Down Payment and Closing Costs in Germany
What counts as own capital, which purchase costs apply in Baden-Württemberg, and why you should keep a reserve after buying a home in Germany.
Your down payment, called Eigenkapital in Germany, is the part of a home purchase you pay from your own money rather than with a loan. On top of the price, buyers in Baden-Württemberg pay real estate transfer tax (Grunderwerbsteuer), notary and land register fees and, if an estate agent is involved, a commission. These closing costs are usually paid from your own capital, so the two belong in the same plan.
If you came to Germany as an adult, you have had fewer years here to save. Here is what your savings are needed for when you buy, and why some should be left afterwards.
What counts as own capital
Own capital is anything you can freely use by the time you buy:
- money in current, instant-access and fixed-term savings accounts
- securities in your portfolio that you can sell
- a building society savings balance (Bausparguthaben)
- a plot of land you already own
- money given to you as a gift
Money you have to pay back, such as a private loan from family, is not really own capital. The bank will ask, so be open about it.
Banks look closely at this figure for two reasons. First, they secure the loan with a land charge (Grundschuld) on the property. The smaller the loan compared with the property's value, the lower the bank's risk, and that usually shows in the terms. Second, German law requires the bank to assess your creditworthiness from your income, expenses and wider finances, not from the property's value alone (§§ 505a, 505b BGB). How I help you prepare for buying a home is described on my loans and financing page.
The closing costs at a glance
Up to four items are added to the purchase price:
| Item | What sets the amount | Negotiable? |
|---|---|---|
| Grunderwerbsteuer (transfer tax) | State law: 5.0 per cent of the price in Baden-Württemberg | No |
| Notary | Statutory fees (GNotKG), based on the transaction value | No |
| Land registry (Grundbuchamt) | Statutory fees (GNotKG) | No |
| Estate agent (Makler) | The agency contract; the law sets how it is shared | The amount, yes |
Transfer tax
In Baden-Württemberg the rate is 5.0 per cent of the purchase price. After signing, the notary reports the contract to the tax office, which sends you a tax assessment. You are only entered in the land register as owner once the tax office confirms the tax has been paid (Unbedenklichkeitsbescheinigung, § 22 GrEStG), so the money has to be ready early.
Notary and land register
A property purchase contract must be notarised (§ 311b BGB). Notary fees depend on the value of the transaction, and any agreement on a different fee is void (§ 125 GNotKG), so every notary charges by the same rules. The bank's land charge is usually set up at the notary too, with its own fees. The land registry charges for each entry: a priority notice in your favour (Auflassungsvormerkung), then you as owner, then the land charge.
Estate agent's commission
You only pay this if an agent is involved, and the law does not fix the amount. Since December 2020, private buyers of a flat or single-family house have clear protection. If the agent is paid by both sides, buyer and seller pay the same amount (§ 656c BGB (opens in a new tab)). If only the seller hired the agent, you can be asked to pay at most what the seller pays, and only after the seller has paid (§ 656d BGB). If you hire an agent alone, you pay alone.
Why closing costs usually come from your own money
The property's value is the bank's security. Transfer tax and notary and registry fees add nothing to that value, so financing them makes the loan larger than the security behind it. Such loans exist, but Germany's consumer advice centre (opens in a new tab) (Verbraucherzentrale, page in German) notes that they usually mean higher interest and longer repayment.
Timing matters too: the transfer tax must be paid before you are registered as owner. So check first whether your savings cover the closing costs and a reserve, and only then which property you can afford.
After the purchase: reserve and household budget
A common mistake is to put every last euro into the purchase. As an owner, you pay for what your landlord used to cover, such as a boiler that breaks down or a roof that leaks. In a flat, your monthly service charge (Hausgeld) includes a maintenance reserve for the shared parts of the building, and if that falls short for a big repair, the owners can vote for a special levy (Sonderumlage). Parental leave or a long illness can also change your budget.
A household budget (Haushaltsrechnung) shows what is realistic. Write down your monthly net income and subtract every fixed expense: living costs, insurance, car, savings plans, existing repayments and any support you send to family abroad. What remains is the space for your future instalment, with some room to spare. The bank does essentially the same sum, so know your result before you meet them.
How to start
- Gather payslips, bank statements, proof of savings and your existing contracts.
- Check your SCHUFA file. Under Art. 15 GDPR you are entitled to a free copy of your data, so you can correct errors before a bank reads it.
- Choose a monthly instalment you are comfortable with, not the highest one a bank might accept.
- Set the reserve aside first. Only what is left is your available own capital.
What I look at in a first conversation
I start with your household budget; the property comes later. I want to know how much of your savings is really free after closing costs and a reserve, and whether your income can carry an instalment for many years. Sometimes it is wiser to keep saving for a while, and then we agree what for and by when. I also look at the purchase alongside protection and retirement planning, since planning an instalment properly also means asking what happens if an income stops.
If you have only lived in Germany for a few years, banks also ask about residence status and probation; see Buying a House in Germany as a Foreigner.
German terms explained
| Term | Meaning |
|---|---|
| Eigenkapital | The share of the purchase you pay from your own money |
| Grunderwerbsteuer | Tax on buying property; each federal state sets the rate |
| Unbedenklichkeitsbescheinigung | Tax office confirmation that the transfer tax is paid; needed before you are registered as owner |
| Grundschuld | The bank's security, entered in the land register |
| Haushaltsrechnung | Income set against expenses, showing what instalment you can carry |
Frequently asked questions
How much down payment do you need to buy a house in Germany?
There is no legal minimum; each bank decides case by case. You should be able to pay at least the closing costs from your own money, and more own capital usually improves the terms. Don't give up your reserve to get there, though.
What are the closing costs when buying in Germany?
Transfer tax, notary and land registry fees and, if an agent is involved, the commission. In Baden-Württemberg the transfer tax is 5.0 per cent of the price. For notary and registry fees, ask the notary for an estimate in advance.
What notary costs apply when buying a flat?
Fees for notarising the contract, for carrying it out (dealing with the land registry, for example) and usually for the bank's land charge, plus expenses. The fees are set by law, so they are the same at every notary. The land registry bills separately.
Talk it through
To go through your own numbers, call me or send me an email. The first conversation is free and non-binding, in Persian, German or English, in Stuttgart or online. My details are on the contact page.
