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PROPERTY

Can you get a mortgage in Germany without permanent residency?

For most people a mortgage is needed to buy a house, and in Germany they are available for both citizens and foreigners who meet a few requirements. Here's what you need to secure one.

Published: 22 February 2024 15:12 CET
House sold sign
A red "for sale" sign is pasted over with the words "sold". Photo: picture alliance/dpa | Soeren Stache

There are no general restrictions that would prevent foreigners from buying properties in Germany.

So if you’re thinking about buying a house in the Bundesrepublik, you are free to apply for a mortgage to make it happen. But you will need to make sure that you have a few boxes checked.

Generally mortgage requirements include: having the legal right to reside in Germany and being currently employed in the country. (Your employer or your business, if you are self-employed, also needs to pay taxes in Germany.) 

Finally you need to be able to cover the closing costs of the purchase with your own money. These costs can be expected to equate roughly 15 percent of the purchase price.

EU nationals generally enjoy similar treatment to German citizens, in terms of borrowing limits on their mortgages, which can be as high as 100 percent of the property value. However some lenders might ask for a larger deposit upfront when dealing with non-German citizens.

Can temporary residence visa holders still apply for a mortgage?

As long as you have a temporary residence permit, you may be eligible for a mortgage in Germany. But you will likely need to show that you are steadily employed and earning a reasonable income.

This means that your residency permit must be one that allows you to work in Germany.

In most cases, minimum mortgage requirements include being employed by a Germany company for at least the past three months – and out of your probation period. The typical Probezeit in Germany lasts six months.

Additionally your monthly salary probably needs to be above €1,500, or more depending on the price of the property you intend to get a loan for.

If you are self-employed, you may face additional challenges, as entrepreneurs tend to be seen as risky investments. That said, you can strengthen your application by providing proof of sufficient income over time (the longer the better).

How can you improve your chances of getting a mortgage?

It’s worth noting that temporary residents are generally considered to be higher risk applicants than German nationals or even permanent residents. So fewer banks are willing to sign-off on mortgages for temporary residents, and they may demand bigger deposits.

READ ALSO: EXPLAINED – How German citizenship differs from permanent residency

Your chances of being approved for a mortgage will likely be improved if you obtain a permanent residence visa.

A mortgage application will require the following documents:

  • An official ID, like your passport
  • Copy of your residence permit
  • Your registration certificate (Anmeldebescheinigung)
  • Proof of German pension scheme, or your social security ID
  • Proof of available equity
  • Documents regarding the property such as its land registry extract, property assessment, and floor plan

Additionally temporary residents will likely need:

  • Salary slips from the last three months
  • A salary statement from the previous year (Lohnsteuerbescheinigung)

For more housing and mortgage information, visit The Local’s property page.

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PROPERTY

Is it a good time to buy a home in Germany?

The housing market in Germany has been turbulent over the last few years for both buyers and sellers. We take a closer look to explore whether it's a good time to buy a home and what the outlook is.

Published: 14 May 2024 11:45 CEST
Is it a good time to buy a home in Germany?

There have been signs that the property market in Germany is beginning to see a turnaround after two years of falling prices. 

But different studies show the situation remains unpredictable. 

For instance, a recent study by real estate platform ImmoScout24 found that falling interest rates are sparking a desire to buy properties once again which is fuelling the demand. 

The real estate platform found that asking prices were showing signs of increases, particularly in large German cities. 

READ ALSO: Why property prices in Germany are likely to rise this year

“We therefore assume that purchase prices will rise in future,” said ImmoScout24 Managing Director Gesa Crockford.

In contrast, Bausparkasse Schwäbisch-Hall predicts that property prices in Germany will slow down rather than see a trend reversal. The building society estimates that house prices will fall by 1.7 percent in 2024. At the end of 2023, experts there believed the decline would be nearer 2.8 percent. 

So what should you do if you’re considering buying a home? We look at the different analysis out there to help you make an informed decision. 

Why could property prices in Germany fall?

When property portals report rising house prices in their online ads, these are usually asking prices that still have to go through the buying process. Flats may end up being sold for less than they were initially advertised online – or not at all if buyers and sellers cannot reach an agreement.

Commerzbank’s assessment is that, as in the previous year, there are major differences between the price expectations of buyers and sellers. Sellers are still unwilling to accept large discounts and, if in doubt, prefer to wait longer until the market has recovered.

Buyers, meanwhile, are realising that offers are still very expensive. According to the bank, many people are unable to finance a property purchase with the current interest rates in Germany. And expectations that the European Central Bank (ECB) would cut interest rates quickly and sharply have not been fulfilled. 

It means that the number of transactions on the housing market that are actually taking place is still significantly lower than before the rise in interest rates in 2022. According to Commerzbank, this indicates that Germany’s property market could continue to decline.

Why might property prices in Germany rise?

Looking at the other side of the coin, there are certainly lots of experts saying that homes in Germany are already being sold at higher prices again – including in Munich where prices had previously fallen sharply.

Along with the likes of ImmoScout, nationwide real estate firm McMakler has also reported those price changes. The increase in property loans also suggests that there is a stabilisation of the market and an end to the low demand.

Flats in Hamburg.

Flats in Hamburg. Photo: picture alliance/dpa | Daniel Bockwoldt

This is because interest rates no longer act as a deterrent as they did a few months ago. Even in the run-up to the ECB’s expected interest rate decisions, refinancing on the capital market has become more favourable: instead of four percent as they were at their peak, interest rates on property loans are more likely to be back at three percent.

READ ALSO: What you need to know about buying property in Germany

Is there a difference when buying a new-build or an older property?

As a rule, new-build houses or flats directly from a property developer are unlikely to be any cheaper at the moment – especially because of the high construction costs.

Experts say, however, that there may be some solid price reductions on existing flats and older buildings, especially for flats with an outdated energy standard and a need for renovation.

One thing to keep in mind, though, is that banks are often asking for risk premiums for homes that are likely to need refurbishments due to the ‘heating law’ and CO2 taxation. If interest rates of six percent instead of three percent have to be paid an older home, buyers can only benefit from the price drop to a limited extent.

Furthermore, it is unclear which renovations the German government will give subsidies for in future as part of EU legislation aimed at climate-neutral construction.

So is it a good time to buy a home in Germany?

Until a few weeks ago, most property experts agreed that there would be a recovery over the course of 2024 and that house prices would not fall any further. It is now considered possible that the low point has not yet been reached. The price slide could continue despite the expected interest rate cuts by the ECB this summer.

But things still remain unclear. Estate agents have reportedly been urging people interested in buying a home to hurry due to possible price hikes in view of rising rents and the high demand for housing in urban centres. However, the buyer’s market, in which potential buyers take their time and negotiate prices downwards, could continue. In some cases, new-build flats are virtually impossible to get off the market. 

READ ALSO: The hidden costs of buying a house in Germany

It’s worth noting that the Kiel Institute for the World Economy (IfW) doesn’t yet indicate that the market in Germany has reached a stabilisation of prices. 

There are stronger fluctuations than in normal times, which buyers may be able to utilise in individual cases, experts say. The main reason for these outliers is that the number of transactions is low and therefore less data is available than usual.

Overall, though, buying a home is a personal decision and depends on many factors, including your financial situation, needs and the area you live which will have its own property market trends. 

The IfW also handily publishes the Greix (German Real Estate Index), where people can check for themselves what they might expect to pay for a home in their region. The data is collected on the basis of actual, notarised sales prices so it’s worth looking into while you’re doing your research. 

It may also be a good idea to chat to a professional real estate expert in your area when deciding on whether to buy a home. 

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