Authored by the expert who managed and guided the team behind the Germany Property Pack
Everything you need to know before buying real estate is included in our Germany Property Pack
Germany maintains an open approach to foreign property buyers, though the process involves specific requirements and considerations that differ from domestic purchases.
Foreign buyers can successfully purchase property in Germany, but they typically face higher deposit requirements, stricter mortgage conditions, and must navigate strong tenant protection laws that significantly impact rental property investments.
If you want to go deeper, you can check our pack of documents related to the real estate market in Germany, based on reliable facts and data, not opinions or rumors.
Germany welcomes foreign property buyers with no ownership restrictions, but non-EU buyers typically need 20-40% deposits compared to 20% for locals.
Mortgage rates range from 3.5-4.5% annually, with foreign buyers often paying higher rates due to stricter lending criteria and residency requirements.
| Aspect | EU Citizens/Residents | Non-EU/Non-Residents |
|---|---|---|
| Minimum Deposit | 20% of property value | 20-40% of property value |
| Mortgage LTV | Up to 100% (rare cases) | 60-80% typically |
| Interest Rates | 3.5-4.0% annually | 4.0-4.5% annually |
| Property Transfer Tax | 3.5-6.5% (state dependent) | 3.5-6.5% (same rates) |
| Notary Fees | 1.5-2% of purchase price | 1.5-2% (same rates) |
| Property Restrictions | None | None |
| Purchase Timeline | 2-4 months | 2-4 months (may extend slightly) |
How easy is it for foreign buyers to open a German bank account for property payments?
Foreign buyers can open a German bank account relatively easily, though the process varies by bank and nationality.
EU citizens typically face minimal requirements, needing only a valid passport and proof of address. Non-EU nationals face stricter requirements including residency registration (Anmeldung), employment contracts, and sometimes income verification.
Most major German banks like Deutsche Bank, Commerzbank, and Sparkasse accept foreign applicants. Online account opening is possible for some banks, but many require in-person visits for non-residents. The process typically takes 1-2 weeks once all documents are submitted.
While a German bank account isn't legally required for property purchases, it's highly recommended and often necessary for mortgage applications. Property payments can be made from foreign accounts, but German banks prefer local accounts for ongoing transactions.
As of September 2025, digital banks like N26 and DKB offer streamlined processes for EU citizens, while traditional banks remain more conservative with non-EU applicants.
What are the minimum deposit requirements for foreign buyers compared to locals?
Foreign buyers typically face higher minimum deposit requirements than German residents, with amounts varying significantly based on residency status and nationality.
German residents and EU citizens can often secure mortgages with 20% down payments, though some banks offer up to 100% financing for exceptional cases with strong local ties and income proof. Non-EU or non-resident buyers typically need 20-40% deposits, with most banks requiring at least 30% for non-residents.
The exact deposit amount depends on multiple factors including credit history, income stability, property location, and the specific lender's risk assessment. Banks view non-resident buyers as higher risk, leading to more conservative lending terms.
It's something we develop in our Germany property pack.
Some private banks and specialized international lenders may offer more flexible terms, but typically at higher interest rates.
What mortgage options are available to foreign buyers and what loan-to-value ratios can they expect?
Most German banks offer mortgages to foreign buyers, but terms vary significantly based on residency and nationality status.
EU citizens with German residence can access similar mortgage products as locals, including fixed-rate mortgages (typically 10-30 year terms) and variable-rate options. They may qualify for loan-to-value ratios up to 80-100% in exceptional circumstances with strong financial profiles.
Non-EU or non-resident buyers are typically limited to 60-80% loan-to-value ratios, meaning they finance 60-80% of the purchase price through mortgages. These buyers have access to fixed-rate mortgages but face more restrictive terms and higher scrutiny during the application process.
Specialized lenders like Hypovereinsbank and Postbank offer international buyer programs, while some private banks cater specifically to wealthy foreign clients. Online mortgage brokers like Baufi24 and Dr. Klein can help compare options across multiple lenders.
Construction loans and renovation financing are also available but with even stricter requirements for foreign buyers.
What are the current mortgage interest rates for foreign buyers versus German residents?
As of September 2025, mortgage interest rates in Germany range from 3.5% to 4.5% annually for fixed-rate loans, with foreign buyers typically paying higher rates.
| Borrower Type | Typical Interest Rate | Loan Terms |
|---|---|---|
| German Residents (Strong Credit) | 3.5-4.0% annually | Up to 80-90% LTV |
| EU Citizens (Non-Resident) | 3.8-4.2% annually | Up to 70-80% LTV |
| Non-EU Citizens (Resident) | 4.0-4.3% annually | Up to 70-80% LTV |
| Non-EU Non-Residents | 4.2-4.5% annually | Up to 60-70% LTV |
| High Net Worth Foreign Buyers | 3.8-4.2% annually | Negotiable terms |
Residents with stable German income and strong credit histories qualify for the most competitive rates. Banks consider local income, employment stability, and credit history as primary factors in rate determination.
Interest rates can vary by 0.5-1% between the best and worst scenarios for foreign buyers, making residency status and income source crucial factors in mortgage costs.
How strict are residency and income requirements for foreign mortgage applicants?
German banks apply strict residency and income requirements for foreign mortgage applicants, particularly for non-EU citizens.
Income requirements include proof of stable earnings for at least two years, preferably in euros or easily convertible currencies. Banks typically require income to be 3-4 times the annual mortgage payment amount. Employment contracts with German or EU-based companies are strongly preferred.
Credit score requirements are stringent, with most banks requiring scores of 700+ for favorable terms. Foreign credit histories are often not recognized, requiring buyers to build German credit history or provide additional financial documentation.
Residency requirements vary by lender, but many prefer buyers with German residence permits or EU citizenship. Non-residents face additional documentation requirements including proof of ties to Germany, business interests, or family connections.
Self-employed foreign buyers face even stricter requirements, needing 3+ years of tax returns and business financial statements. Some banks require co-signers or guarantors for high-risk foreign applicants.
Don't lose money on your property in Germany
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
What taxes apply when foreigners buy property in Germany?
Foreign property buyers in Germany face the same tax obligations as German residents, with no additional penalties for non-resident status.
Property transfer tax (Grunderwerbsteuer) ranges from 3.5% to 6.5% of the purchase price depending on the federal state. Bavaria and Saxony charge 3.5%, while Berlin and most other states charge 6.0-6.5%. This tax is paid once during the purchase process.
Value-added tax (VAT/MwSt) of 19% applies only to new properties purchased directly from developers or certain commercial real estate transactions. Most residential resale properties are exempt from VAT.
Annual property tax (Grundsteuer) applies to all property owners regardless of nationality, typically amounting to several hundred euros per year depending on location and property value. A property tax reform is being implemented across Germany through 2025.
Capital gains tax applies if properties are sold within 10 years of purchase, with gains taxed as regular income. Properties held longer than 10 years are exempt from capital gains tax when sold.
What are the typical notary and legal fees, and do they differ for non-residents?
Notary and legal fees in Germany are standardized and identical for both residents and foreign buyers.
Total notary and registration fees typically amount to 1.5-2% of the property purchase price. This includes notarization of the purchase contract (approximately 1-1.5% of purchase price) and land registry registration fees (approximately 0.5% of purchase price).
All property transactions in Germany must be notarized by law, making notary involvement mandatory rather than optional. The notary serves as an impartial party ensuring legal compliance and proper documentation for both buyer and seller.
Additional legal costs may include hiring a private lawyer for contract review (typically €500-2,000) and translator services for non-German speakers (€300-800 for document translation). These optional services can add 0.1-0.3% to total transaction costs.
It's something we develop in our Germany property pack.
How long does the property buying process take and are there extra steps for foreigners?
The German property buying process typically takes 2-4 months from initial offer to receiving the title deed, with minimal additional steps for foreign buyers.
- Property search and initial offer (1-4 weeks)
- Mortgage pre-approval and financing arrangement (2-6 weeks)
- Purchase contract preparation and notary appointment (1-2 weeks)
- Contract signing at notary office (single appointment)
- Payment of purchase price and transfer tax (1-2 weeks after signing)
- Land registry registration and title deed transfer (2-4 weeks)
- Utility transfers and final property handover (1 week)
Foreign buyers may experience slight delays due to currency transfer requirements, document authentication, or translation needs. Non-EU buyers might need additional time for bank due diligence and compliance checks.
The process timeline can extend if financing approval takes longer or if additional documentation is required for anti-money laundering compliance. Properties in high-demand areas may have faster timelines due to competitive markets.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Germany versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
Are there restrictions on property types foreigners can buy?
Germany imposes no restrictions on property types that foreign buyers can purchase, providing equal access to all real estate categories.
Foreign buyers can purchase residential properties including apartments, houses, condominiums, and multi-family buildings without any limitations. Commercial real estate including office buildings, retail spaces, warehouses, and mixed-use properties are equally accessible.
Agricultural land purchases are also unrestricted for foreign buyers, unlike some European countries that limit agricultural property ownership. Industrial properties, development land, and specialized real estate like hotels or healthcare facilities can be purchased by non-residents.
The only consideration is that some properties may have specific zoning restrictions or heritage protection status, but these apply equally to all buyers regardless of nationality. Foreign buyers enjoy the same property rights as German citizens including the right to rent, sell, or develop their properties.
Investment properties for rental purposes are particularly popular among foreign buyers due to Germany's stable rental market and strong tenant demand in major cities.
How do strong tenant protection laws impact foreign landlords?
Germany's robust tenant protection laws significantly impact foreign landlords' ability to manage rental properties and generate returns.
Rent increase limitations are strictly enforced, with annual increases typically capped at 20% over three years and absolute increases limited by local rent control measures (Mietpreisbremse). Many major cities including Berlin, Munich, and Hamburg have additional rent control restrictions.
Tenant eviction is extremely difficult and time-consuming, requiring substantial legal grounds such as consistent non-payment, property damage, or owner's personal use (Eigenbedarf). Even with valid grounds, eviction proceedings can take 6-18 months and require legal representation.
Long-term lease agreements are standard, with most tenants expecting indefinite contracts. Tenants have strong rights to lease renewal and can only be terminated under specific circumstances defined by law.
Foreign landlords face the same obligations as German owners, including maintenance responsibilities, heating cost regulations, and compliance with energy efficiency standards. Property management companies charging 10-20% of rental income are often necessary for non-resident owners.
What are the ongoing annual costs for foreign property owners?
Foreign property owners in Germany face several ongoing annual costs that vary by property type, location, and management requirements.
| Cost Category | Annual Amount | Details |
|---|---|---|
| Property Tax (Grundsteuer) | €200-800 per year | Based on property value and location |
| Building Insurance | €150-500 per year | Required for all properties |
| Liability Insurance | €100-300 per year | Recommended for rental properties |
| Property Management | 10-20% of rental income | For professional management services |
| Maintenance & Repairs | 1-2% of property value | Budget recommendation for upkeep |
| Utility Connections | €300-600 per year | If property remains vacant |
| Professional Services | €500-2,000 per year | Accounting, legal, tax advice |
Property management becomes essential for non-resident owners, with costs varying by service level and property complexity. Basic management includes rent collection and emergency repairs, while full management covers tenant relations, maintenance coordination, and financial reporting.
It's something we develop in our Germany property pack.
How easy is it for foreign buyers to resell German property and what taxes apply?
Foreign property owners can resell German real estate easily with no additional restrictions compared to German residents.
The resale process follows the same procedures as the initial purchase, requiring notarization and land registry updates. Sales typically take 2-3 months from agreement to completion, with similar timelines for both residents and non-residents.
Capital gains tax applies to properties sold within 10 years of purchase, with gains taxed as regular income at rates up to 45% depending on total income. Properties held longer than 10 years are completely exempt from capital gains tax.
Transaction costs for sellers include real estate agent commissions ranging from 3-7% depending on the federal state and agreement terms. Notary fees for sales are typically lower than purchase fees, usually 0.5-1% of sale price.
Foreign sellers may face additional administrative requirements for tax compliance and currency transfer documentation, but these don't significantly impact the timeline or feasibility of sales.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Germany offers a welcoming environment for foreign property buyers with no ownership restrictions and standardized legal processes.
However, foreign buyers should prepare for higher deposit requirements, conservative lending terms, and strong tenant protection laws that impact rental property investments significantly.
Sources
- Wise - Opening a Bank Account in Germany
- Lawyers Germany - Bank Account Guide
- InvestRopa - Germany Real Estate for Foreigners
- Expatica - Getting a Mortgage in Germany
- Gurcan Partners - Buying Property in Germany
- Lawyers Germany - Property Purchase Guide
- Kredium - Mortgage for Foreigners
- Wise - Buy Property in Germany