How can I afford to buy a property?

Calculated backwards: from the payment to the purchase price

At the bank, the conversation starts with the payment you can make every month without it getting tight. Everything else follows from that payment. The calculation has three steps.

1. The monthly payment times twelve gives the annual payment.
2. The annual payment divided by interest plus initial repayment gives the loan. At 3.8 per cent interest and 2 per cent repayment, you divide by 0.058.
3. Loan plus equity must cover the purchase price and the additional costs. With an agent, you therefore divide the total by 1.1157 to get the purchase price.

There is nothing more to it. The calculation can also be turned around: if a property has been chosen, purchase price times 1.1157 minus equity gives the loan needed, and the payment follows from that. If you want to enter your own figures, use our calculator: it runs exactly these three steps, shows the remaining debt after ten years and warns you if your equity does not cover the additional costs.

Go to the affordability calculator

This page explains what is behind the figures and where the rules of thumb stop. The interest rate of 3.8 per cent in all the examples is an assumption. It is close to the Bundesbank average of 3.81 per cent for residential mortgage loans with a fixed-rate period of five to ten years in August 2026. Your offer may come out higher or lower.

The household budget calculation of the bank

Before any property loan, the bank must check your creditworthiness. That is what § 505a BGB says. It may only conclude the contract if it is likely that you will repay the loan as agreed. A rule of thumb is not enough for that. The bank sets your income against your expenses and looks at what is left over.

On the income side, what counts is the net income that flows reliably. How a bank treats bonuses, parental allowance, rental income or a fixed-term employment contract differs from bank to bank. On the expenses side are living costs, insurance, car, current loans and, for a flat, the service charge (Hausgeld). Your previous net cold rent falls away when you move in yourself.

This is what it can look like for a household with €5,000 net. All expenses are assumptions. Enter your own.

Example. The amounts are not flat rates used by any bank, but assumptions for a two-person household.

In this case the rule of thumb works: a payment of €1,750 leaves €250 of headroom. If the service charge rises or a child arrives, the headroom shrinks quickly. That is why your real bank statements belong in the calculation; percentages are not enough.

Rules of thumb and where they stop

The rule of "30 to 40 per cent of net income" is a starting value. It has three weaknesses worth knowing.

Small incomes. On €3,500 net, a payment of 35 per cent leaves €2,275. Service charge, living costs and everything else come out of that. For a family that can be too little, even though the ratio is right. On €7,500 net it is the other way round: after the payment, €4,875 remains, and a higher ratio would often be manageable.

The interest rate. One percentage point changes a lot. With a payment of €1,750 and 2 per cent repayment, an interest rate of 3.8 per cent supports a loan of around €362,100 (€21,000 annual payment divided by 0.058). At 4.8 per cent it is only around €308,800 (€21,000 divided by 0.068). In the example with €70,000 of equity, the purchase price falls from around €387,300 to around €339,500.

The end of the fixed-rate period. After ten years, a large part of the loan is still outstanding. For this remaining debt you need follow-on financing at whatever interest rate applies then. Nobody knows it today. So work out whether you could also carry a higher payment, or choose a longer fixed-rate period. More on this on the page Mortgage financing in Berlin.

Equity: the additional costs first

Banks finance the purchase price. They generally do not also finance real estate transfer tax, notary, land register and agent's commission, because there is no corresponding value in the land register for them. Your equity should therefore cover these costs first. In Berlin they come to 11 to 11.6 per cent of the purchase price with an agent, and 7.5 to 8 per cent without one. The details are in the guide Additional purchase costs in Berlin.

Whatever goes beyond that reduces the loan. The smaller the loan relative to the value of the property, the lower the interest rate usually is. Even so, keep a reserve. Anyone who transfers their last money on the day of the notary appointment has nothing left for the first repair. How large it should be depends on the property: for a flat with a well-filled maintenance reserve, less is enough than for a house with an old heating system.

If you buy without an agent, the additional costs fall to 7.5 to 8 per cent. In the example with €5,000 net, the purchase price on the same budget would then rise from around €387,300 to around €400,100 (€432,069 divided by 1.08). That is a worked example, not a recommendation: whether a property is offered commission-free is not decided by the buyer. How buyers with little equity go about it, and what financing above 100 per cent costs, is covered on the page Buying with little equity.

Three examples: €3,500, €5,000 and €7,500 net

The same assumptions apply to all three households: payment 35 per cent of net income, 3.8 per cent interest, 2 per cent initial repayment, purchase through an agent with 11.57 per cent additional costs. Only income and equity change.

Example calculation, not an offer. Outstanding balance calculated with the annuity formula, a monthly instalment and an interest rate fixed for ten years. Your bank's borrowing rate and APR may differ; the bank only quotes binding terms after reviewing your documents.

€3,500 net. A purchase price of around €263,000 is possible. The €40,000 of equity covers the additional costs of around €30,400, leaving just under €9,600 to reduce the loan. No reserve is included. In Berlin, that is more likely to stretch to a smaller flat or a location on the edge of the city.

€5,000 net. Around €387,000 is within reach. This is the example from the household budget calculation above, with €250 of headroom a month.

€7,500 net. Just under €594,000. Here it is worth asking whether a higher repayment makes more sense than a higher purchase price. With 3 instead of 2 per cent repayment, the loan falls to €31,500 divided by 0.068, so around €463,200, but the remaining debt after ten years is much smaller.

Buying as a couple: two incomes, one loan

If you buy with a partner, the bank adds both incomes together. For that, both of you usually also sign the loan agreement. Each of you is then liable for the whole sum, not just your half. The law calls this joint and several liability (§ 421 BGB).

There are two questions to settle before the notary appointment. First: how long will both incomes last? If parental leave or part-time work is planned, also calculate the payment against the smaller net household income. In the example with €5,000 net, 35 per cent of €3,800 would be only €1,330, and the full payment of €1,750 would amount to 46 per cent. Second: who gets what share in the land register, and what happens if you separate? Unmarried couples in particular should put this in writing; a lawyer can help you settle the content. What is at stake later with joint ownership is shown in our guide on co-ownership by shares and accrued gains.

When the numbers do not add up

If the result is not enough for what you are looking for, there are several levers. None of them is free.

• Save more equity or receive it from family. Every euro above the additional costs reduces the loan one to one.
• Look for something smaller or further out. One room fewer or a location in the Berlin surroundings often changes the purchase price more than any interest rate comparison.
• Check subsidised loans. The KfW has programmes for families and for buying an owner-occupied home, each with conditions. The overview is on the page Buying with little equity.
• Lower the repayment. That raises the purchase price, but extends the term and increases the remaining debt. We only advise this with a plan for the follow-on financing.

Do you want to know how a bank sees your case before you view? We compare offers from several banks and support you up to the financing confirmation. At our firm, Maximilian Vigansky personally handles the brokering of property loans (mortgage loan intermediation under § 34i GewO, German Trade Regulation Act). The register details are in the Legal notice (German). If we receive money from a partner, we will tell you beforehand.

Sources

• Deutsche Bundesbank: residential mortgage loans to households, effective interest rates on new business (August 2026, provisional, as of 1 October 2026)
• § 505a BGB (German Civil Code), obligation to assess creditworthiness
• § 11 Grunderwerbsteuergesetz (German Real Estate Transfer Tax Act) with the Berlin tax rate of 6 per cent
• BBI: Additional purchase costs in Berlin and BBI: Affordability calculator
• All sources accessed on 28 October 2026.