KfW loans to complement your mortgage loan
Boosting your real estate investment with KfW funding
KfW subsidies for real estate: Take a look!
If you've ever checked out financing for a property or subsidies for modernizations, you may have come across the KfW (short for "Kreditanstalt für Wiederaufbau," EN: Reconstruction Loan Corporation). The KfW is a German promotional bank that aims to improve economic, social, and ecological living conditions on behalf of the federal and state governments. In terms of real estate, this means that KfW offers grants and favorable loans to help more people gain access to the real estate market. Safe to say we approve.
This article gives you an overview of KfW subsidies and the basic requirements, presents three of the most popular programs, looks at the advantages and disadvantages, and explains how you can apply for them. We recommend our magazine article if you want to learn more about the KfW program for modernization. You can find more detailed information on KfW funding in general below. 👌
What is KfW funding?
You've stumbled across this term but don't know what it means? No problem. It's actually pretty simple: KfW funding is government-subsidized funding for people who want to buy, modernize or construct buildings.
The KfW gives out loans for things like aging-in-place remodeling, modernizations, and the construction and purchase of real estate. KfW funding enables you to finance your purchase or remodeling plans to favorable conditions, lowering your monthly mortgage rate. You can apply for individual funding or to complement your mortgage loans.
What are the requirements for KfW funding?
Under which circumstances can you even receive KfW funding? That depends on the type of funding you're interested in. Generally speaking, three requirements apply to all KfW programs:
You have to apply before buying or building your house or apartment.
If you plan on making a building more energy-efficient, you must work with experts in the field.
You have to apply via your bank, your mortgage consultant, or directly via the KfW portal — however, the page is only available in German.
Of course, every program is different and thus also has individual requirements. To learn more about the details of each specific program, you should check out the KfW homepage.
The three top KfW funding programs
There are many different programs at KfW, but some are especially popular. So here's some info on the most sought-after KfW funding programs.
KfW Loan 124: Becoming a homeowner with the KfW Home Ownership Program
The KfW Homeownership Program 124 is designed to give more people access to ownership — we like that because we share the same mission! You can use the program to build or buy a property you can then move into. Loan terms of four to 25 years and fixed interest rates of 5 to 10 years are possible. You can even agree to up to three repayment-free start-up years.
The loan amount is limited to 100,000 euros. In many cases, the homeownership program supplements the mortgage loan.
KfW Loan 261: Energy-efficient construction, renovation, or purchase with the KfW residential building loan
The KfW Home Loan 261 is a program to promote energy-efficiency. If you want to fulfill your dream of owning your own property, you can use it to secure funding for purchasing, constructing, or renovating your energy-efficient apartment or house.
You can secure loans of up to 150,000 euros per unit or 60,000 euros per residential unit for individual measures to ensure energy efficiency and up to 25% of the loan amount as a repayment subsidy. There is also the option of up to 5 repayment-free start-up years. The loan terms are between four and 30 years, with a fixed interest rate of ten years.
KfW Loan 159: Aging-in-place remodeling
Let's say you want to renovate your property to make it suitable for the elderly, barrier-free, more comfortable to live in, or increase protection against burglary. In that case, you can also apply for a KfW loan 159. You can also use the loan to buy converted living space.
Loans of up to 50,000 euros with terms of four to 30 years and fixed interest rates of five or ten years are available under the KfW's Aging-in-Place Remodeling Program. Up to five grace years are also possible here.
If you are interested in one of these KfW loans or would like to know whether there is a suitable subsidy for your plans, you should talk to our experts without any obligation. They can tell you which subsidy suits your situation and which other real estate financing combinations are possible.
KfW program "Jung kauft Alt": Support for families
The "Jung kauft Alt" program supports young families with moderate and lower incomes in purchasing and renovating older properties in need of repair. Families with at least one minor child and an annual income of up to 90,000 euros (plus 10,000 euros for each additional child) can receive low-interest loans from the KfW bank. The properties eligible for funding must be classified as energy efficiency classes F, G, or H and must be renovated to at least Efficiency House 70 EE within four and a half years. The borrower must reside in the property for at least five years.
Applying for a KfW loan
But how do you get the right KfW loan in the first place? Well, we've got good news and bad news. The bad news: In most cases, you can't apply for the loan on your own. The application for KfW funding must be submitted to KfW by a bank, another credit institution or a loan broker. The good news: That means we can do it for you.
However, KfW also offers simple grants. You can apply for these via the portal, although it's only available in German. We're happy to help you with all KfW loans and other questions. 😊
Pros of KfW funding
If you're unsure whether or not you should apply for KfW funding, we've got the pros listed for you down below:
Pros of KfW funding
Low interest rates
You can combine different KfW offers
You don't have to repay KfW subsidies
Terms of up to 30 years for KfW loans
You don't need equity capital for KfW subsidies
You can arrange a later repayment due to grace years
Fixed monthly installments guarantee planning security
Cons of KfW funding
You should also consider the cons in your decision-making. Maybe a KfW loan is not the best option in your situation. Here is an overview of the disadvantages:
Cons of KfW funding
In some cases fixed interest rates of only five years
With a high equity investment, other banks often offer lower interest rates
In low-interest phases, interest rates of other banks are often more favorable
Some offers don't allow unscheduled repayments
Securing KfW funding: Worth it? 🤔
If you want to invest in real estate, it's worth looking at the KfW programs. For example, you can renovate your property with subsidies or usefully supplement your real estate loan.
Like so many other questions about real estate and financing: There is no universal answer to whether KfW funding is worthwhile. It depends on many factors and constellations; and sometimes, taking a different path may be more sensible. In many cases, however, KfW subsidies can be put to good use, for example, to supplement your real estate financing and thus relieve you of some financial burdens.
The key to success here is a comparison of different offers and an individual analysis of your situation and your goals and wishes. If you wish, simply make an appointment with our experts. There you can find out which KfW programs might be interesting for you. 👇
