Housing Subsidies in Germany — Grants, Loans and Programs

Home Ownership in Germany — Is It Worth It?

Germany has one of the lowest homeownership rates in Europe — only about 50% of households own their own property. For many foreigners living permanently in Germany, buying a property can still be a worthwhile investment, especially with rising rents. The state supports the acquisition of home ownership through various programs.

KfW Support — Affordable Loans and Grants

KfW (Kreditanstalt für Wiederaufbau) is Germany's state development bank. It offers various programs for purchasing, building and renovating properties:

KfW-Program 124 — Home Ownership Program

• Interest-subsidized loan up to €100,000
• For the purchase or construction of owner-occupied property
• Interest-free initial years possible (1–3 years)
• Application before purchase through your bank

KfW-Program 261 — Federal Support for Efficient Buildings (BEG)

• For new construction or purchase of an efficient building (high energy standard)
• Loan up to €150,000 per housing unit
• Debt reduction grant up to 25% (depending on efficiency level)
• Particularly attractive for Efficiency Level 40 with sustainability class (NH)

KfW-Program 300 — Home Ownership for Families

• Specifically for families with children and taxable household income up to €90,000 (+ €10,000 per additional child)
• Interest-subsidized loan up to €270,000 (depending on number of children and efficiency standard)
• For new construction or first purchase of new construction (Efficiency Level 40)
• Also applies to foreigners with permanent residence

How Do I Apply for KfW Support?

1. Inform yourself on kfw.de about the appropriate program
2. Speak with your bank or a financial advisor
3. The bank submits the application to KfW for you
4. Important: The application must be submitted before purchase or before construction begins!

Baukindergeld — Family Subsidy (Successor Program)

The original Baukindergeld (2018–2023) has expired. Since 2024, its successor is the KfW-Program 300 "Home Ownership for Families" (see above). This is specifically aimed at families with children and offers particularly favorable conditions.

Who Is Eligible?

• Families with at least one child under 18
• Taxable household income up to €90,000 (one child) + €10,000 per additional child
• First-time acquisition of home ownership (no existing property)
• The property must be owner-occupied
• No restriction to German citizens — permanent residence is sufficient

Wohnriester — Retirement Savings for Your Home

Wohn-Riester (officially: Eigenheimrente) is a form of Riester pension where accumulated capital can be used for an owner-occupied property.

Advantages

• State grants: €175 basic subsidy + €185–300 per child (depending on birth year)
• Tax deduction up to €2,100 per year
• Capital can be used for purchase, construction or debt reduction

Disadvantages

• The subsidy must be taxed in retirement (home savings account)
• The property must be owner-occupied — renting or selling triggers repayment
• Bureaucratic and complex

Who Gets Wohn-Riester?

• Mandatory members of statutory pension insurance
• Civil servants
• Spouses of eligible persons (indirectly eligible)
• Also foreign employees who are subject to social security contributions in Germany

Regional Support — Every Federal State Is Different

Besides federal programs, the federal states offer their own funding programs. These vary greatly and are regularly updated:

Examples (as of 2026)

Tip: Check with your state development bank about current programs. Conditions change frequently.

Housing Construction Premium — Small Support for Savers

If you have a building savings account, you can apply for the housing construction premium:

• Premium: 10% of savings, maximum €70 per person (€140 for married couples)
• Income limit: taxable income up to €35,000 (€70,000 for couples)
• The premium must be used for housing purposes
• Application through the building society (annually by December 31 of the following year)

Employee Savings Subsidy — Extra State Grants

If your employer pays asset-forming benefits (VL) into a building savings account:

• Subsidy: 9% of VL payments, maximum €43 per year
• Income limit: taxable income up to €17,900 (€35,800 for couples)
• The building savings account must run for 7 years (blocking period)

Tips for Foreign Buyers

Legal Requirements

• EU citizens can buy property in Germany without restrictions
• Third-country nationals also can — there is no restriction on property acquisition
• For some funding programs, you need a permanent residence permit (Niederlassungserlaubnis) or at least 5 years of residence

Financing

• Banks typically require 20–30% equity capital (closing costs + down payment)
• A good SCHUFA credit rating is crucial for loan approval
• Limited residence permits can complicate loan approval — be open with your bank

Don't Forget Purchase-Related Costs

Example: For a purchase price of €300,000, closing costs are €30,000–45,000.

Avoid Common Mistakes

• Apply too late: KfW support must be applied for before purchase
• Don't combine programs: Some funding can be combined (e.g., KfW + state support) — ask a financial advisor
• Underestimate equity: Plan for at least 20% of the purchase price as equity
• Forget closing costs: Tax, notary and commission together cost 10–15% of the purchase price

Status: March 2026. All information without guarantee.