KFW is the development bank of Germany--Kredietanstalt fur Wiederaufbau. Part of its mission is to support domestic development.
KfW offers co-financing to local banks so that your mortgage is not just from the local bank but also includes a portion from the KfW. Up to 100.000 Euro can be financed with the KfW for the purchase of your first home in Germany. The KfW charges a low interest rates but require relatively rapid repayment, and also allows you to fix the rate for only 10 years. This does imply a high monthly payment in the first 10 years of your loan and relatively expensive follow up financing. The main benefit is that it can lower the interest rate on the loan portion offered by the local bank or even persuade them to offer the loan in the first place.
KFW also offers very attractive subsidized loans of up to 120.000 Euro for energy efficient newly constructed houses. The implicit subsidies can be up to 30.000 Euros.
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