How much can I afford or borrow?
This is actually quite complicated, but generally, three rules drive how much you can afford:
You must be able to cover the monthly mortgage payments with your net income amply.
You must have enough savings to cover the purchase fees, such as taxes and notary costs.
Your residence status can change your down payment requirements and, hence, the savings you need.
So, in general, it is your income and your savings that drive your affordability, given your residency status.
When it comes to income, this consists of your net salary. However, income from leasing, capital assets, pensions, and alimony are also added.
In contrast, your obligated expenses, such as car loans, alimony payments, and private healthcare insurance, will be deducted. Banks also add maintenance costs of about 3,50 € per square meter of your new property, in addition to your mortgage payments, as expenses. As to these mortgage payments, they make different assumptions about what happens to your mortgage payments after the fixed interest rate period runs out.
Banks differ mostly, though, in how much income they assume you need for your other expenditures, such as general living expenditure, and hence, therefore, derive different amounts as to what you can afford for your mortgage.
Your savings are the next most important determinant for your affordability, as they are needed for the purchase fees and sometimes for a down payment. Many German advisors say you need 20 % savings, but that is not true—the purchase fees vary by state and if you use a real estate agent.
The amount of savings you need also depends on your residency status. If you are not a permanent resident or German or EU citizen, you sometimes need to bring a higher down payment as the banks consider you a greater risk.
Please use our calculator and talk to an advisor to find out in more detail how much house you can really afford.
Use our calculator to find out exactly how much you can afford
