Step 1: the payment you can carry
The starting point is not the price but the payment you can make month after month, even when the car breaks down or one income stops for a while. As a rule of thumb, no more than 35 to 40 % of household net income. A household budget is more precise: income minus living costs, insurance, pension savings and existing loans. What is left, minus a buffer, is the payment you can carry.
If you rent today, you can test it beforehand: for a few months, put aside the difference between the future payment plus a maintenance reserve and your current cold rent. In the example: €5,500 net, 35 % of that, gives a payment of €1,925.
Step 2: from payment to loan
With an annuity loan, interest and repayment together make up a fixed percentage of the loan each year. That gives the loan a payment can carry:
Formula
€1,925 × 12 ÷ (4 % + 2 %) = €385,000. The repayment rate decides how fast the loan falls: with 2 % initial repayment and a 4 % rate it takes about 27.5 years to be debt-free, and after ten years about €290,500 is still outstanding. A higher repayment means a smaller loan for the same payment, but it is paid off sooner.
Step 3: from loan to price
German banks usually finance the purchase price, not the purchase costs. Your equity therefore pays the purchase costs first, and the rest goes into the price:
Formula
With €100,000 of equity, a €385,000 loan and 11.57 % purchase costs in North Rhine-Westphalia: €485,000 ÷ 1.1157 = about €434,700.
| Purchase price | €434,700 |
| Transfer tax 6.5 % | €28,256 |
| Notary and land registry 1.5 % | €6,521 |
| Agent 3.57 % | €15,519 |
| Total cost | €485,000 |
| − Equity | €100,000 |
| = Loan | €385,000 |
The loan comes to almost 89 % of the price here. That is a high loan-to-value, for which banks usually charge a higher rate; more on that below.
Purchase costs by state
Each German state sets its own real estate transfer tax; what counts is the date of the notarised purchase contract. Notary and land registry together cost about 1.5 to 2 % of the price, with fees set by law. The agent’s commission is market practice and negotiable; for flats and single-family houses, since December 2020 the buyer pays at most as much as the seller.
| State | Transfer tax | Agent, typical buyer’s share | Total with 1.5 % notary |
|---|---|---|---|
| Baden-Württemberg | 5.0 % | 3.57 % | 10.1 % |
| Bavaria | 3.5 % | 3.57 % | 8.6 % |
| Berlin | 6.0 % | 3.57 % | 11.1 % |
| Brandenburg | 6.5 % | 3.57 % | 11.6 % |
| Bremen | 5.5 % | 2.98 % | 10.0 % |
| Hamburg | 5.5 % | 3.12 % | 10.1 % |
| Hesse | 6.0 % | 2.98 % | 10.5 % |
| Lower Saxony | 5.0 % | 3.57 % | 10.1 % |
| Mecklenburg-Western Pomerania | 6.0 % | 2.98 % | 10.5 % |
| North Rhine-Westphalia | 6.5 % | 3.57 % | 11.6 % |
| Rhineland-Palatinate | 5.0 % | 3.57 % | 10.1 % |
| Saarland | 6.5 % | 3.57 % | 11.6 % |
| Saxony | 5.5 % | 3.57 % | 10.6 % |
| Saxony-Anhalt | 5.0 % | 3.57 % | 10.1 % |
| Schleswig-Holstein | 6.5 % | 3.57 % | 11.6 % |
| Thuringia | 5.0 % | 3.57 % | 10.1 % |
As of October 2026. The most recent changes were in Bremen (5.5 % since 1 July 2025, previously 5.0 %) and Thuringia (5.0 % since 1 January 2024, previously 6.5 %). Without an agent, purchase costs fall accordingly, to about 5 % in Bavaria.
With your numbers
Prefilled with the example. Your bank states the rate in its offer; in mid-October 2026, ten-year fixed rates were about 4.2 to 4.6 % APR, depending on the loan-to-value.
Highest purchase price
€434,700
Payment €1,925 a month · loan €385,000
Loan-to-value
89 %
above 80 %: usually a rate surcharge
debt-free in about 28 years at this payment
remaining debt after 10 years: €290,500
Same payment, different rate
3.0 %
€503,700
4.0 %
€434,700
5.0 %
€385,400
Annuity loan with constant monthly payment. Transfer tax as of October 2026; agent’s commission is market practice and negotiable. Banks also check living costs and existing loans. Not financing advice.
What the interest rate changes
At the same payment, the rate decides the price you can pay. In the example:
| Interest rate | Loan | Highest price |
|---|---|---|
| 3 % | €462,000 | €503,700 |
| 4 % | €385,000 | €434,700 |
| 5 % | €330,000 | €385,400 |
One percentage point more interest costs €50,000 to €70,000 of price here. For context: according to the Bundesbank, new German home loans with five to ten years fixed cost 3.81 % APR on average in August 2026; the broker Interhyp quoted 4.19 % for ten years at a loan-to-value below 70 % and 4.56 % above 90 % in mid-October 2026. After the fixed period, interest rate risk comes on top; what happens then is shown in When the fixed rate ends.
What banks look at
- Household budget: income minus spending, with flat amounts for living costs per person. Existing loans and leasing payments count in full.
- Loan-to-value: the loan relative to the lending value, which banks usually set somewhat below the price. Up to 60 % gets the best rates, above 80 and above 90 % noticeable surcharges.
- Equity: at least the purchase costs. Financing beyond that exists, but costs more.
- Secure income: a permanent contract after probation; for the self-employed usually several years of accounts.
- Credit history: the Schufa report and existing loans.
Running costs afterwards
The payment is not everything. As an owner you pay property tax, building insurance and maintenance yourself; in a flat, the service charge with its maintenance reserve comes on top. A reserve of about 1 % of the building’s value a year is often quoted, more for older houses. If you plan to let a flat, the calculation is different; see How to calculate rental yield and Own home, buy-to-let or ETFs?
Buffers and risks
- A reserve after the purchase: for repairs, the move, furniture and gaps in income.
- Interest rate changes: if the fixed rate ends at higher rates, the payment or the term goes up.
- Life changes: children, parental leave, a new job or a separation change what you can carry.
So the question is not only how much house the bank will finance, but how much you can carry in worse years too.
Sources
- 01§ 656c BGB (German Civil Code): agent working for both parties
- 02§ 656d BGB: agreements on the agent’s fee
- 03Free Hanseatic City of Bremen: real estate transfer tax (5.5 % since 1 July 2025)
- 04Interhyp: mortgage rates, offers from 12 to 18 October 2026
- 05Finanztip: notary costs when buying a house (German)
Rules and figures as of