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 homeownership programme
- KfW energy-efficient building loan
- KfW energy-efficient renovation subsidy
- KfW child benefit for homeowners
- Riester homeownership pension scheme
KfW loans & subsidies
The KfW bank (Kreditanstalt für Wiedeaufbau) provides several loans and subsidies to those who want to enter the German housing market, as 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 sometimes with other mortgages as well.
KfW 124 homeownership programme (Wohneigentumsprogramm)
The homeownership programme from the KfW supports the purchase or construction of owner-occupied properties. You can borrow up to 50.000 euros at a low annual interest rate, starting from 0,95%. 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).
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 153 energy-efficient building loan (Energieeffizient Bauen)
The 153 loan allows you to borrow up 100.000 euros at a low interest rate (from 1,06%) to build or buy an energy-efficient home.
To apply for this loan, you will need to consult with an energy efficiency expert, who can help you determine whether your property meets the requirements for the loan. You can find an approved expert through this online portal.
KfW 430 energy-efficient renovation subsidy (Energieeffizient Sanieren Investionszuschuss)
This grant of up to 30.000 euros, supported by the Federal Ministry for Economic Affairs and Technology (Bundesministerium für Wirtschaft und Energie), is granted to homeowners who wish to replace inefficient heating and ventilation systems in their properties. This might include installing insulation, renovating windows or replacing boilers.
You can apply for this subsidy directly through the KfW, using their online portal (in German).
KfW 424 child benefit for homeowners (Baukindergeld)
Reserved for first-time buyers, this grant is given to support families who are looking for a home for the first time. You can receive 1.200 euros per year per child, for a maximum of 10 years (12.000 euros in total). For each additional child, you receive a bonus of up to 15.000 euros. To be eligible, you must be entitled to child benefit and have a combined yearly income that does not exceed 90.000 euros (for one child; allowance increases by 15.000 euros for each additional child).
You can apply for the Baukindergeld via the KfW’s online portal (in German).
Exclusions
The KfW loans and subsidies cannot be used for:
- Holiday homes
- Restructuring or extending existing mortgages
- Buy-to-let properties (KfW 124 loan only)
- Maintenance or extensions to a property you already own (KfW 124 loan only)
Homeownership pension scheme (Eigenheimrente)
The homeownership 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.
