Buying property in Germany: costs, mortgages and the process

Can foreigners buy property in Germany?

Yes, and this is the part that surprises people who have looked at Denmark, Switzerland or Austria: Germany places no nationality restriction on property ownership. You do not need German citizenship, EU citizenship, permanent residency, or even to live in Germany. A tourist can buy a Berlin apartment. Your name goes in the Grundbuch like anyone else's.

Two corrections to the myths that follow from that:

• Buying does not give you any right to stay. There is no German "golden visa". A property purchase is irrelevant to your residence permit, and owning a house will not keep you in the country when a permit expires. Residence runs on its own track (Permanent residency (Niederlassungserlaubnis)).
• The gate is not the law, it is the mortgage. Anyone may buy; not everyone can borrow. If you are paying cash, your nationality genuinely does not matter. If you need a German bank to lend you €400,000, their internal risk rules matter enormously.

What banks actually look at (this is lending policy, not law, and it varies between banks - which is precisely why comparing matters):

• Residence status. A Niederlassungserlaubnis or a long-dated permit makes you a straightforward case. A permit with two years left on it does not automatically block a 30-year loan, but it narrows how many banks will quote and can cost you equity or rate.
• Employment. A permanent German contract past the Probezeit is the gold standard. Fixed-term contracts, freelancers and anyone in their first six months at a job get looked at harder (Freelancing in Germany covers the self-employed documentation load).
• Equity. Non-EU buyers are commonly asked for more than the standard 20%, and some banks will not go above 60-70% of the property value for a borrower without settled status.
• A German bank account and a German income. Salary paid abroad into a foreign account complicates every application (Opening a German bank account as an expat).
• Your Schufa file. No file at all is a real handicap here, because a mortgage is exactly where a lender wants years of payment history. This is the argument for arriving, banking normally for two or three years, and buying after.

What buying actually costs on top of the price

German Kaufnebenkosten are high by international standards, they are almost entirely the buyer's problem, and banks will not finance them. They come out of your own cash, on top of any deposit. This is the single most common budgeting mistake expats make here.

The agent's fee is capped by law now, and that is newer than most advice online. Since 23 December 2020, §656c BGB means that when a flat or single-family house is sold to a consumer, a buyer can only be made to pay commission if the seller pays at least as much. In practice that produced a market standard of 3.57% including 19% VAT from each side (7.14% total). The rate itself is not fixed by law and is negotiable, and plenty of listings are sold provisionsfrei with no agent at all.

Two worked examples on a €400,000 property, to show how wide the spread is:

• München (Bayern), no agent: Grunderwerbsteuer €14,000 + Notar and Grundbuch €8,000 = €22,000, or 5.5%.
• Köln (NRW), with an agent: Grunderwerbsteuer €26,000 + Notar and Grundbuch €8,000 + Maklerprovision €14,280 = €48,280, or 12.1%.

Same price, €26,000 difference in cash needed on the day. That gap is why the state table below is worth reading before you decide where to look.

Grunderwerbsteuer: all 16 rates

Grunderwerbsteuer is a Länder tax, so the rate depends entirely on where the property sits, not where you live. Rates as of July 2026:

Three things worth knowing about this table:

• It moves, and stale versions are everywhere. Bremen went from 5.0% to 5.5% on 1 July 2025. Sachsen and Hamburg both jumped on 1 January 2023 (Sachsen from 3.5%, Hamburg from 4.5%). Thüringen went the other way, cutting from 6.5% to 5.0% on 1 January 2024. Plenty of blog tables still show the old numbers, so check the date on anything you read.
• The date that counts is the notarised contract, not completion or your move-in.
• Moveable items can legitimately reduce it. A fitted kitchen, wardrobes, garden equipment or a sauna listed separately in the contract at a realistic value are not part of the taxable property price. The Finanzamt accepts this within reason and challenges obviously inflated figures; agreeing a plausible split with the seller is standard practice, and worth several thousand euros on a normal purchase.

How much cash you actually need

Two separate pots, and conflating them is how people end up short at the Notartermin:

1. The Kaufnebenkosten, in full, from your own money. No German bank finances the tax and fees.
2. The Eigenkapital, the equity share of the price itself. 20% is the norm that gets you sensible rates. Less is possible and more is cheaper.

The technical term to know is Beleihungsauslauf - the loan as a percentage of the bank's own valuation of the property (which is often below the price you agreed). It is the main driver of your rate after your general creditworthiness. Push it down and the rate falls; push it above 80% and pricing worsens noticeably.

Vollfinanzierung (100% of the price, Nebenkosten still in cash) and 110% financing (everything, including the fees) both exist and are advertised heavily. They carry materially higher rates, need excellent income and a very good Schufa record, and leave you with negative equity for years if prices dip. Treat them as an expensive last resort rather than a shortcut, and note that a broker's job is to tell you honestly whether you fall into the narrow group they suit.

On a €400,000 property in NRW with an agent, the realistic cash requirement at 20% equity is €48,280 in fees plus €80,000 in deposit, so €128,280. That number is the real answer to "when can I buy in Germany", and for most arrivals it is several years away.

German mortgages decoded

German mortgage products are conservative, standardised and genuinely different from the US or UK equivalents. Almost everything is an Annuitätendarlehen: a fixed monthly payment (Rate) split between interest and principal, where the interest share falls and the principal share rises over time.

The Zinsbindung is the concept to internalise. A 10-year Zinsbindung on a 30-year loan does not mean the loan ends in 10 years. It means that in year 11 you refinance the Restschuld at unknown rates. Choosing a longer Zinsbindung buys certainty and costs a little rate: in July 2026, 10-year fixes were running roughly 0.2-0.3 percentage points cheaper than 15-year.

And the exit right nobody mentions: under §489 BGB, you can terminate any mortgage 10 years after full disbursement with six months' notice and pay no Vorfälligkeitsentschädigung (early-repayment penalty). This right cannot be contracted away, and it does not expire - it is equally available in year 12 or 15. It effectively caps the downside of a 20- or 30-year fix: if rates fall sharply, you get out at year 10 regardless. Anyone comparing a 10-year against a 20-year fix should be pricing that in.

What rates look like, and what moves yours

In July 2026, a 10-year Zinsbindung was pricing at roughly 3.4% to 4.0% effektiver Jahreszins, with the best offers around 3.4-3.5% for buyers with substantial equity and strong creditworthiness, and a market average near 3.7%. Rates move weekly, so treat that as an anchor, not a quote.

What actually moves your personal number:

• Beleihungsauslauf. The biggest lever. The steps at 60% and 80% of valuation are where pricing visibly changes.
• Zinsbindung length. Longer costs more.
• Your Schufa score and file depth. A thin file is a genuine penalty on a mortgage.
• Employment type. Permanent and past probation beats fixed-term beats self-employed, and self-employed applicants are typically asked for two to three years of accounts.
• Residence status, as covered above.
• Which bank you ask. The spread between lenders on an identical case routinely exceeds every optimisation you could make yourself, which is the entire economic argument for using a broker rather than walking into your own Sparkasse.

One procedural detail that saves real money: when rate-shopping, insist that a bank runs a Konditionsanfrage (request for terms) rather than a Kreditanfrage (firm credit application). The first is Schufa-neutral; the second is recorded, and a cluster of them in a short window looks like distress and can nudge your score down.

The nine steps from viewing to keys

1. Get a Finanzierungsbestätigung first. A written financing confirmation from a bank or broker, before you view seriously. In competitive cities, sellers and agents ask for it, and without one you are not a real bidder.
2. View, and read the documents. For an apartment: Teilungserklärung, the last three years of Eigentümerversammlung minutes, the current Wirtschaftsplan, and the balance of the Instandhaltungsrücklage. For a house: Grundbuchauszug, Baulastenverzeichnis, Energieausweis. The seller must present the Energieausweis at the viewing at the latest.
3. Agree a price, and agree the split of moveable items (see the Grunderwerbsteuer section).
4. Notar is chosen, usually by the buyer, and drafts the Kaufvertrag. A German property purchase is void unless notarised, so this is not optional paperwork.
5. The two-week rule. Under §17 Abs. 2a BeurkG, a consumer must normally have the draft contract two weeks before notarisation. The Bundesgerichtshof has confirmed this is the Notar's duty and not something the parties can simply waive because everyone is in a hurry. Use the fortnight. If anyone pressures you to sign early, that is your signal to slow down, not speed up.
6. The Notartermin. The Notar reads the entire contract aloud in German. If your German is not genuinely fluent, you have a legal right to a sworn interpreter, and the contract can be notarised with a certified translation. Arrange this in advance; do not improvise it on the day.
7. The Notar registers the Auflassungsvormerkung (a priority notice reserving the transfer for you) and your lender's Grundschuld. This typically takes about two to three weeks.
8. Fälligkeitsmitteilung and payment. Only once the Vormerkung is in place and the property's existing charges are cleared does the Notar notify you that the price is due. Typically four to six weeks after the Notartermin. You pay, and keys are handed over on the agreed date.
9. Tax, then title. The Finanzamt bills the Grunderwerbsteuer; you pay; they issue the Unbedenklichkeitsbescheinigung (clearance certificate). Only then is the Eigentumsumschreibung entered and you are formally the owner in the Grundbuch. This last step can take months, which is normal and does not affect your possession of the property.

Checking the price, and the reservation-fee trap

Germany publishes official land values, free, and almost no foreign buyer knows it. Every municipality has a Gutachterausschuss (valuation committee) which receives a copy of every property sale contract in its area under §195 BauGB and derives official Bodenrichtwerte from real transactions. That makes them a genuine market record rather than an estimate. Look yours up free through the central BORIS-D portal or your Bundesland's own BORIS site; a written official extract costs a fee, but the online lookup does not.

The Gutachterausschuss also publishes a periodic Grundstücksmarktbericht for its area, with actual achieved prices per property type and district. Between the two you can sanity-check an asking price in an afternoon, in a market where agents are under no obligation to justify one.

The reservation fee is the trap to know. Agents frequently ask for a Reservierungsgebühr of a few thousand euros to take a property off the market. The Bundesgerichtshof ruled on 20 April 2023 (I ZR 113/22) that such fees agreed in an agent's standard terms are invalid, and that this holds even where the reservation agreement is signed separately, if it is pre-formulated. The reasoning: the buyer gets no meaningful benefit and the agent owes no real consideration in return. Fees paid under such clauses are generally recoverable, and claims can reach back up to ten years. If you are asked for one, you can decline it; if you already paid one on a purchase that fell through, it is worth reclaiming.

Buying a new build is a different transaction. A Bauträgervertrag (developer contract) is not a normal purchase: you pay in stages as construction progresses, under the Makler- und Bauträgerverordnung, and your mortgage is drawn down in matching tranches. That is where Bereitstellungszinsen bite, since the bank charges for committed-but-undrawn money. Completion dates slip, and the KfW 300 programme above only applies to this route. Everything else on this page still holds, but budget for a longer, staged process.

One product you will be offered and should understand: a Bausparvertrag combines a savings phase at a low fixed rate with a right to a loan at a pre-agreed rate later. It is a rate-hedging instrument for a purchase several years out, not a way to buy sooner, and its value depends entirely on where rates go. Compare it against simply saving the deposit before signing anything.

Buying an apartment: the WEG rules that catch people out

Buy an Eigentumswohnung and you are not just buying a flat, you are joining a Wohnungseigentümergemeinschaft (WEG) - a legal community of owners that votes on the building and can bill you for its decisions.

• Hausgeld is your monthly payment to the WEG: building running costs, management, and the reserve. It is not the same as a tenant's Nebenkosten. Crucially, the Verwaltungskosten and the Instandhaltungsrücklage are not umlagefähig, so if you ever let the flat out, those parts stay yours and cannot be passed to a tenant (Kaltmiete, Warmmiete and the Nebenkosten settlement explains the tenant-side split).
• The Instandhaltungsrücklage is the community's savings pot for repairs. Check its balance before you buy. A large 1970s building with a thin reserve and an unrenovated facade is a Sonderumlage waiting to happen.
• A Sonderumlage is a one-off levy when the reserve does not cover an agreed measure - a new roof, a facade, a heating system. It is decided by owner vote and you pay your share whether or not you voted for it. Five-figure bills are entirely normal.
• Read the last three years of Eigentümerversammlung minutes. This is the highest-value hour in the whole process. Deferred repairs, ongoing disputes, planned works and a dysfunctional Verwaltung all show up there, and none of it appears in the listing.
• The Teilungserklärung defines what is yours (Sondereigentum) versus communal (Gemeinschaftseigentum), and contains any restrictions - short-term letting, pets, commercial use.

Old buildings, and the heating rules that changed in July 2026

The heating law was rewritten days ago, and almost everything written about it online is now out of date. The Gebäudemodernisierungsgesetz was passed by the Bundestag on 10 July 2026, cleared the Bundesrat, was published in the Bundesgesetzblatt on 28 July 2026, and its main provisions apply from 29 July 2026. It replaces the previous regime, and the headline change is that the requirement for 65% renewable energy in new and existing buildings is gone. Oil and gas heating remains legal to run and to install. From 2029 a rising share of biogenic fuel must be blended in (the "Biotreppe"), and heating fuels must be climate-neutral by 2045. New funding conditions applied from 21 July 2026.

For a buyer this removes what was the scariest line item on any 1980s house, but it does not remove the economics: an old oil boiler is still expensive to run, and a Sanierungsstau is still priced into what you should pay. Check the current position before you commit rather than trusting a blog post, including this one, given how recently it moved (the federal government's own summary is the primary source).

Other things that specifically bite on older German properties:

• Erbbaurecht (leasehold). Some listings are startlingly cheap because you buy the building but lease the land, paying an annual Erbbauzins for a term of typically 60-99 years. Financing is harder and resale is narrower. It is not a trap if you understand it, but it is a trap if you do not notice it.
• Denkmalschutz. Listed status brings tax advantages on renovation but also means the authority approves your windows, and your budget is not your own.
• Baulasten. Obligations registered with the building authority, not the Grundbuch, so a Grundbuchauszug will not reveal them. Ask for a Baulastenverzeichnis extract separately.
• Grundbuch Abteilung II and III. Section II holds rights of way, Wohnrecht and Nießbrauch (someone may have a lifetime right to live there); section III holds the charges. Read both, and have the Notar explain anything you do not understand.

What it costs to own, every year after

Note that Hausrat (Hausrat) covers your possessions and is a different policy from the buildings cover your lender demands. Owners generally need both.

The tax picture (and the deduction that does not exist)

If you live in it: you cannot deduct your mortgage interest. Under §12 EStG an owner-occupied home is private living expenditure, so Schuldzinsen are not deductible (the narrow exception being a qualifying häusliches Arbeitszimmer). Americans in particular should register this early, because it removes an assumption the entire US home-buying calculation rests on.

If you rent it out: the position reverses completely. Interest becomes fully deductible as Werbungskosten against rental income, alongside depreciation and running costs. This asymmetry is a genuine feature of German tax planning (The German tax return covers the filing side, and Investing as an expat in Germany the comparison against simply buying ETFs).

When you sell: §23 EStG sets a ten-year Spekulationsfrist. Sell within ten years of buying and the gain is taxable at your income-tax rate; sell after, and it is entirely tax-free. Both dates are the notarised contract dates. The big exception: no tax if you used the property yourself in the year of sale and the two preceding calendar years - and because these need not be full calendar years, roughly one year and two days of continuous own use can be enough. Anyone selling near the boundary should take advice on the exact dates rather than counting themselves.

Subsidies: KfW, and why it probably will not help you

The main federal programme for buyers is KfW 300, "Wohneigentum für Familien" - a low-interest loan, not a grant. The conditions are narrow:

• At least one child under 18 in the household, and you must occupy the property yourself.
• You may own no other residential property in Germany.
• Taxable income (zu versteuerndes Einkommen, averaged over the last two years, not gross salary) capped at €90,000 with one child, €100,000 with two, €110,000 with three, and €10,000 more per additional child.
• Loan amounts run from €170,000 (one to two children, standard tier) to €270,000 (five or more children, with the QNG sustainability certificate).
• New build only. This is the condition that disqualifies most expat buyers, who overwhelmingly buy existing property.

Beyond KfW, individual Bundesländer and some municipalities run their own Familienbaudarlehen or Grunderwerbsteuer rebate schemes, and these change often. Check your specific Land, because national guides consistently miss them.

Should you buy at all?

Germany has one of the lowest home-ownership rates in Europe, and that is a rational response to how the system is built, not a national failure of ambition:

• Transaction costs are brutal and front-loaded. Paying 10% to enter means a purchase needs years of ownership just to break even against renting. Buying something you might leave in four years is usually a losing trade here.
• Tenants are genuinely well protected. Indefinite contracts, strong protection against termination, and rent-increase limits mean renting does not carry the insecurity it does in less regulated markets (The German rental contract, The Mietpreisbremse).
• No mortgage-interest deduction, as above, removes a subsidy owners in several other countries take for granted.
• The counter-argument is real too: a fixed mortgage payment plus eventual freehold beats open-ended rent inflation over decades, and the §489 BGB exit right limits your rate risk.

The honest summary: buying in Germany rewards people who are staying, have settled residence status, hold substantial cash beyond the deposit, and intend to keep the property for a decade or more. If that describes you, the numbers work well. If any one of those is missing, renting is not a compromise here - it is frequently the better decision (Long-term integration frames where this fits in a years-2-to-5 plan).

Frequently asked questions