KfW Darlehen
(KfW Loan)
KfW is the development bank of Germany – Kreditanstalt für Wiederaufbau. Part of its mission is to support domestic development.
KfW offers co-financing to banks so that your mortgage is not just from the bank but also includes a portion from the KfW. Some program offers loans that of up to 100.000 Euro and beyond that can be financed with the KfW for the purchase of your home in Germany. For some programs you do need to occupy it yourself: in that case you have to move into the property within 12 months after the KfW mortgage is paid out. It does not matter whether it is your first home, or you have already bought other homes.
You can also get KfW funding for an investment property or a second home, like a holiday home.
The KfW charges usually slightly lower interest rates than most banks but requires relatively rapid repayment. Most programs only allow you to fix the rate for 10 years. This can 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 270.000 Euros for energy-efficient newly constructed houses. Due to the very low interest rates, the implicit subsidies can be up to 80.000 Euros.
KfW programs change all the time. You can read in detail about this here: KFW loans and conditions and how it applies to your German mortgage
