The German government has launched the “Home Ownership for Families” (WEF) program, aimed at assisting low and middle-income families in realizing their dream of owning a home while securing their future. Families with an annual income of up to 60,000 euros are eligible to receive low-interest loans as part of the initiative.
A growing number of families in Germany aspire to create a living space they can shape according to their own preferences. They desire to provide their children with a nurturing environment, often through the ownership of their own house. To address this need, the Federal Ministry of Building has introduced the “Home Ownership for Families” (WEF) support program. Families meeting the eligibility criteria can secure low-interest loans from their chosen financial institution, such as a bank or savings bank.
Why was the WEF funding program established? Rising construction costs and building interest rates pose significant challenges for families with modest and moderate incomes who aspire to achieve homeownership. The subsidy program offers targeted relief to alleviate the burden of construction costs.
Eligible families can secure low-interest loans from local banks participating in the program. By offering support prior to the commencement of the construction project and throughout an extended period, the program significantly eases the financial strain on families.
In 2023, the federal government has allocated up to 350 million euros to support eligible families by providing a ten-year reduction in interest rates.
Who qualifies for the new grant? Families with at least one underage child in the household and a maximum taxable annual income of 60,000 euros are eligible for the new funding. Additionally, families receive an extra 10,000 euros for each additional underage child in the household. Certain conditions apply, including the family’s intention to reside in the property themselves, absence of other residential properties, and no previous receipt of building allowances.
What are the funding amounts? At the launch of the program, the interest rate for KfW loans stood at 1.25 percent effective annual interest for loans with a term of up to 35 years and a fixed interest rate of ten years. Adjustments to the interest rate may occur as the program progresses.
The interest rate offered under WEF is approximately three percentage points lower than the current interest rate for comparable loans from commercial banks. Furthermore, the interest rate is independent of individual creditworthiness (as of June 1, 2023).
Credit Limits:
For “climate-friendly residential building” funding level:
- 1 or 2 children: maximum loan amount of 140,000 euros
- 3 or 4 children: maximum loan amount of 165,000 euros
- 5 or more children: maximum loan amount of 190,000 euros
For “climate-friendly residential building – with QNG” funding level:
- 1 or 2 children: up to 190,000 euros
- 3 or 4 children: up to 215,000 euros
- 5 or more children: up to 240,000 euros
The maximum loan volume achievable is 240,000 euros.
What are the structural requirements for funding eligibility? Eligible new buildings must meet the minimum standard of an efficiency house 40 (EH 40) and demonstrate adherence to the maximum allowable greenhouse gas emissions over the building’s life cycle. To attain a higher funding level, proof of the Sustainable Building Quality Seal (QNG) is required. The following funding levels are available:
- Climate-friendly residential building: This level is achieved when the residential property is constructed according to the Efficiency House 40 standard and meets the greenhouse gas emissions requirements outlined in the Sustainable Building PLUS (QNG-PLUS) quality seal for new residential buildings. The heating system must not rely on fossil fuels or biomass. The KfW leaflet provides further details on the minimum technical requirements.
- Climate-friendly residential building – with QNG: This level is attained when a sustainability certificate is issued for an efficiency house 40, confirming compliance with the requirements of either the “Quality Seal for Sustainable Buildings Plus” (QNG-PLUS) or the “Quality Seal for Sustainable Buildings Premium” (QNG-PREMIUM).
Key Features of the WEF Funding Program: The central promotional instrument of the new home ownership program for families is the KfW loan, which offers reduced interest rates.
The program exclusively supports homeownership in new buildings. Eligible new constructions must meet the minimum standard of an efficiency house 40 (EH 40) and demonstrate compliance with maximum greenhouse gas emissions over the building’s life cycle. Proof of the Sustainable Building Quality Seal is necessary to qualify for higher funding levels.
The involvement of an energy efficiency expert is mandatory during the application process. They will be directly commissioned for the respective construction project.
How does the application process work? Involvement of energy efficiency experts: An energy efficiency expert is required during the application process to verify compliance with building requirements.
Loan application and approval: The loan is applied for through a financing partner before the project begins, and the loan agreement is finalized.
Project implementation and verification: Upon receiving approval, the construction work can commence. An energy efficiency expert verifies and confirms compliance with the building requirements and creates a “Confirmation after implementation,” which must be promptly submitted to the financing partner.
With the launch of the “Home Ownership for Families” program, the German government aims to make homeownership more accessible and affordable for families with low and middle incomes. By providing low-interest loans and offering support throughout the construction process, the program seeks to empower families to create a stable and comfortable living environment for themselves and their children.