How much equity do you need for a tenanted apartment?

By Loro Real Estate team · Last updated: July 2026

Equity needed for a rented apartment is among every investor's first questions, but there is no single figure. Banks' requirements depend on property, creditworthiness and their risk policy. Established guidelines help set a realistic financing range. This guide covers the practical rule of thumb, a Baden-Württemberg apartment example, banks' assessments and financing without equity.

First, every amount mentioned is a guideline, not a commitment. Banks decide individually; the same request can produce different outcomes at two institutions.

The rule of thumb: cover at least purchase costs yourself

The established minimum is to cover purchase costs from your funds: property transfer tax, notary, land register and any brokerage commission, which Loro does not charge buyers. Depending on state and circumstances, these total around 6.5–10% of price. The reason is simple: incidental costs create no asset the bank can realise as security. Paying them yourself keeps the loan within property value.

Financing becomes more comfortable with another 10–20% of price beyond costs. Lower loan-to-value usually improves interest terms, and a smaller loan lowers monthly payments, noticeably improving cash flow. Each additional euro also reduces refinancing pressure after the fixed period. Treat both ranges as guidance: individual bank decisions can vary either way with property and creditworthiness.

Example: €300,000 price in Baden-Württemberg

A simplified rented-apartment example at €300,000 in Baden-Württemberg illustrates the rule. Your actual figures may differ; check current tax rates:

• Baden-Württemberg property transfer tax (5.0%): €15,000
• Notary and land register (around 1.5–2.0%): €4,500–6,000
• Buyer's brokerage commission: €0 at Loro
• Total purchase costs: around €19,500–21,000

This €19,500–21,000 is the example's minimum equity. Adding 10–20% of price, or €30,000–60,000, makes financing substantially easier. Total equity would be around €50,000–80,000. Loan-to-value, interest and monthly payments fall, making rent more able to support the apartment. This is an illustration, not a financing commitment.

How banks assess rented apartments

Banks mainly check three things. First, lending value: a cautiously assessed sustainable value, usually below price, setting the security accepted. Second, debt-service capacity: a household calculation compares income with all expenses and future instalments. Third, creditworthiness, including income, employment, existing commitments and payment history.

For investors, expected rent is only partly credited in the household budget. Banks allow buffers for vacancy, default and non-recoverable costs. Financing must remain viable through temporary lost rent. Each institution applies its own discount, another reason to compare banks. Well-prepared income, asset and property documents speed assessment and improve your negotiating position.

Can you buy without equity?

In principle yes: so-called 100% financing covers the whole price, while you pay costs yourself. Banks grant this only with excellent creditworthiness, secure and sufficient income and a valuable property in a sound location.

Consider the risks openly: full borrowing carries higher interest because the bank takes more risk. Higher payments make negative monthly cash flow likelier, requiring continuing contributions from income. If value falls, no equity buffer remains; the loan may temporarily exceed sale value, problematic for an unplanned sale, especially given limited short-term liquidity.

110% financing for investment property

110% financing goes further: the bank finances purchase costs too. The loan exceeds property value from the outset, leaving part without realisable security.

Requirements are correspondingly strict. Such full financing is conceivable only for households with exceptionally strong income and assets, able to afford higher payments even without rent. The 100% financing risks — higher interest, negative cash flow, no buffer for value changes or post-fix rate rises — are amplified. We do not recommend this model. Anyone considering it should assess viability especially conservatively and seek independent advice.

Our conservative advice: costs plus a buffer

Our buyer-side advisory experience supports a conservative approach: fund at least purchase costs yourself and keep a liquid reserve for maintenance, tenant changes and unexpected expenses. This reserve stays accessible, not invested in financing. A plan that works only in ideal conditions is the wrong foundation for long-term wealth. Sound financing withstands interest changes, rental default and value fluctuations.

We can assess the right equity level together. Loro arranges financing through partner banks and compares institutions' terms, matched to curated, vetted properties across Rhein-Neckar and Hessen, commission-free for buyers. A typical starting point is a rented apartment as an investment. Beforehand, use the interactive investment calculator to vary price, equity and interest and see payments and cash flow. In a non-binding first consultation, we interpret results with opportunities and risks in view.

This article is for information only and does not constitute investment, tax or legal advice.

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