October 12, 2026, 12:16 pm | Read time: 5 minutes

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Why are there government subsidies for buying and building houses?

In recent years, the prices for all types of real estate have increased significantly. According to the Federal Statistical Office, the costs for single-family and two-family homes, as well as condominiums, have risen by a full 82 percent between 2010 and 2025. It’s no wonder that buying and building houses is becoming less affordable. To ensure that already built houses from past decades are also considered in the market, there are several government subsidies designed to make both the purchase and construction of real estate more attractive.

These subsidies allow for loans to be taken out under different, better conditions. Often, the interest rate is lower, but there are specific requirements for approval and maximum amounts. In most cases, the energy efficiency of the house being built is crucial.

What subsidies are available for energy-efficient houses?

When building and buying energy-efficient houses, there are various ways to access funding. According to expert Henning Ludwig, the KfW subsidy offers two different options for builders and buyers.

1. “Climate-Friendly New Construction – Residential Buildings” (KfW 297/298)

“This program supports the construction of climate-friendly real estate. Depending on the efficiency and sustainability standard, subsidized loans of up to 150,000 euros per residential unit are possible,” explains Henning Ludwig. For this subsidy option, the interest rate starts at 1.0% effective annual interest, with a term of up to 35 years. However, like other loans, there is an interest rate lock-in, which applies for up to 10 years.

The key facts about this program at a glance:

• applies to Efficiency Houses 55, Efficiency Houses 40, and Efficiency Houses 40 QNG
• The subsidy does not apply to refinancing, additional financing of ongoing projects, or the purchase of land
• The loan amount depends on the subsidy level achieved by the house

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2. “Homeownership for Families – New Construction” (KfW 300)

“This program is particularly suitable for families and single parents,” Ludwig continues. “Requirements include that the property is owner-occupied, at least one child under 18 lives in the household, and certain income limits are met. The possible loan amount varies and can be up to 270,000 euros,” the expert explains to myHOMEBOOK.

Here, the interest rate starts at 0.01% effective annual interest, and the term is 35 years with up to 10 years of interest rate lock-in.

The key facts about this subsidy for a property at a glance:

• applies to the new construction and initial purchase of owner-occupied and climate-friendly real estate (residential buildings and condominiums)
• applies in stages for the Efficiency House that reaches level 40 or level 40 QNG-PLUS
• A requirement is that the property is at least 50 percent owner-occupied

Important: For this subsidy program, the taxable household income must not exceed 90,000 euros (with one child) per year. An additional 10,000 euros is added for each additional child.

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What subsidies are available for lower energy efficiency?

Of course, not everyone needs to build a house classified as QNG to receive funding. Henning Ludwig also reports this. “Lower subsidies are possible. The ‘KfW Homeownership Program’ (KfW 124) is a funding measure that has been in place for a long time. It is not tied to an energy-efficient measure and is generally suitable for anyone acquiring a property for personal use. However, the interest rate granted is only slightly below the current market rate.” This means that this subsidy is significantly less attractive in its terms than the other options mentioned.

Grants for existing properties

Not everyone wants to build a house or invest in new construction. In some cases, it may even be more cost-effective to buy and renovate an older, existing house. There are, of course, ways to partially finance the property with government measures.

“The KfW Program 308 ‘Young Buys Old’ is specifically aimed at families and single parents who want to acquire an existing property with high renovation needs,” explains the financing expert. A requirement for this program is to purchase a property that falls into energy efficiency class F, G, or H. The income of the applicants also plays a crucial role.

Dr. Burkhard Touché, subsidy advisor of the Association of Private Builders, adds: “When acquiring an existing property, an energy renovation to an Efficiency House 85 is required, where the low-interest loan program of the KfW for Efficiency Houses or the KfW grant program for heating replacement or the Federal Office for Economic Affairs and Export Control for individual insulation measures can be used.”

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“Depending on the number of minor children living in the household, subsidized loans of up to 100,000, 125,000, or 150,000 euros can be applied for.” Borrowers should know: “The subsequent energy renovation must be completed within a specified period,” Henning Ludwig further explains.

Additionally, there is the “Residential Building – Loan” program (KfW 261). It focuses on the energy renovation of the building to become an Efficiency House. The more the house is renovated and refurbished to reach one of the Efficiency House levels, the more varied the loans can be. Those who wish to apply for this funding measure can be granted a low-interest loan “of up to 150,000 euros per residential unit.” The repayment subsidies make this loan particularly attractive. They reduce the amount of the loan to be repaid and also shorten the loan term.