Mortgage Requirements for Tax Foreigners in Germany

Germany’s real estate market is highly attractive to international buyers. However, tax foreigners—individuals not residing or paying taxes in Germany—must meet specific requirements to secure a mortgage. Below is an overview of the key conditions and restrictions.

Key Mortgage Requirements

Tax foreigners face stricter criteria when applying for a mortgage in Germany. Here are the main requirements:

Loan-to-Value (LTV) Ratio: While German citizens can access mortgages with up to 100% LTV, tax foreigners often qualify for lower LTV ratios, necessitating higher personal investment. Lenders generally allow a maximum LTV of 60% for tax foreigners. This means you must provide a down payment of at least 40% of the property’s value, plus additional funds to cover fees such as notary costs, property transfer tax, and real estate commission.

Employment Status: Mortgage eligibility is limited to individuals with stable, salaried employment. Self-employed and freelance applicants are mostly not eligible for financing.

Property Type: Only residential properties are eligible for mortgage financing and commercial units are excluded from consideration.

Rental Property Income: When purchasing a rental property, some lenders require that 80% of the expected rental income be sufficient to cover the monthly mortgage payments. This ensures that the property’s income can substantially offset loan obligations.

Cross-Border Purchases: Buying property in another country is possible, but only if it is located near Germany’s border. For such purchases, lenders may offer up to 90% LTV, with potential flexibility for higher ratios depending on the circumstances.

Banks tend to impose stricter requirements for tax foreigners due to their conservative approach. However, financing is still possible with sufficient equity investment.

Feel free to reach out to Hypofriend so we can review and optimize your financing structure tailored to your needs.