Down Payment (Eigenkapital)
The upfront cash needed to buy property
Eigenkapital (down payment) is the cash you bring to purchase a property. In Germany, banks require substantial equity—not just for the property price, but also to cover closing costs.
How Much Do You Need?
German banks typically require:
- 10-30% of purchase price as down payment
- Plus 10-15% for closing costs (notary, property transfer tax, land registry)
Real Example
€450,000 Property Purchase:
- Purchase price:€450,000
- Down payment (20%):€90,000
- Property transfer tax (5%):€22,500
- Notary & land registry:€9,000
- Total cash needed:€121,500
Why So Much Equity?
- Risk management: German banks are conservative and want borrowers to have "skin in the game"
- Closing costs aren't financed: Unlike some countries, you can't add closing costs to the mortgage
- Better rates: Higher equity (30%+) gets you lower interest rates
The 110% Financing Myth
Some banks advertise "110% financing" but it's rare and expensive. Expect 5-6% interest rates vs. 4% with 20% down. For most investors, it's not worth it.
Related Terms
Mortgage(Hypothek / Immobiliendarlehen)
A mortgage (Hypothek or Immobiliendarlehen) is a loan secured by property. In Germany, typical terms include 10-30 year fixed interest rates and 1-3% annual repayment rates.
Leverage(Hebelwirkung)
Leverage (Hebelwirkung) means using borrowed money to increase investment returns. With 80% financing, you control a €500k property with just €100k down, amplifying both gains and risks.
Closing Costs(Nebenkosten / Kaufnebenkosten)
Closing costs (Kaufnebenkosten) include property transfer tax, notary fees, and land registry fees. In Germany, expect 10-15% of purchase price in total closing costs.