Rent vs Buy Calculator

It depends heavily on the city, your time horizon, and what you would do with the capital tied up as a down payment. In high-price cities like Munich or Frankfurt, where purchase prices are 30–40× annual rent, renting and investing the down payment has historically been competitive over a 10–15 year horizon. In smaller cities with price-to-rent ratios below 25×, buying tends to look more attractive after 7–10 years of ownership.

Germany's closing costs are among the highest in Europe: Grunderwerbsteuer (3.5–6.5% of the purchase price, depending on the federal state), notary and land registry fees (roughly 2%), and agent fees where applicable (typically 3.57% including VAT). In total, budget 7–12% of the purchase price on top — money that must come from savings and cannot be financed with the mortgage.

German banks typically want to see 20–30% of the total purchase cost in equity — meaning the purchase price plus closing costs. Some lenders offer higher loan-to-value mortgages, but rates are usually higher and conditions stricter. More equity generally means a lower interest rate and better loan terms, which can meaningfully reduce the total cost of ownership over time.

Beyond the mortgage, expect: Hausgeld or Wohngeld (the monthly service charge in a condominium, typically €2–4/m²/month), a maintenance reserve (1–2% of property value annually is a common rule of thumb), Grundsteuer (property tax — reformed from 2025, with amounts varying significantly by municipality), and building insurance. For a 70m² apartment, these extras can add €300–500/month on top of the mortgage.

Investment properties in Germany receive tax treatment that owner-occupied homes do not: mortgage interest, depreciation (AfA of up to 5% per year on new builds, or 2–3% on older properties), and running costs are all deductible against rental income — and against salary if the property generates a net loss. Many professionals in Germany explore renting where they live and buying a separate property to let out, combining flexibility with the available tax advantages.