Financing for renovation and construction of energy-efficient houses: state money for houses and heating

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Written By Kampretz Bianca

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Financing from KfW and Bafa is available for the creation of own housing, energy-saving construction and renovation, for the purchase of cooperative shares for own-use living spaces and for age-appropriate conversions.

Efficiency house serves as a reference

Basically, the better the energy balance of a home, the greater the financing will be. In order to classify the energy balance of a house, KfW Bank has what is called House efficiency standard developed. Indicates how high a home’s energy requirements are relative to a comparable new building.

The highest standard that can be achieved with federal financing for efficient buildings (BEG) is KfW Efficiency House 40. It uses 40% of the energy of a comparable new building from 2009. The lowest standard still eligible for financing for a renovation is o KfW 85 Efficiency House.

Promote energy-efficient renovation

The focus of state financing is energy renewal. Funds are available for a complete renovation or for individual measures. For a complete renovation, the KfW low-interest loans with repayment subsidiesindividual measures in the building envelope promote this Bafa with donations. KfW is responsible for the new heating subsidies.

The money will only be available if the measures meet certain minimum technical requirements. Furthermore, the work must generally be carried out by specialists. As a rule, therefore, it makes sense to have one in advance Energy efficiency experts be turned on, even if it is not mandatory, as is the case when replacing the heating system. Bafa pays half the fee, but a maximum of 5,000 euros.

Tip: Ours shows which regulations homeowners must follow when renovating Building Energy Act Overview.

Repayment Subsidy Loans for Full Renewal

Financing is greater for a complete renovation of an efficient home. If at least 65 percent of energy needs are covered by renewable energy, a loan with reduced interest of up to 150,000 euros and a repayment subsidy of up to 37,500 euros is possible. If it is a house with a particularly poor energy standard (“Worst Performance Building”), the reimbursement subsidy can go up to 52,500 euros. The repayment subsidy reduces the loan amount to be repaid and shortens the term. Borrowers do not need to repay the full amount.

Tip: You can find best practice examples in our article Tackle modernization appropriately.

Subsidies and additional credit for individual measures

There are subsidies for individual renovation measures, for example thermal insulation, replacement of windows and doors or new heating. Heating financing is provided by KfW and other efficiency measures are financed by Bafa. The Bafa grant is equivalent to 15% of the costs.

If an individual renewal plan (isFP) is available, there is an additional 5%. A maximum of 30,000 euros per residential unit is eligible for financing. They increase to 60,000 euros if the iSFP bonus is granted for the measures. In total, a grant of up to 12,000 euros is possible.

There is a KfW for self-employed owners to finance the remaining costs low interest supplementary loan up to 120,000 euros. The prerequisite for the supplementary loan is a grant notice or a grant commitment from KfW or Bafa.

Tip: We can help you find the right heater Heating and hot water guide. If you choose a heat pump, our test is Air-to-water heat pumps useful.

Energy-saving renovation with Wohn-Riester

From the beginning of 2024, the credit saved on Riester contracts can also be used for energy-efficient renovations of apartments and houses for personal use. The prerequisite is that a specialized company carries out the work and confirms that the measures meet the legal requirements for financing.

Withdrawal is also possible if owners wish to use the KfW heating subsidy. For this purpose, only the grants granted are deducted from the declared expenses and not the total financed costs. The Central Retirement Asset Office of the German Pension Insurance confirmed this to Finanztest.

In principle, however, the same applies to combinations with other financing: if the total financing exceeds the limit of 60 percent of financed expenditure, the subsidy will be reduced accordingly.

New energy-efficient buildings

The new buildings are financed through the KfW program “New climate-friendly buildings”. To obtain a KfW loan with reduced interest of up to 100,000 euros for new buildings, they must meet at least the “Efficiency House 40” standard. They must also meet certain requirements regarding greenhouse gas emissions in the construction cycle and heating based on fossil fuels cannot be installed. The house is also with the Quality seal for sustainable buildings (QNG) certified, the loan increases to 150,000 euros. The interest rates on KfW’s new construction loan are significantly cheaper than market interest rates.

Home ownership for families

For families with at least one child who are building a new house or buying a new building, there are particularly cheap loans from KfW – since October 16, 2023, with significantly improved conditions. Depending on the size of the family and the standard of the building, the maximum loan amount is between 170,000 and 270,000 euros.

However, candidates are not expected to earn too much. For a family with one child, taxable family income cannot exceed 90,000 euros per year. For the second child and each additional child, the limit increases by 10,000 euros each. The decisive factor is the average taxable income in the second and third years prior to filing the application.

Requirements for the building and financing levels correspond to the “New Climate Friendly Building” program (see above): The building must at least reach the “Efficiency House 40” standard, meet certain requirements for greenhouse gas emissions in the construction cycle and no fossil fuel-based heating can be installed. The house is also with the Quality seal for sustainable buildings (QNG) certificate, the loan amount increases.

Up to 100,000 euros for your own home

KfW supports the construction or purchase of your own homes or condominiums with a loan of up to 100,000 euros. Unlike financing programs for energy-efficient construction and renovation, there are no special requirements regarding energy efficiency or sustainability. However, there are no reimbursement allowances for this.

The interest rate is often not very attractive at first glance. However, since a KfW loan can improve bank loan conditions, the KfW loan may still be worth it, like ours KfW Comparison Calculator show.

Up to 50,000 euros for age-appropriate renovations

On the other hand, the interest rates of the KfW age-appropriate conversion program are attractive. There is a loan of up to 50 thousand euros to break barriers, regardless of the applicant’s age. The promotional loan can also be used to improve theft protection.

Promote cooperative living

There is also a promotional loan of up to 100,000 euros for buyers of cooperative shares for a cooperative apartment for their own use – both when establishing a new property and when participating in an existing housing cooperative. There is a 15% repayment subsidy for the loan.

Submit your financing request in a timely manner

The following applies to almost all financing programs: Homeowners generally need to apply for financing before they can sign a delivery and service contract or purchase agreement. They may only have used planning and consultancy services in advance.

There is an exception for heating subsidies. Candidates must have already signed a service provision and delivery contract with a specialized company. The commission must then contain the condition that it be linked to the financing promise.

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