German Mortgage

KfW loan and KfW funding products: An overview

When you’re looking for a home in Germany, you will most likely see the term KfW. It stands for Kreditanstalt für Wiederaufbau – a German government-owned development bank headquartered in Frankfurt. It was founded in 1948 as part of the Marshall Plan to rebuild the German economy. Although funding provided by KfW mainly supports private building construction, it also helps companies and public institutions in other areas, such as in environmental protection and development policy.

Moreover, the KfW funding benefit homebuilders and buyers through various low-interest support programs. They can use the KfW homeownership loan 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:

A couple researching for a kfw loan.

KfW Residential Property Program (124)

KfW Residential Property Program 124 promotes the purchase or construction of owner-occupied homes or apartments. The benefits are:

  • Borrow up to €100,000
  • Up to 3 repayment-free years
  • Attractive mortgage interest rate
  • The applicant may combine this loan with other KfW funding products

You can use this KfW loan for land acquisition and construction costs. The KfW offers the customer two financing options for the homeownership loan, either via an annuity loan or a bullet loan. The aim is to enable mortgages for homeownership at the most favorable and fair conditions possible.

After approval, you can have your KfW loan paid off within 12 months. Partial payments are also possible, maximum extension period is 36 months. Early repayment of the loan is also possible. You have the option to repay the entire outstanding amount for an early repayment fee or “Vorfälligkeitsentschädigung”.

However, if you plan 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, please download this fact sheet or check out KfW’s official German website.

KfW Residential building loan (261)

The KfW residential building loan or “Wohngebäude Kredit” supports those interested in buying or building an efficient house. In addition, the KfW supports energy conversion work on existing houses. If necessary, KfW provides experts to assist in the implementation of these measures.:

  • Attractive annual interest rate to repay the loan
  • Homes refurbished as a “KfW Efficient House” can apply for a grant of up to €150,000 or up to €75,000 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
  • Additional subsidies possible, for example through construction supervision

The KfW mortgage not only favors new construction and individual energy-saving measures for existing properties but also supports them with expert planning and construction supervision, as well as with specialist acoustic planning for their home. The loan can be excellently combined with other KfW loans.

Very attractive is the subsidy payment. It states that the better the energy standard of the house, the more bonus is paid. The better the efficiency house level of your property after renovation, the higher the repayment subsidy. Depending on the KfW status after completion, the borrower receives:

Repayment subsidy due to energy-efficient real property

Efficiency house Repayment subsidy in % per housing unit Amount per housing unit
Effizienzhaus 40 Plus 25 % of max. 150.000 Euro amount borrowed up to 37.500 Euro
Effizienzhaus 40 20 % of max. 120.000 Euro amount borrowed up to 24.000 Euro
Effizienzhaus 40 Erneuerbare-Energien-Klasse oder Nachhaltigkeits-Klasse 22,5 % von max. 150.000 Euro amount borrowed bis zu 33.750 Euro
Effizienzhaus 55 15 % of max. 120.000 Euro amount borrowed bis zu 18.000 Euro
Effizienzhaus 55 Erneuerbare-Energien-Klasse or Nachhaltigkeits-Klasse 17,5 % von max. 150.000 Euro amount borrowed up to 26.250 Euro



You have two options for financing your KfW funding, in the form of an annuity loan or bullet loan. The maximum loan amount is 150000 euros, while the KfW loan can be combined with other funding programs of the KfW. The loan can be spread over several months after its approval and can be repaid at an early stage for a fee. If you need further information, visit the appropriate KfW website.

KfW Residential building loan (262)

The KfW 262 loan is the sister loan of the KfW 261 loan. It supports you in building and buying your dream home. With subsidies, it provides funding for the construction of an efficient house. The KfW funding is also for borrowers who want to renovate an apartment or an older building in an energy-efficient way.

  • Borrow up to €150 000 per housing unit for individual measures
  • Up to 60,000 euros loan per housing unit for a single improvement
  • Attractive mortgage interest rate
  • The applicant may combine this loan with other KfW products

You can get the KfW loan via an annuity loan or via a bullet loan. In addition, there is also a subsidy from the KfW for individual building measures. It also includes additional costs that may be associated with the construction. In the table below, you can find the supported projects and renovations:


Action Repayment bonus
Insulate walls, roof surfaces, basement and floor ceilings 20%
Renew windows and exterior doors 20%
Install or renew summer thermal insulation 20%
Install ventilation systems 20%
Install digital systems that optimize energy consumption or make technical systems smartly controllable 20%

With the repayment subsidy, you save money: The repayment subsidy reduces your loan amount to be repaid and shortens the term. This means you do not have to repay the entire amount. The KfW loan is paid in full or in installments. However, a commitment fee is charged from the 13th month onwards. You have the option of terminating the KfW loan early against payment. However, an early repayment fee will be charged. If you need further information, check the KfW website.

Special repayments with the KfW funding

Under the Energy Efficient Loan program, the KfW allows borrowers to repay the loan amount entirely or installments of €1,000 or more. In comparison, most banks limit particular repayment to a one-time annual payment of 5% or 10% of the loan amount only.

KfW homeownership loans are also more attractive than other banks because they have shallow interest rates and a subsidy to repayment. For instance, if your home achieves a high energy efficiency standard after refurbishment, you can potentially receive a repayment allowance of up to 40% of the loan amount. In conclusion, this means the state will pay part of the reconstruction costs for you, and the loan term will be shorter.

In summary, KfW mortgages are a great alternative for you if you are looking for a house in Germany. They offer fair interest rates and are especially lucrative if you plan to use energy-efficient methods when buying or building a home. With KfW funding, you can also finance a second home, as long as you use it yourself. 

Our LoanLink24 mortgage advisors are happy to answer any questions. Our goal is to help you find the best loan. You may email us at or call us at 0800 05 28000. You can also start with the LoanLink24 mortgage illustrator and check your mortgage options. Are you curious about buying a house in Germany and want to learn more about it? Check our blog to find more helpful content for Expats in Germany.

You can get a great mortgage because thanks to our algorithm. We can compare the offers of more than 400 banks.  Got a question about the real estate valuation or mortgage application process for EU Blue Card holders in Germany? Contact us!

Join our newsletter for mortgage tips!


By entering your details, you agree with the following: