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 amply cover the monthly mortgage payments with your net income.
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. But income from leasing, capital assets, pensions, and alimony are also added.
In contrast, your obligated expenses such car loans and 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. And as to these mortgage payments, they make different assumptions as to 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 after vary by state and if you use a real estate agent.
The amount of savings you need also depend 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 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.