Why banks are cautious
Under § 505b BGB, banks must carefully assess the creditworthiness of the borrower for consumer property loans (Immobiliar-Verbraucherdarlehen). With foreign income this is more complex: 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 through specialised departments or brokers.
Equity
There is no minimum ratio set by law; each bank decides for itself. In our experience, banks usually require considerably more equity from buyers without a German place of residence than from residents – at least the additional 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 (Beleihungsauslauf) falls.
Typical documents
Valid passport, proof of registration in your country of residence, proof of income for the last few months, tax assessments or tax returns for the last two to three years, bank statements, proof of equity, an overview of existing loans and the property documents (exposé, land register extract, declaration of division, living area calculation, tenancy agreement, energy performance certificate).
Expect to need translations into German or English. Self-employed persons usually need balance sheets or profit statements for several years.
Interest rates in October 2026
Mortgage rates rose in autumn 2026. For a ten-year fixed-rate period, brokers quoted effective best rates of around 4.1–4.2% at the beginning of October 2026 (Dr. Klein, as of 09.10.2026: 4.16%) and average offers between approximately 4.4 and 4.5% (Baufi24, 06.10.2026: offers around 4.5%, average of September contracts 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 the interest rate and currency risk to the home country. A land charge (Grundschuld) 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 flat – 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 clients. 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 fails afterwards, the obligation to pay remains.
Land charge and power to encumber
As security, banks generally require a land charge in the land register of the purchased flat. As the buyer is not yet the owner when the purchase price falls due, the purchase contract usually contains a power to encumber (Belastungsvollmacht): the seller cooperates in creating the land charge, but the bank pays directly towards the purchase price.
The land charge is also notarised or certified; the notary and land register costs for it are added to the additional purchase costs. Buyers who do not travel can also arrange the creation of the land charge via a power of attorney or subsequent approval – this should be agreed with the bank and the notary early on.
Do German banks finance buyers without a place of 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 place of 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-rate period, around 4.1 to 4.5% effective depending on the source (as of the beginning of October 2026), often higher for non-residents.
What is a power to encumber?
A clause in the purchase contract by which the seller allows the buyer to have a land charge registered for the financing bank before the transfer of ownership.
