Expat Guide: Income & Savings Needed to Buy a House in Germany

The short answer: the 35% rule

There is no law stopping you: foreigners can buy property in Germany regardless of nationality or visa. The real gatekeeper is the bank's budget calculation, the Haushaltsrechnung. Its core rule, confirmed by consumer advice centres across Germany, is simple: your monthly mortgage payment — interest plus repayment — should not exceed 30–35% of your household net income. At 35% you are at the standard limit; at 40% a bank may still say yes, but with no buffer left for real life.

*At 4.3% interest plus 2% initial repayment (an annuity of 6.3% of the loan per year), roughly the terms well-qualified buyers get in October 2026, when top 10-year fixed rates run at about 4.0–4.5%. The price column assumes the bank lends 80% and you fund the rest — plus all side costs — in cash.

Run these examples backwards and a familiar rule of thumb appears: approved purchase prices land at roughly 4–5 times the household's gross annual income. That is not a bank law — it is simply where the 35% maths ends up at today's rates. And income is only half of the test. The other half is cash, as sections 3 and 4 show.

How the bank does the maths

In the Haushaltsrechnung the bank starts from your proven net income, then subtracts flat living-cost allowances (Lebenshaltungspauschalen) for each household member, your existing commitments — car finance, other loans, maintenance payments — and a safety margin. The mortgage payment has to fit into what remains. This is why the cap sits near 35% of net rather than at "whatever is left at the end of your month": the bank prices in the costs of owning, not just the loan.

What counts as income matters as much as how much you earn. Salary from a permanent contract counts in full once you have passed probation, evidenced by several months of German payslips. Rental income is counted only at a discount. Bonuses and commission are typically averaged over two to three years or heavily discounted, and a one-off payment is ignored. Income from a fixed-term contract or from a job still in its probation period is often discounted or left out entirely — the same salary can produce two different verdicts depending on the contract behind it.

The bank will also pull your SCHUFA report. A thin file is normal for newcomers, but negative entries are a hard problem; if you have never checked yours, you can estimate the score a lender would see with our SCHUFA simulator before you apply.

The worked example: €4,000 net, a €322,500 home, €103,000 cash

Here is the full calculation for a household taking home €4,000 a month, following a real lender example step by step:

1. Payment ceiling: 35% of €4,000 net = a maximum payment of €1,400 per month.
2. Loan size: at 4.51% interest plus 2% initial repayment, that €1,400 a month carries a loan of ≈ €258,000.
3. Purchase price: if the bank lends 80% of the price, a €258,000 loan corresponds to a purchase price of ≈ €322,500.
4. Cash needed: €64,500 of equity (the 20% the bank does not lend) plus ≈ €38,700 of purchase side costs (12% of the price) = ≈ €103,000 in savings.

The lesson surprises most first-time buyers: a €4,000 net income "supports" a €322,500 home on paper — but the purchase only happens if roughly €103,000 of cash exists. For most expats, accumulating the cash, not earning the income, is the longer project. A household on €3,000 net runs the same maths to a loan of roughly €200,000 and a proportionally smaller cash pile.

The cash you need beyond the price: Nebenkosten and equity

On top of the purchase price, German purchases carry side costs (Nebenkosten) of roughly 10–15%, and banks expect them to come from your savings, not from the loan:

• Property transfer tax (Grunderwerbsteuer): 3.5% of the price in Bavaria and Saxony, up to 6.5% in states such as North Rhine-Westphalia and Brandenburg.
• Notary and land registry: around 1.5–2% — the notary is mandatory in Germany; no notary, no ownership.
• Estate agent (Makler): typically a 3.57% buyer share; since 2020 the buyer pays at most half of the total commission.

Equity guidance follows the same logic (and matches KfW advice): at a minimum, cover the side costs from savings; ideally, hold side costs plus 20% of the price, which also unlocks the best interest rates. Loans covering 100% of the price — even 110%, including the side costs — do exist, but typically cost 0.5–1 percentage points more interest and are harder to get approved, because the bank carries the entire risk.

And the bill does not stop at the notary's office: owners keep paying Grundsteuer (property tax), buildings insurance and, for apartments, Hausgeld and maintenance reserves. Those running costs are exactly why the 35% rule leaves a buffer instead of letting a payment consume half your income.

The expat checklist: what German banks want from foreign buyers

• Employment: a permanent (unbefristet) contract with the probation period (Probezeit) passed is the gold standard. Bring the contract and at least your last three German payslips.
• Residence status: there is no legal barrier to buying, but a secure status strengthens the file. A permanent settlement permit makes you a straightforward case, and Blue Card holders with a German track record are approved regularly too — see our guide to the permanent residence requirements. A first, short permit makes some banks cautious.
• SCHUFA and banking history: salary landing in a German account for several months and a clean SCHUFA record (see section 2). Newcomers should build a few months of clean history before applying.
• Self-employed? Expect a different bar: banks usually require two to three years of German tax assessments (Steuerbescheide) plus current business figures. That is why freshly arrived freelancers struggle even when their foreign income was high — on paper, their German income history is still zero.
• Documents to have ready: passport and residence permit, employment contract, recent payslips, bank statements proving the equity, and your SCHUFA self-disclosure.

Frequently Asked Questions

• Can foreigners buy property in Germany at all? +
  Yes — there is no legal restriction on foreigners buying property in Germany, whatever your nationality or residence status. The practical hurdle is financing, not permission: German banks lend most readily to buyers with a permanent employment contract, several months of German payslips and a secure residence status. If you buy without a mortgage, no bank approval is needed at all.
• How much deposit and cash do I really need? +
  At minimum, banks expect you to cover the purchase side costs — roughly 10–15% of the price for transfer tax, notary and estate agent — from your own savings. The solid standard is side costs plus 20% of the price as equity: for a €322,500 home that comes to about €103,000 in cash. Buying with less equity is possible, and even 100% financing exists, but it typically costs 0.5–1 percentage points more in interest and is harder to get approved.
• What net income do I need for a €400,000 home? +
  It depends on the loan size. Borrow €320,000 (80% of the price) at around 4.3% interest plus 2% repayment and the monthly payment is €1,680 — under the 35% rule that needs about €4,800 net household income, plus roughly €120,000 in cash (€80,000 equity and €40,000+ side costs). Borrowing the full €400,000 would cost about €2,100 a month and need around €6,000 net — and few banks will finance 100% of the price.
• Does my bonus or commission count as income? +
  Partly. Many banks average bonuses and commission over the last two to three years, or count them only at a discount; a one-off bonus is usually ignored completely. What the bank trusts most is your base salary from a permanent contract once the probation period is over. If a large share of your pay is variable, expect the bank to work with a lower income figure than your payslip's best month suggests.
• Can I buy on an EU Blue Card, or do I need permanent residence first? +
  You can buy on an EU Blue Card — no rule requires permanent residence first. In practice the bank looks at the whole picture: Blue Card holders with a permanent contract, passed probation and some German track record are approved regularly. A settlement permit (Niederlassungserlaubnis) simply makes the file stronger, because your right to stay in Germany is unlimited.
• Is renting and investing the difference ever the smarter move? +
  Sometimes, yes. Buying ties up 10–15% of the price in side costs that are gone for good, so if you may leave Germany within a few years, or your savings are still far short of the side costs plus equity, renting and investing the difference can work out better. Buying tends to win when you plan to stay long-term and the monthly payment fits comfortably inside the 35% rule.