How high should the monthly mortgage payment be?

A common rule of thumb is that your monthly mortgage payment should not exceed 35% of your household net income. For a net income of 4,000 EUR, that would be a maximum of 1,400 EUR per month. Many financial advisors recommend staying at 30% to maintain a buffer for unexpected expenses, repairs, or temporary income loss. Additionally, keep at least 3 monthly payments as an emergency reserve.

What is the minimum equity I need?

Ideally, you should bring 20-30% of the purchase price as equity. At a minimum, purchase costs (8-15% depending on the federal state) must be covered with your own funds, as banks typically do not finance these. A 100% mortgage without equity is possible with some banks but comes with significantly higher interest rates and greater risk. The more equity you contribute, the better your interest rate conditions will be.

What are purchase costs and how high are they?

Purchase costs are additional costs on top of the property price that apply to every real estate transaction. They consist of: property transfer tax (3.5-6.5% depending on the federal state), notary and land registry fees (approx. 1.5-2%), and potentially broker fees (3.57-7.14% incl. VAT). In total, expect 8-15% of the purchase price in additional costs. These should be paid entirely from equity, as they do not increase the property value.

What is the difference between nominal and effective interest rate?

The nominal interest rate (Sollzins) is the pure interest rate the bank charges for the loan. The effective interest rate (Effektivzins) additionally includes all other costs such as processing fees, account management fees, and the effect of repayment scheduling. The effective rate is therefore always slightly higher than the nominal rate and reflects the true annual cost of the loan. Always compare offers based on the effective interest rate, as only this allows a fair comparison.

Is a longer fixed-rate period worth it?

A longer fixed-rate period (e.g., 15 or 20 years instead of 10) typically costs a rate premium of 0.2-0.5 percentage points. In return, it protects against rising interest rates and provides planning certainty over a longer period. In a low-interest-rate environment, a long fixed-rate period is particularly advisable as you lock in favorable conditions long-term. When rates are high, a shorter period may make more sense if you expect rates to fall.

What happens when the fixed-rate period ends?

When the fixed-rate period expires, the remaining debt must be refinanced - this is called Anschlussfinanzierung. You can request a new offer from your current bank (prolongation) or switch to a different bank (refinancing). The follow-up financing is then at the current market rate, which may be higher or lower. With a forward loan (Forward-Darlehen), you can lock in favorable rates for your refinancing up to 5 years in advance.

How much do I save with extra repayments?

Extra repayments can significantly reduce interest costs. Example: On a loan of 300,000 EUR at 3.5% interest and 2% repayment, an annual extra repayment of 5,000 EUR saves tens of thousands of euros in interest over the full loan term. At the same time, the loan term is shortened by several years. Most contracts allow 5-10% extra repayment per year. Use this option whenever you have the financial flexibility.

Can I buy a property without equity?

Yes, some banks offer 100% financing or even 110% financing (including purchase costs). However, interest rates for full financing are significantly higher - often 0.5-1.0 percentage points above the rate with 20% equity. The risk is also greater: if property values decline, you could quickly owe more than the property is worth. Full financing should only be considered if you have a high, stable income.

What subsidies are available for home buyers in 2026?

Germany offers various subsidy programs: KfW provides low-interest loans for energy-efficient construction and renovation (e.g., KfW program 261). For families with children, there are successor programs to the Baukindergeld that vary by federal state. Additionally, some federal states support the purchase of owner-occupied housing with their own programs. Check with your municipality and KfW for current funding opportunities.

How does the repayment rate affect the loan term?

The repayment rate has an enormous impact on the total loan term. At an interest rate of 3.5%, it takes about 46 years to fully repay the loan with an initial repayment rate of 1%. With 2% repayment, it takes about 30 years, and with 3% repayment only about 24 years. Each additional percentage point of repayment saves tens of thousands of euros in interest over the loan term. A minimum initial repayment rate of 2%, ideally 3%, is recommended.

Fixed-rate Period: 10, 15 or 20 Years? Making the Right Choice | Mortgage Calculator

Fixed-Rate Period: The Most Important Decision in Mortgage Financing

Choosing the fixed-rate period (Zinsbindung) is one of the most consequential decisions when taking out a German mortgage. It determines how long your agreed interest rate remains locked in and therefore how predictable your monthly payment will be. Once the fixed-rate period expires, the remaining debt must be refinanced at whatever market rates prevail at that time, which could mean significantly higher or lower payments.

10 Years: The Classic Choice

The ten-year fixed-rate period is by far the most popular option in Germany and typically offers the most favorable conditions. In 2026, nominal interest rates for ten-year terms range from approximately 3.0 to 3.8 percent depending on loan-to-value ratio and creditworthiness. The advantage is straightforward: you get the lowest rate and minimize your initial monthly burden.

The downside of a short fixed-rate period is the interest rate risk. After ten years, the general interest rate level could be significantly higher than today. If your remaining debt is still substantial at that point, the new monthly payment could increase considerably. With a one-percentage-point rate increase from 3.5 to 4.5 percent on a remaining debt of 200,000 euros, the monthly payment rises by approximately 170 euros. A ten-year fixed rate is therefore best suited for borrowers who choose a high repayment rate and expect to have repaid a large portion of the loan by the end of the fixed-rate period.

15 Years: The Compromise

A fifteen-year fixed-rate period typically carries a premium of 0.2 to 0.4 percentage points over the ten-year option. In return, you receive five additional years of planning certainty. This option is particularly attractive for borrowers who choose a moderate repayment rate and expect a relatively high remaining debt after ten years. The longer lock-in protects against a potential rate increase and provides more time to reduce the outstanding balance.

An added advantage: the statutory special termination right under Section 489 of the German Civil Code also applies here after ten years. This means you can terminate after ten years with six months' notice without paying a prepayment penalty (Vorfaelligkeitsentschaedigung). Should rates have fallen by then, you can refinance at better terms. The fifteen-year option thus provides a kind of insurance against rising rates while maintaining downside flexibility.

20 Years and Beyond: Maximum Security

Fixed-rate periods of 20 or even 25 years offer maximum planning certainty but come with a notably higher premium of 0.3 to 0.6 percentage points over ten years. This option makes sense for conservative borrowers who prioritize absolute predictability and are willing to pay a price for it. Particularly in low-interest-rate environments, locking in favorable conditions for the very long term can prove advantageous.

Even with a 20-year fixed rate, the statutory termination right applies after ten years. You therefore have the security of a long lock-in with the option to exit at the halfway point. While the higher rate may seem discouraging at first glance, viewed over the entire financing period it can turn out to be the cheaper choice if rates rise significantly in the interim.

Making the Decision: Which Fixed-Rate Period Suits You?

The optimal fixed-rate period depends on your individual situation. Choose a short lock-in (10 years) if you can afford a high repayment rate, plan regular extra repayments, and expect a low remaining balance at the end of ten years. Opt for a medium lock-in (15 years) if you prefer planning certainty with a moderate repayment rate and do not want to pay the highest premium. Choose a long lock-in (20+ years) if you value maximum security and want to lock in the current rate level for the long term.

Also consider your personal life situation: are major expenses planned in the coming years (growing family, career change, renovation)? Could your income fluctuate? The more uncertain your financial future, the more valuable a long fixed-rate period becomes. Use our calculator to model different fixed-rate scenarios and see the impact on your monthly payment and total costs.