Property loan without equity: Assess your chances realistically in 5 steps
27.04.2025
12
Minutes
Katrin Straub
Managing Director at nextsure
Do you want to buy a house, but don’t have the necessary deposit? That doesn’t have to be an obstacle. We’ll show you how to check a mortgage without a deposit for buying a house and which hurdles you need to overcome.
The topic in brief and concise terms
A mortgage without a deposit is possible, but it requires excellent creditworthiness and a high, secure income.
Expect significantly higher interest rates (a surcharge of up to 1.5 percentage points) and a longer loan term.
The Residential Property Credit Directive (WIKR) requires banks to carry out a strict assessment of your financial capacity.
The foundation of full financing: understanding the bank’s perspective
Banks consider a property loan without equity to be high risk. They usually require 20 to 30 per cent equity to reduce the risk of default. With a 110 per cent mortgage, which also covers the incidental purchase costs, the bank bears the full risk. These additional costs, consisting of land transfer tax, notary and land registry fees, can amount to up to 15 per cent of the purchase price. Therefore, only a few institutions grant such loans, and only to applicants with excellent creditworthiness. A realistic household budget calculation is the first step towards persuasion. This higher risk directly leads to noticeably higher interest costs for you.
Refine the requirements profile: These criteria you must meet
To obtain loan approval, you must convince the bank of your financial stability. A single factor is rarely enough; it is the overall package that counts. A SCHUFA score of over 97 per cent is a basic requirement. Your income must not only be above average, but also sustainably secured, ideally through two salaries in permanent employment. Banks use the „40 per cent rule“ as an internal benchmark: your total monthly loan instalments should not exceed 40 per cent of your net income. The following points are decisive for the bank:
Very good creditworthiness: A spotless SCHUFA record is non-negotiable.
High and secure income: A permanent employment contract and a salary that clearly exceeds the monthly instalment.
Positive household budget: After all costs are deducted, a significant surplus must remain.
Stable personal situation: Permanent employment in a crisis-proof industry is viewed positively.
Good property value: The property itself serves as security and must be in good condition and in a good location.
Reviewing these criteria shows the bank that you can also bear the long-term burden in the event of unforeseen circumstances, which is crucial for the property financing.
Create cost transparency: calculate interest mark-ups and total costs
A mortgage loan without equity is noticeably more expensive. Banks compensate for the increased risk with an interest rate surcharge of up to 1.5 percentage points. For a loan amount of 400,000 euros, one percentage point already means an additional 4,000 euros in annual interest costs. Over an interest rate fixation period of ten years, this quickly adds up to 40,000 euros or more. A lower repayment rate, often a consequence of the high interest burden, extends the term and increases the overall costs further. A favourable construction finance calculator helps to visualise the monthly burden. The higher remaining debt at the end of the fixed-interest period also entails a considerable interest rate risk.
Actively managing risks: How to improve your negotiating position
Even without equity, you can actively improve your chances of approval. The key is to offer the bank additional collateral that minimises the risk. Even small savings of €5,000 signal a willingness to save and discipline. A well-thought-out strategy can make all the difference. Here are four ways to strengthen your position:
Provide additional collateral: A mortgage-free property, a building savings contract or a life insurance policy can serve as security.
Use a guarantor: A solvent guarantor, often from the family, can significantly strengthen the applicant’s creditworthiness.
Choose a property with potential for appreciation: Properties in sought-after locations or with modernisation potential are rated more favourably by banks.
Check state support: KfW loans can be regarded by some banks as a form of substitute equity, which improves the terms.
Long-term thinking is crucial here, especially with regard to future refinancing for your home loan.
Use expert knowledge: legal framework and design tips
Since 2016, the residential property credit directive (WIKR) has regulated lending in Germany more strictly. It requires banks to carry out a very precise assessment of creditworthiness in order to prevent consumers from becoming overindebted. That means the bank must be convinced that you can repay the loan over the entire term. Our expert tip: Document all income and expenses in full for at least three months before applying. This creates transparency and trust. Professional advice can help you assess your financial situation objectively and develop the right strategy. At nextsure, we support you in avoiding pitfalls and finding a viable financing solution. Solid planning is also important if you later consider a loan for a condominium.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific optimisation suggestions.
More useful links
The Deutsche Bundesbank provides detailed statistics on interest rates and yields for residential construction loans to private households.
As part of its residential property market indicator system, the Deutsche Bundesbank provides current interest rates for residential construction loans in Germany.
Statista provides a statistical analysis of the equity share in property financing.
The Federal Statistical Office (Destatis) offers comprehensive tables on house prices and land prices in Germany.
Wikipedia offers a comprehensive overview of the topic of property financing.
The Consumer Advice Centre provides detailed information on key aspects of construction and property financing and offers consumer advice.
The KfW provides information on its Home Ownership Programme (124), which supports the promotion of home ownership.
The Deutsche Bundesbank regularly publishes financial stability reports, which provide insights into the stability of the German financial system.
FAQ
What are the biggest risks of a property loan with no deposit?
The greatest risks are the higher interest costs, the longer term and the high remaining debt. If interest rates rise by the time of refinancing or the property value falls, this can lead to significant financial problems.
What documents do I need for the exam?
You will usually need the last three payslips, permanent employment contracts, a detailed household budget calculation, a SCHUFA credit report, as well as all property documents (brochure, land register extract).
Does a guarantor improve my chances of getting a loan without a deposit?
Yes, a solvent guarantor can significantly improve your chances. The bank gains additional security as a result, which reduces the credit default risk from its perspective and can lead to better terms.
What is the difference between 100% and 110% financing?
A 100 per cent financing covers only the purchase price of the property; you must cover the ancillary costs (approx. 10–15 per cent) yourself. A 110 per cent financing covers both the purchase price and the ancillary costs.
Does age play a role in lending?
Yes, under the Residential Property Credit Directive, the bank checks whether the borrower can repay the loan within their statistical life expectancy. This can make lending more difficult for older applicants.
Can I use government funding such as KfW loans?
Yes, KfW funding programmes can often be integrated into the financing. Some banks even treat them as a kind of substitute for equity, which can improve the terms of the main loan.
