Home buyers can save thousands of euros with these subsidy programs
16/04/2024 · Autor: Marius Grumbt
When it comes to financing their property, homebuyers are looking for planning security rather than adventure. However, there has recently been an irregularity in one crucial aspect of real estate financing. Due to budget disputes, various funding programs of the state development bank KfW, including the recently introduced new construction funding, were suddenly suspended. This led to a chaotic situation.
There is now new hope for 2024. The Ministry of Construction is opening up the flow of funds and announcing a new edition of new construction funding. It also intends to improve the conditions for other funding programs. The SPD-led ministry has further plans for the rest of the year from which property buyers can benefit. Below is an overview of the main developments.
The KfW program 'Home Ownership for Families' (KfW 300) was spared cuts in the wake of the budget crisis and is currently available to consumers without restrictions. However, it may be advisable to wait with the application, as the current fixed interest rate is a maximum of ten years. From March 1, KfW will also be offering the low-interest loans with a fixed interest rate of up to 20 years.
This change may prove to be advantageous: At best, the loans are available at an interest rate of 0.01 percent, practically a zero rate. However, it should be noted that the exact interest rate conditions for the period from March 1 are not yet known.
In addition, the entry requirements for this attractive funding program are demanding. It is aimed exclusively at families (including single parents) with at least one minor child and an annual taxable income of up to 90,000 euros. For each additional child, this limit increases by a further 10,000 euros.
The number of children determines the maximum loan amount. For one or two children, this is 170,000 euros, for three or four children 200,000 euros. Families with at least five children can apply for the highest total amount of 220,000 euros. Both the income limit and the maximum loan amounts were raised last year following criticism of the program.
It should be noted that in order to receive the subsidies, the planned home must meet strict energy requirements. Only buyers who wish to build or purchase a particularly environmentally friendly property for the first time are eligible. The house must meet the EH40 standard, which means that the building may only consume 40 percent of the energy required by a legally defined reference house.
In addition, consumers can receive additional subsidies by meeting the so-called QNG standard (Quality Seal for Sustainable Buildings). This standard also takes into account the CO2 emissions generated during the construction of the property. With a QNG seal, the loan volume increases to up to 220,000 euros for families with one or two children, to 250,000 euros for families with three or four children and to 270,000 euros for families with five or more children.
Source: WiWo
The 'Climate-friendly new build' (KFN) funding program is aimed at a broader target group and was last available under the numbers 297/298, depending on whether you wanted to take advantage of the low-interest loans as an owner-occupier or institutional investor or local authority. The maximum loan amount per residential unit was 150,000 euros. In contrast to the 'Home Ownership for Families' program, there are no income limits here. However, the energy requirements must also be met in this case.
In mid-December, the Ministry of Construction suddenly stopped granting loans for the program due to the budget crisis. Now the program is to be relaunched with a funding volume of 762 million euros for this year, with the possibility of a later increase, according to the ministry. When it was first launched in March 2023, the program was launched with a similar funding volume and expanded to a total of almost 1.7 billion euros over the course of the year.
The exact conditions of the relaunch are currently still unclear. The ministry had recently raised the interest rate for this KfW program from 0.01 to 0.44 percent shortly before the funding freeze.
The funding policy under Construction Minister Klara Geywitz (SPD) places a clear focus on new buildings with a good energy balance. However, these properties are more expensive to build than those with a lower efficiency standard and are therefore more accessible to buyers with higher incomes.
In the summer, KfW is planning a new program that will promote the purchase of existing properties with low-interest loans, provided the property is renovated to make it more energy efficient. Details on the specific funding conditions are not yet known, only the planned funding volume of 350 million euros for this year.
Currently, buyers of existing properties can apply for loans of up to 100,000 euros via the Wohneigentumsprogramm with the number 124. There are no income limits or energy requirements. Despite the most recent interest rate of 3.7 percent, which at first glance appears higher than a conventional loan with a ten-year fixed interest rate (3.5 percent), the promotional program can be attractive. Many banks count some of the KfW loan as equity, which can give homebuyers advantages despite the higher interest rate, especially if more equity is contributed and the interest rate on the main loan is reduced as a result.
What else is coming?
The Ministry of Construction has announced the introduction of further support programs aimed primarily at construction companies and real estate companies. One program aims to promote the conversion of commercial space into residential space, while another aims to stimulate the construction of climate-friendly buildings in the low-price segment.
