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How to get a building subsidy in Germany

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The German government is interested in sustainable development and provides an opportunity to obtain a subsidy for constructing an energy-efficient building. When buying a flat in an energy-efficient house, you can also take out a mortgage on favourable terms and compensate for part of the loan principal. 

You may also use this subsidy when investing in the development of such a building and thus increase the profitability of the project. Let us tell you what is meant by an energy-efficient house and what are the other conditions for receiving the subsidy.

House plan
Franck Boston / Shutterstock

What is a KfW Efficiency House Standard

There is a benchmark for energy-efficient buildings: the KfW Efficiency House Standard. The higher the standard, the less energy the building needs and the higher the cost of the house. Energy efficiency in new buildings is an important part of the energy transition and is therefore subsidised by the government. The amount of financial support depends on how high the KfW Efficiency House Standard is for a new building.

The KfW Efficiency House standard consists of 2 criteria: how high the overall energy demand of the house is and how well the building structure is insulated. This is indicated by the values for the primary energy demand and the heat loss during transmission.

The primary energy demand indicates how much energy is used on average for heating, ventilation and hot water preparation. This figure includes not only the energy consumption in the building itself but also all energy consumption for the preceding processes such as electricity, gas or central heating supply in the house.

Heat transmission losses indicate how much heat energy in the heated space is lost through the building envelope. Good thermal insulation and modern insulated windows ensure low heat losses.

Heat transmission losses
Dario Sabljak / Shutterstock

Types of standards: KfW 40, KfW 40+, KfW 55

Funding for the KfW 55 standard will be discontinued in 2022. KfW only accepts applications for loans and subsidies for the Efficiency House 55 Standard until January 31, 2022. KfW continues to support other efficiency house levels and building renovations

The values 40, 40 plus and 55 define different standards for KfW efficiency. The lower the value, the lower the energy requirement for the property and the more financing can be obtained. A 100 KfW Efficiency House that meets the requirements of the Energy Conservation Ordinance (Energieeinsparverordnung or EnEV) is used as a reference standard.

For example, compared to the EnEV reference building (100 KfW), the Efficiency House 55 requires only 55% of primary energy. In addition, transmission heat loss is only 70%. So its structural thermal insulation is 30% better.

The statutory energy efficiency standard for new construction is 75% of the reference building level. In other words, to receive entry-level funding for KfW Efficiency House 55, a building has to be constructed approximately 25% better than the minimum requirements specified in the EnEV.

KfW Efficiency House 40 Plus is the highest efficiency standard. The regular Efficiency House 40 Plus is additionally equipped with a “plus package”, which is designed for independent electricity generation and usage. Typically, the electricity comes from a photovoltaic system (solar panel system or solar plant), which is combined with a fixed battery storage system and a heat recovery ventilation system. This allows you to save even more energy, become more independent and obtain a subsidy for a new building of the largest size.

The KfW Efficiency House Standard is always the result of a combination of various structural and technical measures, especially what concerns heating, ventilation and insulation. Thermal insulation must be evenly distributed throughout the building structure, and renewable energy sources must be used in the system technology. This can be done, for example, by using ambient heat from heat pumps, by using solar energy to heat hot water and support heating, or by installing a ventilation system with heat recovery (heat recuperation).

It is worth remembering, though, that every house is different. The same measures can lead to various efficiency standards in different buildings. So it is always important to look at the building as a whole and to have a well-developed overall energy concept.

An example of KfW Efficiency House 55:

  • Exterior wall insulation: 18 cm;
  • Roof insulation: 24 cm;
  • Basement insulation: 10 cm;
  • Triple-glazed windows;
  • Brine/water heat pump (draws its energy from the ground).
Building plan
DesignRage / Shutterstock

What financing is available

The maximum subsidy amount for construction and the relevant energy efficiency standards for the building are shown in the table below:

Efficiency standard

Subsidy in % per flat

Amount per flat

KfW Efficiency House 40 Plus

25% of max. €150,000 loan amount / eligible costs

up to €37,500

KfW Efficiency House 40

20% of max. €120,000 loan amount / eligible costs

up to €24,000

KfW Efficiency House 40 renewable energy class (1) or sustainability class (2)

22.5% of max. €150,000 loan amount / eligible costs

up to €33,750

KfW Efficiency House 55

15% of max. €120,000 loan amount / eligible costs

up to €18,000

KfW Efficiency House 55 renewable energy class (1) or sustainability class (2)

17.5% of max. €150,000 loan amount / eligible costs

up to €26,250

1 – Renewable energy sources provide at least 55% of the building's heat supply; 2 – A sustainability certificate is issued for the KfW house.

Since 1 July 2021, the subsidy is also available when renovating housing to the KfW standard or when purchasing a building or an apartment that has recently been renovated to the KfW standards. The maximum amount of the renovation subsidy and the respective energy efficiency standards of the building are presented in the table below:

Efficiency standard

Subsidy in % per flat

Amount per flat

KfW Efficiency House 40

45% of max. €120,000 loan amount / eligible costs

up to €54,000

KfW Efficiency House 40 renewable energy class (1)

50% of max. €150,000 loan amount / eligible costs

up to €75 000

KfW Efficiency House 55

40% of max. €120,000 loan amount / eligible costs

up to €48,000

KfW Efficiency House 55 renewable energy class (1)

45% of max. €150,000 loan amount / eligible costs

up to €67,500

KfW Efficiency House 70

35% of max. €120,000 loan amount / eligible costs

up to €42,000

KfW Efficiency House 70 renewable energy class (1)

40% of max. €150,000 loan amount / eligible costs

up to €60,000

KfW Efficiency House 85

30% of max. €120,000 loan amount / eligible costs

up to €36,000

KfW Efficiency House 85 renewable energy class (1)

35% of max. €150,000 loan amount / eligible costs

up to €52,500

KfW Efficiency House 100

27.5% of max. €120,000 loan amount / eligible costs

up to €33,000

KfW Efficiency House 100 renewable energy class (1)

32.5% of max. €150,000 loan amount / eligible costs

up to €48,750

KfW Efficiency House 55

15% of max. €120,000 loan amount / eligible costs

up to €18,000

KfW Efficiency House 55 renewable energy class (1)

17.5% of max. €150,000 loan amount / eligible costs

up to €26,250

1 – Renewable energy sources provide at least 55% of the building's heat supply.

The subsidy may also be obtained in the future if the application for construction approval or notification of the residential building was made at least 5 years prior to the time of the application.

If in addition an individual renovation schedule (iSFP) is drawn up with an energy efficiency expert, an extra subsidy of 5% may be obtained. In this case, you will have 15 years to renovate the house and achieve the desired level of efficiency.

To receive additional funding, several KfW financing products may be combined, in which case it is possible to get either a direct grant that does not have to be repaid or a low-interest loan.

You may as well obtain a loan for the installation of renewable energy systems with which, for example, a photovoltaic system (solar panel system or solar plant) can be implemented. A grant of up to €28,200 is available for this. Families with children have the opportunity to apply for building subsidies (Baukindergeld) and receive up to €12,000 per child.

The KfW home ownership programme provides financial support with a loan of up to €100,000, with which you can cover the costs associated with building land, materials, notary public, land transfer tax and more.

4 steps to a KfW efficient building:

  1. It is best to plan a project with an energy efficiency expert. You can choose an expert from the list of the German Energy Agency (dena). The KfW provides an additional grant of up to €4,000 for the construction supervision by such an expert. When buying a new house or turnkey condominium, it is best to ask the manufacturer or builder about the KfW Efficiency House Standard right away and request proof of application.
  2. Talk to your financial partner before starting the construction or before buying a new property. After receiving a “confirmation of application” from the energy efficiency expert or the builder, the financial partner will help you apply for a loan.
  3. Sign a loan agreement with your financing partner. Upon the approval of financing, you may enter into a sales-purchase agreement or begin the construction process.
  4. After completion of construction, send a “confirmation of completion” to the financing partner in order to receive a repayment grant. When buying a turnkey or condominium house, this confirmation may be obtained from the builder or prefabricated house manufacturer.

Which of the standards is most profitable in terms of funding

There is no definite answer to this: it all depends on the characteristics of the planned house, the climate region in which it will be located, the desired temperature inside the house, and the intended heating. For example, if you choose between the KfW 55 and KfW 40 Plus for a house designed for a family of four, it is possible to save about 100 euros per year due to lower heating and electricity costs. It may also be possible to resell the house at a higher price.

Bear in mind, however, that the financing of the KfW 55 houses will no longer be available in 2022. Additionally, a KfW 40 Plus house will cost more than a KfW 55 house. The specific cost of construction in each case can be calculated by an energy expert.

Note: The German government encourages the construction of energy-efficient buildings and provides funds to financially support the construction.

To receive a building subsidy, you must draw up a project plan with an energy efficiency expert, apply for the subsidy, conclude a loan agreement and send a confirmation of construction completion.

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