Since the beginning of March, house builders have been able to apply for loans from the state development bank KfW as part of the “climate-friendly new construction” program. According to the Ministry of Construction, these guarantee end customers interest of 0.9 percent for ten years on a 35-year mortgage. For comparison: On the open market, customers pay four percent interest for a comparable mortgage. This saves them tens of thousands of euros over a period of ten years. According to the Ministry of Construction, anyone who applies for a development loan with a short credit period of 10 years can even receive an effective end customer interest rate of 0.01 percent per year as part of the promotion.
Who gets the money?
The KfW program is aimed at climate-efficient new buildings. The new construction and the first purchase of energy-efficient buildings with the Efficiency House 40 standard are funded. This means that the energy requirements of the property may not exceed 40 percent of the requirements of a standard house. The KfW supports houses of this class with cheap loans of up to 100,000 euros.
The highest loans of up to 150,000 euros can be obtained by those who also meet the stricter quality requirements for sustainable buildings, namely the quality seal “Sustainable Building Plus” (QNG-PLUS) or “Sustainable Building Premium” (QNG-PREMIUM).
Important: The loan must be applied for before you start building. Apartment buildings can apply for funding per residential unit.
Why is it worth being fast?
This year, 750 million euros are available for the program. If the subsidy pot is empty, other applicants will not receive any loans. If you want to benefit from the cheap loan, you should submit your application promptly.
Past experiences also provide a reason for this. In January 2022, the Federal Ministry of Economics prematurely ended KfW grants for energy-efficient construction and renovation due to a flood of applications. In April there was a restart, which ended after only three hours because the money was quickly exhausted. Since then, funding for new construction has been in emergency mode.
How much will I save with the program?
Current figures from Interhyp show that the average price for a newly built property, without land, is around EUR 475,000 for Interhyp customers, and a climate-friendly new building is around EUR 50,000 more, depending on the equipment. Thanks to the new KfW subsidy program, customers can save just under 300 euros per month when financing such a sample property with a ten-year fixed interest rate (35 years, first year without repayment) compared to the current best interest rate (around 3.6%, ten-year fixed interest rate). save up to 40,000 euros in total.
What does the certification cost me?
Because the subsidy is linked to energy efficiency standards, builders must bear in mind that the costs incurred for construction supervision and certification of a climate-friendly new building can quickly reach the low five-digit range. In the old KfW program, additional funding could still be applied for. A maximum loan amount of EUR 140,000 with a repayment subsidy of EUR 16,000 was possible for a single-family home. A maximum loan amount of EUR 150,000 can be applied for in the newly launched “climate-friendly residential building” new construction subsidy, which takes the increased construction costs into account, but customers no longer receive a repayment subsidy.
Is the higher funding even worth it?
The move from the KfW 40 house to the “Sustainable Building Plus” or “Sustainable Building Premium” quality seals does bring an additional KfW loan of EUR 50,000, but also higher certification costs and more expensive materials. Because the materials protect the environment primarily through sustainability, but tend not to reduce the energy consumption of the house, there are no additional savings.
In individual cases, only planners can answer whether the higher KfW financing is worth it from a purely financial point of view. Builders of single-family houses may actually save if they limit themselves to KfW 40. Since the subsidy for multi-family houses per Apartment can be paid out several times and the additional costs for further certifications per square meter are usually cheaper there, larger projects could benefit from the higher financing. However, general statements remain difficult.
What else do I have to know?
Compared to the old subsidies, the new program offers some simplifications for those wanting to build: The total term of the loan has been extended from a maximum of 30 to 35 years, which extends the financing and enables borrowers to make lower installments. “Especially in times of high inflation, high construction costs and rising capital market interest rates, this is a noticeable relief for customers,” says Jörg Utecht, CEO of the Interhyp Group. The two funding levels of the program, in which builders no longer have to have their property certified for the lower loan amount of 100,000 euros, lower the hurdles for many applicants.
Can anyone build with the new program?
Rather no. “For people who want to build an efficiency house 40 with a sustainability class, the new KfW funding noticeably improves the feasibility of the project,” says Utecht. “For builders with a tight budget who can only just afford the construction in the current situation, a subsidized loan of a maximum of 150,000 euros should not be enough.”
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