House financing: What state funding is possible?

Buying a house represents an extensive project, which should be well thought out even from the financial side. Only a few private builders and home buyers can fully finance their own home with equity, and a loan must be made. In addition, there are often state subsidies that can significantly reduce financing costs. What are the options?

House financing by the Kreditanstalt für Wiederaufbau (KfW)

The aim of the state-owned Kreditanstalt für Wiederaufbau is above all to promote energy-efficient housing. That is why the purchase of a house or apartment that complies with the modern energy standard will be rewarded with a repayment subsidy of up to 15,000 euros.

In addition, KfW provides loans with an annual interest rate of 0.75%, before April 2016 up to 50,000 euros, and then up to 100,000 euros. This form of financing can be applied for the purchase or construction of real estate with the following funding standards:

  • KfW Efficiency House 55
  • KfW Efficiency House 40
  • KfW Efficiency House 40 Plus
  • KfW Efficiency Houses 70 will only be available until March 31, 2016

The actual lending rates for your home purchase or home purchase are based on the energy saving potential of the property. There will be a 20-year fixed-interest period from 1 April 2016 for the 20 to 30-year loan terms.

What requirements does the house have to fulfill for KfW funding?

To grant the above loan, the property must comply with the minimum technical requirements of KfW. The state-owned bank provides corresponding leaflets that are to be downloaded from the homepage.

The purchase of holiday homes is not supported by this product, nor does KfW provide additional finance for completed or completed construction projects.

State funding for real estate without current efficiency standard

You are planning to buy a house that does not meet the above energy standards? If so, the KfW home ownership program may be in question for you, the possible loan amount here is up to 50,000 euros. The lowest interest rate currently stands at 1.11% (end of 2015).

Especially in low-interest phases, however, the comparison with other credit offers is worthwhile to find out whether KfW really offers the best financing option. Since the capital requirement usually goes beyond the 50,000 euros anyway, you are sure to have some bank talks in the house.

Residential Riester for home financing: use allowances

State promotion of home ownership is not only about the KfW, but also by residential Riester. Up to 100% of the assets saved on a Riester contract may be used for home purchase, ask your financial adviser.

If home purchase is not planned immediately but in a few years, it may be worth your while to sign a new Riester contract. Each eligible person receives 154 euros per year as state allowance (source).

Under 25-year-olds may even count on an additional starter bonus of 200 euros. The child supplement for parents is also 185 euros per year for offspring born before 2008 and 300 euros per year for younger children.

Grants of individual federal states

The federal states also offer government subsidies for house financing, and there are often tailor-made offers for families and people with disabilities. The following banks are your contact persons depending on the desired place of residence:

HamburgInvestment and Development Bank (IFB)
BremenBremer Aufbau Bank (BAB)
Mecklenburg-VorpommernState Development Institute Mecklenburg-Vorpommern (LFI MV)
Schleswig-HolsteinInvestment Bank Schleswig-Holstein (IB.SH)
Lower SaxonyNBank
North Rhine-WestphaliaNRW Bank
HesseEconomic and Infrastructure Bank (WIBank)
SaarlandSaarland Investment Bank (SIKB) / State Office for Central Services (LZD)
Rheinland-PfalzInvestment and Structural Bank (ISB)
BavariaBayerische Landesbodenkreditanstalt (Bavaria Labo)
Saxony-AnhaltInvestment Bank (IB) Saxony-Anhalt
SaxonySaxon Development Bank (SAB)
BrandenburgInvestment Bank of the State of Brandenburg (ILB)
BerlinInvestment Bank Berlin (IBB)
ThuringiaThuringian construction bank

Tips & Tricks

For information purposes, it is worth visiting the digital funding database of the Federal Ministry of Economics, where there is a practical search function. Get informed online before arranging a personal consultation with the responsible bank.

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