Thinking about buying property in Germany? Whether you just moved here on a Blue Card or you have been renting in Munich for five years, getting a mortgage (German: Baufinanzierung) is one of the biggest financial decisions you will make. This guide covers how mortgage rates are set, real closing costs, what banks expect from expats, and how to compare loan offers.
How Mortgage Rates Work in Germany
The zero-interest era is over. There is no single rate for everyone: your individual rate depends on your credit score (Schufa, Bonität), your equity and loan-to-value, the loan amount and the fixed interest period you choose. The European Central Bank cut its key rates through 2024 and 2025, but mortgage rates track long-dated Bund yields rather than the policy rate directly.
If you bring less equity, expect a higher rate.
Compare mortgage offers
Rates change daily. Compare offers from multiple banks and brokers for free. A rate inquiry (Konditionsanfrage) is Schufa-neutral and costs nothing.
Closing Costs by State (Kaufnebenkosten)
On top of the purchase price, you will pay closing costs that vary significantly depending on the federal state. The biggest variable is the property transfer tax (Grunderwerbsteuer). Bavaria charges the lowest rate at 3.5%, while NRW, Brandenburg, and Schleswig-Holstein charge 6.5%.
Property Transfer Tax: All 16 Federal States
| Federal State | Transfer Tax | Total Costs* |
|---|---|---|
| Bayern | 3.5% | 8.0 - 10.5% |
| Baden-Wuerttemberg | 5.0% | 9.5 - 12.0% |
| Niedersachsen | 5.0% | 9.5 - 12.0% |
| Rheinland-Pfalz | 5.0% | 9.5 - 12.0% |
| Sachsen-Anhalt | 5.0% | 9.5 - 12.0% |
| Thüringen | 5.0% | 9.5 - 12.0% |
| Bremen | 5.5% | 10.0 - 12.5% |
| Hamburg | 5.5% | 10.0 - 12.5% |
| Sachsen | 5.5% | 10.0 - 12.5% |
| Berlin | 6.0% | 10.5 - 13.0% |
| Hessen | 6.0% | 10.5 - 13.0% |
| Mecklenburg-Vorpommern | 6.0% | 10.5 - 13.0% |
| NRW | 6.5% | 11.0 - 13.5% |
| Brandenburg | 6.5% | 11.0 - 13.5% |
| Saarland | 6.5% | 11.0 - 13.5% |
| Schleswig-Holstein | 6.5% | 11.0 - 13.5% |
*Total includes Grunderwerbsteuer + notary/land registry (~1.5-2%) + buyer's agent share (~3.57%). Thüringen reduced from 6.5% to 5.0% on 01.01.2024. Bremen raised from 5.0% to 5.5% on 01.07.2025. Source: finanz-tools.de, Haufe, immoverkauf24.de.
Practical Example: EUR 400,000 property in NRW
- Property transfer tax (6.5%): EUR 26,000
- Notary and land registry (~1.7%): EUR 6,800
- Agent commission (buyer share, 3.57%): EUR 14,280
- Total closing costs: approx. EUR 47,080 (11.8%)
These costs must be paid from your own funds. Banks generally do not finance closing costs.
Mortgage Requirements for Expats
Good news: you don't need German citizenship to get a mortgage. Banks care about your financial stability, not your passport. That said, expats face a few extra hurdles compared to German-born applicants. Here is what you typically need:
1. Residence Permit (Aufenthaltstitel)
EU citizens qualify automatically. Non-EU residents need a Niederlassungserlaubnis (permanent), Blue Card, or a limited Aufenthaltserlaubnis with at least 2 years remaining. Banks want assurance you will stay in Germany.
2. Employment Contract (Arbeitsvertrag)
An unlimited contract (unbefristet) is ideal. Some banks accept limited contracts if your employer is well-known and your field has strong demand. Self-employed expats need at least 3 years of tax returns.
3. Equity (Eigenkapital)
20-30% of the purchase price plus closing costs from your own funds. Equity from your home country is accepted if documented with bank statements. More equity means better rates.
4. Schufa Record
Banks check your German credit record. If you are new to Germany and have no Schufa history, this can be a challenge. Start building your score early. Read our Schufa score guide for practical steps.
Schufa tip: Rate inquiries (Konditionsanfragen) do not affect your score, so compare freely. Only binding credit applications (Kreditanfragen) are recorded. For a deeper understanding of how the Schufa system works, check our Schufa reform 2026 guide.
Step-by-Step: How to Get a Mortgage in Germany
Check Your Finances and Build Equity
Before you start browsing property listings, figure out what you can actually afford. A common rule: your monthly mortgage payment should not exceed 35% of your net household income. Save for a down payment of at least 20% plus closing costs.
Expat tip: Equity from your home country is accepted. Document the source carefully with recent bank statements showing the transfer history.
Choose Your Fixed Interest Period (Zinsbindung)
This is one of the most important decisions. A longer fixed period costs slightly more per month but protects you from future rate increases. At current levels, a 15 to 20 year fix offers the best balance between security and flexibility.
- 15-20 years: solid protection against rising rates
- After 10 years: legal right to cancel with 6 months notice (Section 489 BGB), regardless of your fixed period
Get 3-5 Quotes and Compare
Never accept the first offer. Get quotes from your own bank, at least one online broker, and one regional bank. You can compare mortgage offers for free through our partner tools, or start with a general loan comparison to see what rates are available for your profile.
Good to know: Rate inquiries (Konditionsanfragen) are Schufa-neutral. Compare as many offers as you like without worrying about your credit score.
Check KfW Funding Programs
The KfW Bank (Germany's state development bank) offers subsidized loans with rates well below market level. You can combine these with your regular mortgage. The catch: you must apply before signing the purchase contract or starting construction.
- KfW 124: general homeownership loan, up to EUR 100,000 (doubled from EUR 50,000 as of 02.03.2026)
- KfW 297/298: climate-friendly new construction, up to EUR 100,000 per unit (rate set on day of commitment)
- KfW 300: families with children building new (up to EUR 270,000)
- KfW 261: energy-efficient renovation, up to EUR 150,000 per unit (up to 45% Tilgungszuschuss)
- KfW 308: "Jung kauft Alt" for families buying existing homes (up to EUR 150,000)
KfW effective rates are set on the day of commitment and depend on capital markets. You always apply through your own bank (Hausbank), not directly at KfW. Current terms are on kfw.de.
For full details on all KfW programs, see our KfW loans 2026 guide.
Gather Your Documents and Apply
German banks need a substantial set of documents. Having these ready speeds up the process significantly.
Personal Documents
- ID/passport + residence permit
- Last 3 salary statements
- Employment contract
- Last 2 tax returns (if available)
- Bank statements (3 months)
- Existing loan/credit details
Property Documents
- Purchase price offer / Exposee
- Floor plan (Grundriss)
- Energy certificate (Energieausweis)
- Land register excerpt (Grundbuchauszug)
- Site plan (Lageplan)
- Photos of the property
Refinancing After the Fixed Period (Anschlussfinanzierung)
Most mortgages in Germany use a fixed rate for 10-20 years, but the loan term is often 25-30 years. When your fixed period ends, you still owe money. You have three options for this follow-up financing:
Prolongation (staying with your bank)
Simplest option. Your bank offers you a new rate for the remaining balance. Convenient, but often not the cheapest.
Umschuldung (switching banks)
Move your remaining balance to another bank with better conditions. Costs a small fee for the new Grundschuld registration, but can be worth it.
Forward-Darlehen (locking in rates early)
Lock in today's rates up to 5 years before your current fixed period ends. You pay a surcharge on the rate for each month of lead time, but if rates rise, you are protected.
Section 489 BGB: After exactly 10 years from full disbursement, you have a legal right to cancel your mortgage with 6 months notice, regardless of the agreed fixed period. No penalty. This applies even to 20-year or 30-year fixed rate agreements. This is one of the strongest borrower protections in Europe.
Buying Property in 2026: Pros and Cons
What speaks for buying
- KfW funding can lower your overall financing costs
- Property prices stabilizing after 2022-2023 correction
- 10-year cancellation right limits your risk (Section 489 BGB)
What speaks against buying
- Monthly payments are higher than in the low-rate years up to 2021
- Closing costs of 8-15% cannot be financed; you need cash
- Energy renovation obligations on older properties (GEG/GMG rules)
- Expats without Schufa history may face higher rates or rejection
5 Expert Tips for 2026
Negotiate Sondertilgung (extra repayment rights)
Insist on at least 5% annual extra repayment without penalty. If you get a bonus or inheritance, you can pay down your mortgage faster.
Set Tilgung (principal repayment) to at least 2-3%
Higher initial repayment means less interest over the full term.
Combine your mortgage with KfW funding
KfW 297/298 offers subsidized loans for energy-efficient new construction. The KfW rate is set on the day of commitment, so compare it with your bank offer before you decide.
Check the energy certificate before buying
Under the new GEG/GMG rules, buyers of older properties may face mandatory renovation within 2 years. Heating systems older than 30 years often need replacement. Factor renovation costs into your budget.
Negotiate Bereitstellungszinsen (commitment fees)
For new construction, the bank charges interest on undisbursed portions. Negotiate an interest-free commitment period of 12-18 months to avoid unnecessary costs during the building phase.
Related Guides
Frequently Asked Questions
Sources
- Kaufnebenkosten: finanz-tools.de (all 16 states), Haufe (Bremen/Thueringen changes), immoverkauf24.de.
- Notary fees: drklein.de/notarkosten-hauskauf.html. Fee increase per KostBRAeG 2025.
- ECB rates: European Central Bank, Monetary Policy Statement December 2025.
- KfW programs: kfw.de (124, 261, 297/298, 300, 308), baufi24.de/foerderung/. KfW 124 limit doubled to EUR 100,000 from 02.03.2026.
- Legal: Section 489 BGB (special cancellation right). GEG/GMG framework (February 2026).