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Equity when buying a house in Germany: how much do you really need?

Updated: 2026-07-12 · Reading time: 12 min · ImmoLens editorial team

“How much Eigenkapital (equity) do I need to buy a house?” is one of the most frequent questions asked by prospective buyers. The short answer: at least the Kaufnebenkosten (the ancillary purchase costs), better still 20 to 30 percent of the purchase price on top, and in any case a buffer you never touch. This guide explains what actually counts as equity, why the Beleihungsauslauf (loan to value) decides your interest rate, how long building it up realistically takes and where full financing becomes dangerous.

1. What counts as Eigenkapital, and what does not?

Three items deserve a closer look, because in practice they are regularly misjudged:

• The securities portfolio. Banks rarely count a portfolio at its full market value, because the price can fall before the money is paid out. Sell in good time and prove the proceeds as a cash balance, instead of negotiating with a fluctuating portfolio statement.
• The life insurance policy. The surrender value counts, but cancelling is often a loss-making move. Do not surrender old contracts with a high guaranteed interest rate just to dress up your equity ratio. Look into borrowing against the policy instead.
• The Muskelhypothek. Banks do recognise your own labour, typically in the range of 10,000 to 30,000 €, often capped at around 10 to 15 percent of the estimated tradesperson costs. Only what you can realistically do yourself is recognised: painting, laying floors, garden work. Not electrics, not plumbing.

2. Equity is not the same as available money

This is the mistake that throws most financings off balance in the first year: the buyer pushes every available euro into the equity to press down the interest rate, and stands on moving-in day with an empty account in a house he does not yet know.

The rule is therefore: three to six months of household expenses must be left over as a liquidity buffer, in addition to the equity, not out of it.

3. The minimum: the Kaufnebenkosten

The absolute minimum amount of equity is the Kaufnebenkosten, because as a rule banks do not finance them. They create no asset the bank could realise: the Grunderwerbsteuer (property transfer tax) is gone the moment it is paid. Depending on the federal state these amount to 7 to 12 percent of the purchase price:

4. The Beleihungsauslauf: the real lever

The Beleihungsauslauf (loan to value) is the ratio of the loan to the value of the property. It is the one metric that translates your equity into a concrete interest rate. Banks work with bands here, and every band you cross costs a premium:

Do 0.3 percentage points sound like little? Let us work it out. Two identical loans of 300,000 €, the same monthly instalment of 1,375 €, ten years of fixed interest, once at an illustrative 3.5 % and once at 3.8 %:

5. The recommendation: 20 to 30 percent plus ancillary costs

From the logic of the interest bands follows the classic recommendation: 20 to 30 percent of the purchase price as equity, plus the ancillary costs out of your own pocket. That puts you safely below the 80 percent mark even after the bank applies its safety discount. More equity mainly pays off up to the classic lending limit of 60 percent; beyond that the additional interest advantage becomes small. From that point the honest question is no longer “how do I push down the rate” but “do I really want to put all my money into a single, illiquid asset”.

6. A gift from your parents: know the allowances

The fastest route to equity is not a savings plan but the family. And German law is more generous here than most people assume. Under § 16 ErbStG (the Inheritance and Gift Tax Act) the following allowances apply, and they apply per donor, per recipient, afresh every ten years:

In practice this means a child can receive 400,000 € from each parent tax-free, so 800,000 € in total. For an equity injection of 60,000 € or 80,000 €, the allowance is never the problem. The form, however, can be.

7. Building up equity: the time calculation

If the family cannot help, saving is what is left. The decisive question is then not “how much do I need” but “how long will it take”. The following table assumes a securities savings plan and a return of 5 percent per year:

There are two lessons in this table. First: at 500 € a month you have about 34,000 € together after five years, of which 30,000 € came out of your own pocket. Compound interest is a weak helper over short horizons, the savings rate is the lever. Second: doubling the period from five to ten years brings more than double the result. Whoever has time, wins.

8. The risks of 100 and 110 percent financing

With a 100 percent financing you bring only the ancillary costs, with a 110 percent financing nothing at all. Both exist, but only with excellent creditworthiness, a secure income and a sought-after location. And both are more dangerous than the interest premium suggests.

The core of the problem: the ancillary costs are gone immediately. Anyone financing a purchase price of 400,000 € plus 36,000 € of ancillary costs in full owes the bank 436,000 € for a property that is worth 400,000 € the day after the purchase. You start 36,000 € underwater, and repayment takes years to catch up.

This scenario rarely arrives because of interest rates, it arrives because of life: separation, job loss, illness, a move for work. Full financing takes away your ability to get out without damage at such a moment. Anyone choosing it anyway should agree a high repayment rate of at least 3 percent, to reduce the shortfall quickly, and a long fixed-interest period, to push out the refinancing risk.

9. A concrete calculation: what do I need?

The last line is the honest part of this calculation. With 110,200 € of equity you are well positioned, but you do not automatically land in the bank's 80 percent interest band. Anyone who wants to reach that band reliably needs closer to 30 percent equity on a 380,000 € purchase price. Plan with that buffer and the interest offer will not surprise you.