German Mortgage

An overview of the KfW funding products

When you’re shopping for a home in Germany, you will most likely see the term “KfW”. Kreditanstalt für Wiederaufbau (KfW) is a German government owned development bank headquartered in Frankfurt. It was founded in 1948 as part of the Marshall Plan to rebuild German economy.

Although funding provided by KfW mainly support private building construction, it also supports companies and public institutions in other areas, such as in environmental protection and development policy.

Moreover, homebuilders and buyers can be benefitted through various low interest support programs by KfW. They can use the KfW loans to help purchase, build or renovate a home. Borrowers can often combine one funding program with others. Your mortgage broker should help you work with lenders to secure KfW funding. Here are some options:

KfW Residential Property Program 124/134:

KfW 124 promotes the purchase or construction of owner-occupied homes or apartments:

  • Borrow up to €100,000
  • Mortgage interest rate from 0.84%
  • Applicant may combine this loan from other KfW products.

You may use this KfW loan for land acquisition and construction costs.

This program also allows great flexibility in repayment methods. Borrowers can choose fixed rates or opt for years of interest-only payments. But similar to most mortgage offers in the market, there could be prepayment penalties.

However, if you are planning to purchase a buy-to-let property, you would not be eligible for this KfW funding program.

For more information about the KfW residential property program 124/134, please download this fact sheet or check out KfW’s official German website.

KfW Energy Efficient Loan 153:

KfW also promotes home modernization projects that enhance energy efficiency:

  • From 0.95% annual interest rate plus a subsidy of €18,000 to €30,000 to help repay the loan.
  • Homes refurbished as a “KfW Efficient House” can apply for a grant up to €120,000, or up to €50,000 for individual measures or packages of measures.
  • Immediate commitment by KfW: once everything has been set with your lender, KfW takes action on their funding decisions.
  • The better the energy standard, the higher the repayment bonus.

KfW Baukindergeld 424 :

First-time buyers with children are eligible for a grant of €12,000 per child via a federal government initiative called Baukindergeld. To qualify, you must be entitled to child benefit and and the income for families with one child cannot exceed €90,000. The applicant income scale increases by €15,000 per child. This subsidy covers children under the age of 18 at the rate of €1,200 per year for 10 years. It does not need to be repaid.

There are a myriad of benefits of choosing KfW funding programs over the other banks. Take special repayment as an example. Under the Energy Efficient Loan program, KfW allows borrowers to repay the loan amount completely or with instalments of €1,000 or more. In comparison, most banks limit special repayment to a one-time annual payment of 5% or 10% of the loan amount only.

KfW loans are also more attractive than other banks because it has very low interests and a repayment subsidy. For instance, if your home achieves high energy efficiency standard after refurbishment, you can potentially receive a repayment allowance of up to 27.5% of the loan amount. This means the state will pay part of the reconstruction costs for you and the term of the loan will be shorter.

You can still apply for Baukindergeld in 2021, if you have signed the contract by the end of March.

Here you can also find more information about the KfW program and program goals.

We are happy to answer any questions. Via email at or by phone +49 (0) 30 5683 7535. You can also start with the LoanLink mortgage illustrator here:

Got a question about the real estate valuation or home purchase process for non-German resident in Germany? Contact us!

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