Can I buy a home now in Germany or should I wait and save?

If this is too long, then consider the main options that can help you to purchase your home faster. Increasing your savings is the most effective approach. Being realistic as to the house you can afford is the second. Keep in mind that renting is usually much more expensive, and getting started is better than waiting forever.

The table below indicates the house price that you can afford based on the number of years you save, taking into account the monthly amount and initial payment. The final property price also considered the tax of the state you chose. You can change these inputs at the top of the article to simulate other scenarios that might fit you better.

With your monthly saving of 600 €, you can afford the respective house price:

This table can help you find the most suitable option for you at the moment. In our experience, it rarely pays to wait longer than 5-6 years to buy a home after you started working full time—and often it is much better to do it 3-4 years after you started working full-time.

Options to help you buy a home faster

Is your dream home far out of reach? Consider buying first a small home such as an apartment in the city and then later rent it out when you move into a house with a garden in the suburbs or a village. You can then rent out that starter apartment. It will build you a great nest egg, and you can use 80 % of the value of that apartment as collateral for purchasing your dream home.

In any case, when planning your future in terms of buying, make sure you plan to keep the house relatively long as the purchase costs are high in Germany. More concretely: plan on holding your home for at least 7-8 years. So don't buy if it means holding it for just 2-4 years.

How does the market outlook affect the timing of when I can buy a home?

The outlook for property prices and interest rates will impact your result: when property prices increase an extra 2 % it may take you 6 months longer, and it may take you 5 months shorter if they stay flat. If interest rates increase by 0,5 % it may take you 0 months longer, and vice versa, it may take you 0 months shorter if they decline by 0,5 %.

The key assumptions

The impact of the property price on your savings goals

The property price has a huge influence on your home savings target. If it takes too long to afford your dream home then it is usually better to scale down your ambitions--and lower your price or add to your savings. You can save more or ask family for support, including using their German property as collateral.

Using Berlin as an example, real estate prices have remained stable over the past year but it had a significant increase of approximately 10 % annually over the past ten years according to the Guthmann Berlin Real Estate Report 2023.

Purchasing costs

When purchasing a home in Germany, you must be aware of the purchasing cost such as property transfer tax, notary fees, and real estate commission. Depending on the state in which the property is located, it ranges from 8-11 % of the purchase price. Use our calculator to discover the purchasing costs for your dream home.

Loan-to-value-ration (LTV)

Banks will not lend more than a certain value of the property. The maximum loan-to-value ratio is about 100 % although if you bring 5 % more equity you usually can get a much better interest rate. Bringing 5 % more equity is expected to take you an extra 27.000 €. If you have a Blue card or one of you is a Temporary Resident then you will only be eligible for a LTV of 95 % maximum.

Loan-to-income-ration (LTI)

Banks limit their loan size to a ratio of your net monthly income--including the income of your partner and reliable bonuses. The maximum depends on the prevailing interest rate and is also influenced by your residency status and how much equity you can bring. To see how all these features work it is best to create a Hypofriend account and then you will have a dashboard that you can use to evaluate in detail all relevant options.

Not sure if you can afford your dream home? Use our calculator to easily find out how much house you can afford!

How much can you afford if you save longer?

Increasing your savings is the most effective approach to accelerate homeownership and keep up with market prices. By boosting your initial savings, you can cover essential expenses like the down payment (a required percentage of the home's purchase price) and purchasing costs. However, it may be challenging to add a substantial sum to your initial savings. An alternative option to increase your initial capital is to wait and save monthly and this will increase your affordability of the property.

Discover our guide for more tips on increasing how much house you can afford in Germany.