“New KfW subsidy for home ownership: Who qualifies and what it offers”

Since the turn of the year, families can no longer apply for child benefit. There is now a new KfW subsidy for this. Who gets it and what it brings.

High prices, rising interest rates, long waiting times: Anyone who wants to build a house now needs patience and, above all, more money than before. Then came the news that the federal government was ending the popular Baukindergeld a year earlier than planned, which for some was bad news (more on this here).

It is particularly difficult for families with low or middle incomes to fulfill their dream of owning their own home. A new subsidy from the German Reconstruction Loan Corporation (KfW) is intended to help: the “Home Ownership for Families” program (KfW 300). We show what the successor to the Baukindergeld can do, what the advantages and disadvantages are.

The new KfW program will start on June 1, 2023 and is aimed at families with low and middle incomes who want to build a climate-friendly house or buy a new climate-friendly property in order to live in it themselves. In the case of a purchased new building, the building acceptance must not be older than twelve months.

In addition, the taxable annual household income for one child must be less than 60,000 euros. For each additional child, the income limit increases by 10,000 euros. You can find out how high your taxable income is from your tax assessment from the tax office (more on this here).

The decisive factors here are the mean values ​​for the second and third calendar year before the application is submitted. This means: If you apply for funding in 2023, the average of the income from 2020 and 2021 applies.

By way of comparison: the income limit was more generous for child benefit. They received it if the taxable annual income was less than 75,000 plus 15,000 euros per child. The property also did not have to be climate-friendly and could have been built a long time ago.

You will only receive the new funding for families if your newly built residential building meets at least the KfW Efficiency House Standard 40. These properties use only 40 percent of the energy that a regular house or apartment requires. In addition, the building must not be heated with oil, gas or biomass and only emit a certain amount of CO2 over its entire life cycle.

A larger loan amount is subsidized if your house gets the even more sustainable so-called QNG standard. QNG stands for “Sustainable Building Quality Seal” and means that aspects such as the use of environmentally friendly building materials are also taken into account.

Unlike the Baukindergeld, there is no subsidy in the new support program, but a loan. So you don’t get any more money for free. Instead, you can take out a low-interest loan from KfW.

The amount depends on how many children you have and whether the new building receives the “Sustainable Building Quality Seal” (see above). The maximum possible loan amount is 240,000 euros. For example, a family with two children who wants to build a climate-friendly house without sustainability certification can apply for a maximum of 140,000 euros in funding.

An advantage over the expired child benefit is that the money flows directly at the beginning of the financing. You can use it to replace a lack of equity and thus pay for the ancillary construction costs, for example. This was not possible with the Baukindergeld because it was only paid out gradually.

However, there is criticism of the lower income limits coupled with the requirement to build energy-efficient houses. “The way the funding program is currently designed, it is only suitable for a very limited target group,” says Michael Neumann, CEO of the credit broker Dr. Small. “The greatest need for borrowed capital arises with new buildings, in particular due to the currently required energy efficiency standards. Only a few can really afford these when building their own home – despite the new subsidy program.”

He also considers the limitation to new buildings to be too short-sighted. Because these required more resources than existing buildings. “For climate protection reasons, the exclusive promotion of newly built real estate does not seem sensible to me,” says Neumann. “In my opinion, the rededication and increase of existing properties should be further strengthened.”