Mortgages when you are self-employed

🏦What banks ask for

The evidence requirement is substantially heavier than for an employee, and it is largely non-negotiable.

Two full years of self-employment is the usual minimum; three is where the field of lenders widens noticeably. Below two years, most banks will not proceed at all, whatever the numbers show.

🧮How your income is actually calculated

Banks take your declared profit after tax, average it over the available years, and often weight the most recent year more heavily. Rising profits are read favourably; a declining trend is read as a risk, and a single strong year in the middle of two weak ones will not carry the file.

This is where a conflict appears that nobody warns freelancers about. Tax advice optimises for lower declared profit; mortgage assessment optimises for higher declared profit. The two years before a property purchase are the wrong moment to minimise your tax base aggressively, and the decision has to be made long before the application.

💶Equity: expect to bring more

The purchase costs come from your own funds as always. Beyond that, self-employed applicants are typically asked for more equity than employees on comparable income — often 20 % of the price rather than 10 %, and full financing is considerably harder to obtain.

The logic is straightforward from the bank's side: variable income plus a low deposit is two risks stacked, and lenders price or decline accordingly.

🏦Which lenders are worth approaching

This is where the difference between banks is largest. Some retail banks effectively do not lend to the self-employed; others have specialist teams that assess business accounts properly. Regional banks and savings banks are sometimes more flexible where you have a long relationship and a local business.

Approaching them yourself in sequence is slow and costly in terms of credit enquiries. This is the clearest case in German lending for going through a broker who knows which institutions will actually engage with a freelance file.

📌Preparing a file that gets approved

📈Health insurance and pensions come into it too

For self-employed applicants, banks look at the whole household budget rather than a payslip. Private health insurance premiums are a fixed monthly cost that reduces available income, and they rise with age — a point some lenders factor in explicitly.

Retirement provision matters for a different reason: most self-employed people in Germany are outside the statutory pension system, which means the property is often expected to carry more of the retirement load. That changes what a sensible loan looks like, not just what an approvable one does.

❓The GmbH question

Running your business through a GmbH changes what the bank looks at. Your salary from your own company is employment income on paper, but lenders see through the structure: as a controlling shareholder you are assessed as self-employed, and they will want the company's accounts alongside your payslips.

The advantage is that a managing director's salary is stable and documented. The complication is that banks also look at the company's profitability, its liabilities and how dependent it is on you personally. Distributions and retained profits are read differently by different institutions, which is another reason the choice of lender matters.

📌A realistic two-year plan

Almost every item on that list has to happen before you know which property you want. That is the awkward truth about self-employed financing in Germany: the preparation window opens long before the decision does.