Owning your own home can be expensive: mortgage, utilities and maintenance are just some of the monthly costs homeowners have to take care of. Luckily, the German government (Bundesregierung) provides several allowances and subsidies for homeowners to offset these costs.
These include:
- KfW home ownership programme
- KfW home ownership for families loan
- KfW renewable energy loan
- KfW efficient residential building loan
- Riester homeownership pension scheme
KfW loans & subsidies
The KfW bank (Kreditanstalt für Wiederaufbau) provides several loans and subsidies to those who want to get a foot on the German property ladder, well as homeowners who want to make their properties more energy efficient. The KfW loans and subsidies can usually be combined with each other, and usually with other mortgages as well.
KfW 124 home ownership programme (Wohneigentumsprogramm)
The home ownership programme from the KfW supports the purchase or construction of owner-occupied properties. You can borrow up to 100.000 euros at a low annual interest rate, starting from 3,18%. This not only includes the sale price, but also renovations, fees for mortgage advisors and closing costs like notary fees, or property transfer taxes (which are not covered by most types of mortgages).
The loan can be used to purchase a building plot, construction costs, and the cost of hiring an architect, if you are building a new home, or for the purchase price, cost of repairs, conversions and modernisations, as well as notary and broker fees, if you are buying a home. It is not suitable for holiday homes or buy-to-let properties.
To apply for the 124 loan, you can consult with a “financing partner” (Finanzierungpartner), i.e. your German bank, insurance advisor or financial advisor, who will apply to the KfW on your behalf. You must do this before you purchase the property or construction begins, if you are building your own.
KfW 300 home ownership for families loan (Wohneigentum für Familien)
If you are a family with kids and are looking to buy or build an energy-efficient home, you can apply for a loan from the KfW to support the project.
The 300 programme is a loan of up to 170.000 to 270.000 euros, with an annual interest rate of 0,10 percent, which can be used to purchase or construct a house or apartment. To be eligible, you must have at least one child under the age of 18 and a gross household income of no more than 90.000 euros per year (plus 10.000 euros for each additional child). You cannot apply for the home ownership for families loan if you previously received Baukindergeld, or if you already own a residential property in Germany.
The building will meet the requirements if it reaches efficiency house level 40 (Effizienzhaus-Stufe 40), emits so little CO2 that it meets the criteria for the “Sustainable Building Plus Quality Seal”, and is not heated with oil, gas or biomass.
To apply for this loan, you’ll need to consult with an energy efficiency expert or a consultant for sustainability. They can put together some important documentation for you on the energy-efficiency of your project, before you apply via a financing partner like your bank.
KfW 270 renewable energy - standard loan
If you want to convert the heating or electricity systems in your home to make them more sustainable, you can apply for the KfW 270 renewable energy loan.
The loan can be used to fund the construction, expansion and acquisition of systems for the use of renewable energies, including associated costs for planning and installation. This includes things like:
- Solar panels
- Hydroelectric power generation systems
- Systems for generating electricity from wind power
Although the funding is primarily aimed at businesses, private individuals can also apply, so long as they feed at least part of the electricity or heat generated into the national grid. You can apply for the funding via your bank.
KfW 261 efficient residential building loan
If you want to renovate your house or apartment in an energy-efficient way, or would like to purchase an energy-efficient house, you can apply for the KfW residential building loan and get up to 150.000 euros in a loan with a 1,07% annual interest rate, plus a 5- to 45-percent repayment subsidy, meaning you pay back less than you borrowed overall.
You can apply for the funding to:
- Completely renovate a property to make it more energy-efficient
- Pay for the energy-efficiency renovations in a newly-renovated home that you are purchasing
- Convert a non-residential space into a home
The total amount you can borrow depends on how energy efficient your renovated property is and how high the eligible costs are. The process of applying for this funding is quite complicated, but in a nutshell you first need to consult with an energy efficiency expert, who can provide you with paperwork to get your project approved by your financing partner.
Home ownership pension scheme (Eigenheimrente)
The home ownership pension scheme (Eigenheimrente or, more commonly, Wohn-Riester) allows you to put money saved in a Riester private pension scheme towards buying a house, paying off your current mortgage, or modifying your home to prepare for old age. It is intended to help those approaching retirement pay off their mortgage more quickly, and thus avoid unaffordable mortgage repayments once retired.
Anyone who contributes to a Riester pension receives a yearly bonus of 175 euros from the state (plus 300 euros per child); these bonuses can also be put towards the cost, effectively meaning that the state helps you to buy a property.
You can open a Wohn-Riester savings account through your regular bank.