Inflation, interest rate hikes and rising commodity prices are making real estate financing more and more expensive. In addition, the financing of a property is associated with considerable risks that have to be calculated. Various state subsidy programs can facilitate real estate financing, but which subsidies can be used?
Wohn-Riester: The property as a pension plan
The so-called “Wohn-Riester” is certainly the most well-known funding option for home financing. Since the contract is intended to be used to live rent-free in old age, the Wohn-Riester is also referred to as a homeowner’s pension. The prerequisite is that the subsidized property is used long-term and not sold (without good reason) and that the loan is paid off by the time you retire, otherwise there is a risk of subsequent taxation of the subsidized capital.
The subsidy consists of an annual allowance on the one hand and tax savings on the other: If the assets saved – for example through monthly installments – exceed four percent of the gross annual income, the full allowance of 175 euros per year is paid out and can be taxed as a special expense be made. For families, another 300 euros per child can be added. The credit from classic Riester contracts can be used for real estate financing.
KfW funding programs for energy-efficient living
Subsidies and low-interest loans can be applied for at KfW, the Reconstruction Loan Corporation. The KfW home ownership program provides loans of up to EUR 100,000 for energy-efficient real estate. As part of the “Climate Protection Program 2030”, the following applies: The better the energy balance of the property to be financed or renovated, the higher the subsidy. Until the end of the year, preference will be given to new buildings, followed by existing buildings from 2023.
Bauspar contracts with housing premiums
Home building premiums are also included in classic home savings contracts. From a deposit of 50 euros per year, these housing construction premiums can be accessed from ten percent of the annual amount saved, up to an annual savings of 700 euros for individuals and 1,400 euros for married couples. Whoever earns less than 35,000 euros gross as an individual is entitled to the housing construction premium; the maximum amount is twice as high for married couples.
Employee Savings Allowance
As part of the capital-forming payments by the employer, there is also the option of applying for a state employee savings allowance of nine percent as a bonus for building society savings contracts. The gross income limit of EUR 17,900 applies here for individuals and EUR 35,800 for married couples.
Regional housing promotion
Within the Housing Promotion Act, property financing can be promoted regionally. The individual federal states provide, among other things, low-interest loans, various grants or discounted building land within basic financing. These state funding programs are primarily aimed at (large) families and people with an annual income that does not exceed EUR 12,000 (or EUR 18,000 for married couples). However, a major hurdle at this point could be the relatively high equity ratio, which varies from state to state.
Other funding opportunities
Subsidy programs can also take effect in the modernization of owner-occupied real estate. For example, you can apply for subsidies from the Federal Office of Economics and Export Control (BAFA) when converting the heating to renewable energies as part of an energy-related refurbishment.
In principle, regardless of the support program, the amount of equity, earnings limits (vary depending on marital status) and the deadlines to be observed when applying must be observed. The possibility of combining several funding programs is also interesting, since some of the funding programs can only be applied to part of the financing amount.
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