Types of home loans in Germany
There are several different types of home loans in Germany. Some German mortgages require you to start repayment immediately, while others allow you to delay full repayment and only pay interest. Your mortgage advisor can walk you through all of the implications and help you decide what is best for your personal situation, but below we have put together the most important differences:
Annuity mortgage (Annuitätendarlehen)
The most popular form of mortgage in Germany, an annuity mortgage (Annuitätendarlehen), is a fixed-rate loan over a period of five to 30 years. Your monthly mortgage payment remains the same throughout the life of the mortgage. At first, you pay mostly interest, with a small amount going towards repaying the original loan. Over time, as the loan is gradually paid off, the interest portion decreases and the repayment portion increases.
One peculiarity of the German system is that lenders will typically allow you to set the amount you wish to repay each month (as a proportion of the original loan, between 2 and 10 percent per year - known as “Tilgung”). You may also be permitted to pay lump sums (Sondertilgung) to pay off your mortgage more quickly.
Full repayment mortgage (Volltilgerdarlehen)
The full repayment mortgage (Volltilgerdarlehen) is very similar to the annuity mortgage, in that you pay a consistent monthly rate made up of interest and repayments. The only difference is that, instead of determining your monthly repayment rate as a percentage of the total mortgage, you specify a length of time after which you would like to have fully repaid your loan. Your monthly payment is therefore adjusted to allow you to achieve this: the shorter the term you choose, the higher your monthly repayment.
Interest-only mortgage (endfälliges Darlehen)
Not very common among buyers in Germany, an interest-only mortgage is almost always used for buy-to-let properties. Under the interest-only model, your monthly payments do not repay the loan, covering only the interest. At the end of the mortgage term, the full outstanding amount is due. Expats will usually need a large down payment to secure an interest-only mortgage.
Building society mortgage (Bausparen)
A building society mortgage is a type of mortgage that is linked to a savings account. These mortgages are typically characterised by long-term, low interest rates. There are two models: either you save in a designated savings account until you become eligible for a mortgage, or you take out the mortgage and submit repayments into a savings account that is later used to pay off the mortgage.
Variable rate mortgages (variables Darlehen)
In contrast to fixed-rate mortgages like annuity and full repayment mortgages, variable rate mortgages, as the name suggests, have variable rates of interest. Every three months, the interest rate is adjusted to reflect that of the European Central Bank.
This kind of mortgage allows borrowers to take advantage of fluctuations in interest rates, which may enable quicker repayment; however, on the flip side, they leave borrowers vulnerable to sudden spikes in interest rates, which can greatly increase their repayments.
Variable mortgages are relatively flexible, permitting the borrower to make larger payments or terminate the mortgage without penalties. These kinds of mortgages are often combined with other, fixed-rate mortgages.
How to get a mortgage in Germany: Key steps
Getting a mortgage in Germany can seem complicated. To simplify the process, our 10-step guide walks you through all the basics.
1. Check what you can afford
Your first port of call when buying a house in Germany is a mortgage advisor or other lender. Make an appointment to go through your personal and financial information, in order to get an idea of whether you will qualify for a mortgage and, if so, how much you can afford.
2. Get pre-approval
If you’re satisfied you meet the basic requirements, it is worth submitting an application for pre-approval. This key step means that a mortgage lender provisionally agrees to finance your property purchase. Having pre-approval assures the seller that you can go through with the sale, helping you to stand out at viewings.
3. Find your property
Equipped with a realistic estimate of the kinds of property you can afford, and armed with the knowledge that you will most likely be approved for a mortgage, you can begin your property search. Having an estate agent, who can alert you when new properties come up for sale, can give you a competitive edge.
4. Make an offer and pay the reservation fee
Once you have found your dream home, it’s time to make an offer. It is quite common for buyers to secure properties with reservation fees (0,5 - 1% of the property price and usually refundable). This will hold the property for two to four weeks, while you finalise your mortgage.
5. Finalise your mortgage
If you didn’t already seek pre-approval, next you will need to submit your application to your mortgage provider, along with all the necessary personal and property documents. Your application will be processed by the bank, and you will receive a response within three to 10 working days.
For your application, you will need to prepare quite a few documents, often going back several years, that prove that you meet the requirements. 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
6. Draft & sign a purchase contract
At this point, either you or the seller selects a public notary to draft a purchase contract. Once it is drafted, you need to meet with the seller and the notary to sign. At this formal appointment, the notary will read the entire purchase contract out loud, allowing for last-minute revisions and questions. If you cannot speak German, you may need an interpreter.
7. Pay closing costs
After you have signed the notarised purchase contract, you need to pay the closing costs from your own equity, including fees for the notary and real estate agent.
8. Pay purchase price to the seller
Several weeks later, the notary will request that you pay the full purchase price to the seller. This includes any down payment from your own equity, with the remaining amount transferred directly to the seller by your mortgage lender. You will be asked to fill out a purchase order form to authorise the payment.
9. Pay property transfer tax
Around six to 10 weeks after signing the purchase contract, you will receive a bill from your local tax office requesting payment of the property transfer tax (Grunderwerbsteuer). Once you have paid this, the notary will instruct the land registry to transfer the property ownership to you, making you the legal owner.
10. Move in
With all steps complete, you are free to collect the keys, arrange your move, set up your utilities, take out home insurance, and enjoy your new home!