What Is KfW?
KfW (Kreditanstalt fuer Wiederaufbau) is Germany's state-owned development bank. It offers subsidized loans and direct grants for energy-efficient construction, property purchases, and heating upgrades. The rates are far below what any commercial bank can offer because the German government backs these programs.
For expats and newcomers planning to buy or build in Germany, KfW funding can cut your monthly mortgage payment by several hundred euros. You don't apply at KfW directly. Instead, your German bank or a mortgage broker submits the application for you.
Limited Budget: Apply Early
The EH55 tier under KfW 297/298 has roughly 800 million EUR for 2025 and 2026 combined. Once that money is gone, EH55 funding closes to new applicants. The EH40 tier has no published cap yet, but don't wait.
The Five KfW Programs for 2026
Climate-Friendly New Construction
For building or buying a new energy-efficient home. Two efficiency levels with different rates and loan caps. Since March 2, 2026, the rates dropped significantly.
EH40 + QNG (highest standard)
- Up to 150,000 EUR loan
- 0.6% p.a. (10-year fixed)
- Requires QNG sustainability seal
EH55 (good standard)
- Up to 100,000 EUR loan
- 1.0% p.a. (10-year fixed)
- Budget limited: ~800M EUR total
Source: KfW.de, rate effective since 02.03.2026. Market comparison: regular mortgages currently 3.5-4.5% p.a.
Jung kauft Alt (Young Buys Old)
Built for families buying older existing properties and committing to renovate them. One of the best deals in German real estate right now.
0.01%
Rate (7-10yr term)
1.12%
Rate (35yr, 10yr fixed)
150k
Max loan (3+ kids)
Requirements: At least one child under 18. Household income max. 90,000 EUR (+10,000 per extra child). Property must be renovated to EH 85 EE within 54 months. Loan: 100k EUR (1 child), 125k (2), 150k (3+).
Source: baufi24.de, KfW Merkblatt 308. Renovation standard relaxed from EH 70 to EH 85 since 08.01.2026.
Energy-Efficient Renovation
For comprehensive energy renovation of existing homes. Combines a subsidized loan with a repayment grant (Tilgungszuschuss) that reduces what you owe.
- Up to 150,000 EUR loan per unit
- Interest: 2.45-3.12% p.a. (annuity loans)
- Tilgungszuschuss: up to 45% (max 67,500 EUR back)
- Certified energy consultant (Energieberater) required
Source: KfW product page 261. The Tilgungszuschuss effectively turns part of your loan into a grant.
Supplementary Credit for Individual Measures
This one is easy to miss but can be very valuable. If you already received a BAFA or KfW grant for a specific upgrade (insulation, windows, heating), you can add a low-interest supplementary loan on top.
- KfW 358: from 0.01% p.a. (household income under 90,000 EUR)
- KfW 359: standard rate, no income limit (for landlords, investors)
- Requires prior BAFA or KfW grant approval
Source: KfW product page 358/359. Income checked against 2023/2024 tax returns for 2026 applications.
Heating Replacement Grant
Not a loan. A direct grant for switching from oil or gas heating to a heat pump, biomass system, or district heating. No repayment required.
Source: KfW.de, baufi24.de. Speed bonus drops to 17% after 2028. Max eligible costs: 30,000 EUR per home.
All Programs at a Glance
| Program | Purpose | Amount | Rate / Grant |
|---|---|---|---|
| 297/298 | New build (EH40/EH55) | 100k-150k EUR | 0.6-1.0% p.a. |
| 308 | Family buys older home | 100k-150k EUR | 0.01-1.12% p.a. |
| 261 | Energy renovation | Up to 150k EUR | 2.45-3.12% + grant |
| 358/359 | Supplementary credit | Varies | From 0.01% p.a. |
| 458 | Heating replacement | Grant (no loan) | Up to 70% |
Example: How Much Can You Save?
Say you are buying a new EH40 home for 350,000 EUR. You put down 20% equity (70,000 EUR) and finance the remaining 280,000 EUR. Here is what the numbers look like with and without KfW.
With KfW 297/298
- KfW loan: 150,000 EUR at 0.6%, 2% repayment = 325 EUR/month
- Bank mortgage: 130,000 EUR at 3.8%, 2% repayment = 628 EUR/month
- Total: ~953 EUR/month
Without KfW (all bank)
- Bank mortgage: 280,000 EUR at 3.8%, 2% repayment = 1,353 EUR/month
- No subsidized portion
- Total: ~1,353 EUR/month
Savings: roughly 400 EUR per month, or about 4,800 EUR per year over the 10-year fixed period. This is a simplified example; actual payments depend on your bank's offer and repayment structure. Compare mortgage rates here.
How to Apply: Step by Step
Pick the right program
New build? KfW 297/298. Buying an older home with kids? KfW 308. Renovating? KfW 261 or 458. Not sure? A mortgage broker can help you figure out which combination works best.
Hire an energy consultant
Most programs require a certified Energieeffizienz-Experte. They confirm your building meets the technical standards. Find one through the official dena experts list at energie-effizienz-experten.de.
Talk to your bank or broker
KfW loans are never applied for directly. Your Hausbank or a mortgage broker submits the application. They also structure how the KfW portion fits with your regular mortgage.
Get approval BEFORE you start
This is the one rule you cannot break. KfW must confirm your application before you sign a purchase contract or break ground. If you start early, you lose everything.
Build, buy, or renovate
After written approval, you can move forward. Funds are disbursed according to construction progress or upon purchase completion.
SCHUFA, Eligibility, and What Expats Should Know
Your bank will run a SCHUFA credit check as part of the loan process. KfW does not check your score separately, but since every application goes through a bank, your credit history matters. If you are new to Germany, start building your SCHUFA as early as possible. Open a bank account, register your address, and avoid hard credit inquiries.
| Your Status | KfW Eligible? | Notes |
|---|---|---|
| EU citizen | Yes | Same as German nationals |
| Permanent residence (Niederlassungserlaubnis) | Yes | Full access |
| Blue Card holder | Yes | Fewer banks may process; bring more equity |
| Limited residence permit | Usually | Banks may require more capital |
| Tax non-resident | No | Income must be taxed in Germany |
If you are a foreigner applying for financing in Germany, a larger down payment and stable employment contract will strengthen your application. Check your options with our free comparison tool.
Pros and Cons of KfW Loans
Advantages
- Interest rates far below market level
- Tilgungszuschuss reduces your loan balance
- Combinable with regular bank mortgages
- KfW 458 grants require no repayment at all
- Available to foreigners with residence permits
Things to Consider
- Must apply before construction or purchase
- Energy consultant costs (often 1,000-3,000 EUR)
- Strict technical requirements for buildings
- Budget limits can close programs mid-year
- Processing takes longer than regular loans
Related Guides
Frequently Asked Questions
Sources: KfW.de (program pages 297/298, 308, 261, 358/359, 458), KfW press release March 2, 2026, baufi24.de (KfW 308 conditions), ee-experten.com (rate tables), BMWSB (EH55 budget), Finanztip (Jung kauft Alt). All interest rates as of March 2, 2026. Rates, conditions, and budgets can change; verify with your bank before applying.