How Much House Can I Afford? Mortgage Calculator Germany
Are you thinking about buying a property in Germany? We explain how to calculate your budget based on salary and savings and what you need to consider.Published on Feb 8, 2023 . Updated 3 months ago
When considering buying a property, there is one question that arises: How much house can I afford? This is one of the most crucial questions. Usually, you will have to take out a loan to buy a property.
So how much loan based on salary will you get from the banks in Germany? What monthly payment can you expect? Our calculator will tell you.
Let's calculate how much house you can afford to buy in Germany
Your budget for buying property in Germany
House price of: 384.615 € | Monthly payment of: 1.603 € | Loan amount of: 365.385 € |
You can afford to buy a property up to a purchase price of 384.615 € with an estimated monthly payment of 1.603 €.
Surprised at how much or how little you can afford? Many prospective buyers feel the same way. Most of them used to significantly underestimate their initial situation, but with higher interest rates affordability has declined.
For an even more accurate budget overview and more information on purchasing fees, monthly payments, and more, check out our budget and optimal mortgage calculator.
Calculate your mortgage options
Use Hypofriend’s mortgage calculator to calculate your mortgage options in Germany.
How much house can I afford?
When planning your budget for buying a property in Germany, you should keep two things in mind:
You must be able to pay the monthly payments for the loan with your disposable net income.
You should have enough savings to cover the purchasing costs with your own funds. These would include land transfer tax, notary fees, costs for registration in the land register, and the broker's commission if a broker was involved in the brokerage. Use our calculator to determine the purchasing costs.
Rule of thumb when planning your budget
The combination of the two points above matters when it comes to planning your budget. The more equity you use, the greater the ratio of your loan to your net income.
This ratio is called the loan-to-value ratio (known as “Beleihungsauslauf” in German). Let's assume the property you want to buy has a value of 500.000 € and you take out a mortgage of 450.000 €. This leads to a loan-to-value ratio of 90 %.
The more equity you have, the lower the loan-to-value ratio. Accordingly, you can borrow more money from the bank. As a rule of thumb, consider the following (this varies depending on the interest rates):
100 percent loan-to-value ratio equals 90 × net income
90 percent loan-to-value ratio equals 100 × the net income
80 percent loan-to-value ratio equals 115 × the net income
With a net income of 3.000 € and a loan-to-value ratio of 100 %, you would get a maximum loan of 270.000 €. At a 90 % loan-to-value ratio, you would have 300.000 € at your disposal, and at 80 %, it would be 360.000 €.
The less money you have to borrow from the bank, the lower the interest rates. That is because the more money the bank lends you, the higher the risk for the bank. And this risk gets compensated for by higher interest rates. So if you take out a smaller loan, this will have a correspondingly positive effect on your monthly payments.
How to calculate your budget
First of all, you have to calculate your net income. This does not only refer to your paid salary, but to your actual net income from all sources. This means that things like alimony payments, child benefits, rental income, capital assets, and other payments have to be included in the calculation.
Deduct expenses from your net income
After you know your net income, subtract your monthly expenses from it. This includes everyday items such as food, car, insurance, memberships (clubs, fitness studio, etc.), and utilities.
By the way: Even as a property owner you have to pay utility costs. The rule of thumb for all property utility costs is four Euros per square meter. This includes, for example, fees for garbage collection, heating, and water consumption.
You do not have to add your previous rent to your monthly expenses. After all, it will not be included when you move into your new home. However, your current cold rent is a good indicator and shows you how high your monthly repayment can be.
You found your dream home but it doesn't fit your budget? Find out how to negotiate house prices with our step-by-step guide.
Can I afford a house on my salary?
Once you have calculated your monthly budget, you can use our German mortgage calculator to check how much you can borrow. To do this, enter the city where you want to buy a property, the purchase price, your equity, and the repayment. You will then be shown the monthly payment and the interest rate. You can play around with the parameters and find out how they change, for example, with more equity or a different fixed interest period.
Example calculation
Let's assume you want to buy a property together with your partner. Your combined total net salary is 4.000 €. You do not have any other income.
You pay 100 euros for your mobile phone contract, 50 euros for the gym, and fueling your car costs 200 €. You spend 800 euros on food and restaurants, and your shopping budget is 350 € per month. All your insurances add up to 250 € and the utilities for your 80-square-meter flat are 160 € a month.
If you now deduct all the expenses from your net income, you still have 2,000 € left over. However, your maximum monthly payment will be around 1.400 €. This is because banks usually only grant loans with a maximum monthly payment of 35 % of your net income.
You're not sure yet whether it makes more sense to rent or buy? Use our rent-vs-buy calculator to figure it out.