Property financing in Germany without a German residence
German banks are considerably more cautious about financing buyers without a residence in Germany than residents. It is nevertheless possible, often with more equity and more documents. Anyone who needs financing should have the commitment in hand before notarisation.
Why banks are cautious
Under § 505b BGB, banks must carefully assess the borrower's creditworthiness for consumer real estate loans. With foreign income this is more laborious: proof of income and tax assessments are in a foreign language, credit agencies such as SCHUFA have no data, and income in another currency adds an exchange-rate risk.
Many institutions therefore do not finance non-residents at all, or only via specialised departments or brokers.
Equity
There is no statutory minimum ratio; each bank decides for itself. In our experience, banks usually require considerably more equity from buyers without a German residence than from residents – at least the purchase costs and often a substantial part of the purchase price. Only the offer of the respective bank is binding.
More equity also improves the interest rate, because the loan-to-value ratio falls.
Typical documents
Valid passport, proof of registration in your country of residence, proof of income for recent months, tax assessments or tax returns for the last two to three years, bank statements, proof of equity, overview of existing loans, and the property documents (exposé, land register extract, declaration of division, living-space calculation, tenancy agreement, energy performance certificate).
Expect translations into German or English. Self-employed persons usually need balance sheets or profit calculations for several years.
Interest rates in October 2026
Mortgage rates rose in autumn 2026. For a ten-year fixed interest period, brokers quoted effective top rates of around 4.1–4.2 % at the beginning of October 2026 (Dr. Klein, as at 09.10.2026: 4.16 %) and average offers between about 4.4 and 4.5 % (Baufi24, 06.10.2026: offers around 4.5 %, average of September completions 4.16 %).
These figures apply to residents with a good credit rating and solid equity. Experience shows that terms for non-residents tend to be higher. Interest rates change daily; only the specific offer is decisive.
Alternative: financing in your home country
Some buyers take out a loan with their bank in their home country, secured by assets held there, and buy in Germany without a land charge. This simplifies the notarial contract but shifts interest-rate and currency risk to the home country. A land charge on the German flat in favour of a foreign bank is legally possible but rarely offered in practice.
In any case, check whether the interest is deductible in Germany as income-related expenses (Werbungskosten) if you let the property – this depends on the connection between the loan and the flat.
An order of steps that avoids trouble
1. Preliminary check with a bank or broker experienced with foreign buyers. 2. Reserve the property. 3. Submit complete documents; valuation by the bank. 4. Binding loan commitment. 5. Only then notarisation. The purchase contract normally contains no financing condition (Finanzierungsvorbehalt); if the financing then fails, the obligation to pay remains.
Land charge and mortgaging power of attorney
As security, banks usually require a land charge (Grundschuld) in the land register of the flat being purchased. As the buyer is not yet the owner when the purchase price falls due, the purchase contract usually contains a mortgaging power of attorney (Belastungsvollmacht): the seller cooperates in creating the land charge, but the bank pays directly towards the purchase price.
The land charge (Grundschuld) is likewise notarised or certified by a notary; the notary and land registry costs for this are added to the purchase costs. Buyers who do not travel can also arrange the creation of the land charge via a power of attorney or subsequent approval (Nachgenehmigung) – this should be agreed early with the bank and the notary.
Sources
- https://www.gesetze-im-internet.de/bgb/__505b.html
- https://www.drklein.de/aktuelle-bauzinsen.html
- https://www.baufi24.de/presse/pressemitteilungen/zinskommentar-102026/
- https://de.statista.com/statistik/daten/studie/1347565/umfrage/entwicklung-der-bauzinsen-in-deutschland/
Frequently asked questions
Do German banks finance buyers without a residence in Germany?
Some do, many do not. The conditions are usually stricter: more equity, more documents, sometimes higher interest rates.
Do I need a SCHUFA credit report?
Without a residence in Germany, there is usually no meaningful SCHUFA data; banks then ask for credit reports from the home country.
What are mortgage rates in October 2026?
For a ten-year fixed interest period, depending on the source, around 4.1 to 4.5 % effective (as at early October 2026), often higher for non-residents.
What is a mortgaging power of attorney?
A clause in the purchase contract by which the seller permits the buyer to have a land charge registered for the financing bank even before the transfer of ownership.
General information, as at October 2026. It does not replace advice from a tax adviser, solicitor or notary.
