Buying with little equity

What banks require

No law sets a fixed minimum ratio. The law does require the bank to check your creditworthiness before it grants a property loan (§ 505a BGB, German Civil Code). That includes your income, your expenses and the value of the property, which the bank sets itself. This value can be below the purchase price.

The bank gets no security for the additional costs. Real estate transfer tax, notary and agent's commission are not entered in the land register and cannot be realised. Banks therefore generally expect you to pay these costs yourself. Everything you contribute on top reduces the loan. The smaller the loan in relation to the value of the property, the cheaper the interest rate usually is.

In practice, this means your equity should first cover the additional costs, then a reserve for the first months, and only the rest goes into the purchase price.

A short calculation shows what each additional euro brings. €30,000 more equity reduces the loan by €30,000. At 3.8 per cent interest and 2 per cent repayment, that is €145 less in monthly instalments (30,000 times 5.8 per cent divided by 12). On top comes what the bank takes off the interest rate when its share of the property value gets smaller. It states the amount in its offer; there is no fixed scale.

What counts as equity

Equity is money that belongs to you and that you can use for the purchase. This includes:

• balances on current, overnight and fixed-term deposit accounts,
• securities and fund units, whose value can fluctuate until the purchase,
• building society savings,
• money that parents or grandparents give you,
• your own unencumbered plot, if you are building.

A gift from parents is tax-free up to €400,000 per parent and child within ten years (§ 16 Inheritance and Gift Tax Act (ErbStG), ten years under § 14). A private loan from the family, by contrast, is borrowed capital. The bank includes its instalment in your household calculation. Whether a gift or a loan suits you better is something to clarify with your tax adviser.

Not equity in the bank's sense is money you borrow yourself, for example through an instalment loan, and amounts that only become available after the purchase. An instalment loan for the additional costs also appears in your Schufa credit record and weighs twice on the household calculation.

Do not tie everything up in the purchase. If you transfer the last of your money on the day of the notary appointment, you can only pay for the first heating repair or a special levy from the owners' association with an expensive loan.

Additional costs first

The calculation shows what this means for a flat at €300,000 in Berlin. Notary and land register are set at 2 per cent, at the upper end of the usual range of 1.5 to 2.0 per cent.

Example. The rates come from our guide Additional purchase costs in Berlin. Without an agent, the €10,710 does not apply.

Around €35,000 is therefore the lower limit at which a bank can calculate without a surcharge. If you do not have it, you end up with 100 per cent financing or more.

Proof and timing

The bank wants to see your equity, usually as recent account statements or securities account statements. If part of it only becomes available later, such as a fixed-term deposit or a building society contract, say so in the first conversation. Otherwise the bank counts on money that is still tied up on payment day.

The additional costs do not all fall due on the same day. You pay the agent's commission as soon as the purchase contract is in place. The notary's invoice arrives shortly after the appointment. The tax office requests the real estate transfer tax roughly six to ten weeks after the notary appointment, and only when it has been paid can the land registry enter you as owner. The purchase price itself falls due when the notary tells you so. Plan your equity for this order. The details are in the guide Additional purchase costs in Berlin.

When the family wants to help

Many first-time buyers receive support from parents or grandparents. For the bank, it makes a difference in what form the money arrives.

A gift counts in full as equity. Put it in writing so that the bank can see that nobody will ask for the money back. A family loan, by contrast, is a debt. The bank includes its instalment in your household calculation, even if the parents are generous. Whether a bank values an interest-free family loan with a late due date differently is something your financing adviser clarifies beforehand.

A third option is additional security, for example a land charge (Grundschuld) on the parents' debt-free property. This lowers the bank's risk but ties the parents' house to your loan. Get advice before anyone signs, and talk openly in the family about what happens if you can ever no longer pay the instalments.

100% and 110% financing

With 100% financing, the bank lends you the whole purchase price and you pay the additional costs yourself. With so-called 110% financing, it also finances the additional costs. In Berlin with an agent, that is strictly speaking 111.57 per cent. The calculation for the same flat with three different equity amounts:

Worked example with the same interest rate in all three columns. In practice, banks usually charge a higher rate for a higher loan share. The bank states the surcharge in its offer.

The table therefore understates the gap. Even half a percentage point more interest costs around €139 a month on a loan of €334,710 (334,710 times 0.5 per cent divided by 12).

On top come risks that appear in no monthly instalment:

• Selling in the first few years. The additional costs are gone. If you have to sell because of a job change or separation, the proceeds may not cover the debt, and you also pay an early repayment penalty (§ 502 BGB, German Civil Code).
• Follow-on financing. After ten years, in the example without equity, €253,427 is still outstanding, which is 84 per cent of the original purchase price. If the interest rate is then higher, the instalment rises noticeably.
• No buffer. Anyone who buys with no equity usually has no reserve for repairs either.

Full financing can still make sense, for example with a high, secure income and a short saving period. In that case the repayment should be rather higher, so that the remaining debt quickly falls below the value of the property.

In this case, expect stricter checks. Banks that also finance the additional costs require a very good Schufa record and a secure income. A probation period, a fixed-term contract or a young company make full financing difficult. And because the bank has no cushion in the property, it pays closer attention to whether enough is left to live on after the instalment. A financing confirmation before the viewing is especially important here: you then know whether any bank will go along before you fall in love with a flat.

Support: what exists and for whom

Subsidised loans do not replace equity. They are additional loans, often at a lower interest rate, which the bank includes in its calculation. They are applied for through your bank or your financing broker, before you sign the purchase contract. We checked the KfW pages on 28 October 2026:

For a flat, energy-efficiency renovation usually affects the common property, that is the roof, facade or heating. The owners' association decides on this, not you alone. Whether programme 308 can be used in your case should therefore be clarified with your adviser before applying.

How to proceed with little equity

1. Calculate the additional costs for your target price. At €250,000, they are €28,925 with an agent (11.57 per cent).
2. Check what you have, what the family can contribute and what reserve must remain.
3. Clarify with the financing adviser whether a subsidised loan fits and what interest surcharge full financing would cost you.
4. Adjust the target price. With the affordability calculator you can see straight away what a different equity amount changes about the purchase price.
5. Only then go to viewings, with a financing confirmation in your pocket. When there are several interested buyers, the seller often decides for the one who can prove their financing.

Mortgage broking (Immobiliardarlehensvermittlung under § 34i GewO, German Trade Regulation Act) is handled at our firm by Maximilian Vigansky personally. The registration details are in the Legal notice (German). If we receive money from a partner, we tell you beforehand. You can work out how the instalment looks with different fixed-interest periods on the page Mortgage financing in Berlin.

Sources

• § 505a BGB (German Civil Code), creditworthiness assessment; § 502 BGB, early repayment penalty
• § 16 ErbStG (Inheritance and Gift Tax Act), allowances; § 14 ErbStG, aggregation over ten years
• KfW: Programme 124, Programme 308, Programme 300
• § 11 Grunderwerbsteuergesetz (German Real Estate Transfer Tax Act) with the Berlin tax rate of 6 per cent
• BBI: additional purchase costs in Berlin, BBI: affordability calculator
• All sources accessed on 28 October 2026.