The honest answer to "rent or buy?" is uncomfortable: it depends on more inputs than the question pretends. The calculator above is a model, not a recommendation. What it does well is calibrate what each path costs once the comparison is made apples-to-apples.
How the model works
For the buy path, we compute upfront costs (down payment + Grunderwerbsteuer (property transfer tax) at the Bundesland-specific rate + 2% notary + 3.57% broker), then a fixed monthly mortgage payment using the standard Annuitätendarlehen (annuity loan) formula. Each year we add Hausgeld (building service charge) and maintenance (~1.5% of property value annually). The property appreciates at a configurable rate. After N years, the buyer's net position is property equity (current value minus remaining mortgage) minus the total cash they put in.
For the rent path, we track cumulative rent paid as the renter's cost. Rent grows at a configurable rate each year. The crossover year is the first year where the buyer's wealth (equity built up minus everything spent) exceeds the rent the renter would have paid over the same period. That's the answer to "how long do I need to stay to make buying pay off?" If buying never wins under your assumptions, the calculator says so plainly.
What about investing the difference? A disciplined renter who invests their down payment and the monthly cost gap in an ETF can come out ahead even when buying breaks even on costs. That's a separate question, it isn't about renting versus buying, it's about owning the property versus owning the equity market. If that comparison matters to you, the investment comparison calculator handles it directly.
Things that move the answer a lot
Holding period
Closing costs (Grunderwerbsteuer + notary + broker) are roughly 9-12% of the purchase price. Buying is dead money for the first few years until property appreciation and mortgage paydown together exceed those costs. The longer you hold, the more buying wins; the shorter, the more renting wins.
Tilgung rate (initial principal repayment)
Initial Tilgung determines both your monthly burden and your total interest cost over the life of the loan. 1% Tilgung at current rates means a 35-40 year payoff and something like double the lifetime interest of a 3% Tilgung loan that pays off in ~22 years. Most German banks recommend a minimum of 2%. The calculator's default.
The rent-to-buy ratio
If a comparable rental is much cheaper per month than the mortgage + Hausgeld + maintenance, the renter saves substantially each year. In Munich the gap is often tight enough to favour buying after a handful of years; in Leipzig it's often wider and renting wins for longer. Use a comparable-rent figure for the same property, not a cheaper alternative.
Property appreciation
German residential property has averaged ~1.5% real appreciation long-term, with substantial regional variation. Munich and Berlin have outpaced; smaller cities have lagged or fallen. Use a number that reflects your local market, not the national average.
What we don't model
Mortgage interest tax deductibility. Not allowed in Germany for owner-occupied property. Only landlords can deduct interest on rental property.
KfW subsidies and BAFA grants. Available for some energy-efficient properties but too situation-specific to model meaningfully. Add to your down payment if relevant.
Capital gains tax on the property at sale. An owner-occupied home is tax-free regardless of how long you've held it, as long as you've used it as your own residence in the year of sale and the two preceding years. For rented or vacant property, Spekulationssteuer applies if you sell within ten years of buying. Out of scope here, but flag it if you're modelling a short hold on an investment property.
Capital gains tax on the ETF portfolio. Abgeltungssteuer (25% + Soli) applies on realised gains. We compare gross performance because tax circumstances are individual; subtract roughly 26-28% of the renter's portfolio gain in your head to see the after-tax picture.
Mietpreisbremse caps on rent increases. Where in force, these limit rent growth on existing leases. The default 2% rent inflation already reflects the blunt average; use lower if you're in a strongly-protected lease, higher if you're in a market without effective controls.
The bigger frame
Buying isn't just a financial transaction; it's also a decision about mobility, life stage, and how you want to live. A renter with a portfolio of equal wealth has more flexibility; a buyer with the same wealth has more stability. The calculator measures the financial dimension only. Whether the answer leans buy or rent for you depends on what you weight beyond the numbers.