Youth buys old: The new KfW funding program at a glance

At a time when affordable housing is becoming scarce and climate protection increasingly urgent, the new KfW funding program „Young Buys Old“ is a very welcome development. Since September 3, 2024, it has been offering young families a unique opportunity to realize the dream of owning a home while making an important contribution to environmental protection.

The program kills several birds with one stone: it makes the purchase of existing real estate more attractive for young buyers, promotes the energy-efficient renovation of old buildings, and revitalizes town centers. With low-interest loans of up to 200,000 euros, KfW creates a strong incentive to invest in older houses and bring them up to modern energy standards.

In this article, we take a close look at the details, benefits, and challenges of this innovative program, which has the potential to permanently transform the real estate market and energy efficiency in the building sector.

Key data of the KfW program „Young buys Old“

• Start date: September 3, 2024
• Target audience: Families and single parents with at least one child under the age of 18 living in the household. As an owner, you live in the subsidized property yourself (with an ownership share of at least 50 %). The acquired property is your only property in Germany.
• Income limits: Your household income (according to your tax assessment, your taxable income) may not exceed 90,000 euros for one minor child. This limit increases by 10,000 euros for each additional child.
• Funding volume: A total of 350 million euros is available for 2024.

Funding conditions

• Eligible for funding: Purchase price of a property (maximum one residential unit) including land costs
• Maximum loan amounts: depends on the number of minor children in the household
  1. Child: 100,000 Euro
  2nd child: 125,000 Euros
  3. Children and more: 150,000 euros
• Interest rates: As of September 2024, the annual interest rate ranges from 0.12 % p.a. to 3.23 % p.a.
• Fixed interest rate period: the duration of the fixed-interest period can be chosen between 10 and 20 years
• Runtimesat least 7 years to a maximum of 35 years for annuity loans (loans with monthly repayment), grace periods for principal repayment depending on the term between one and five years. For a bullet loan, the term and interest rate fixation period is 7 to 10 years

Comparison with market-standard conditions

The subsidized loan offers a very attractive interest rate which, depending on the term, is significantly below current market conditions. This is the main advantage and driving force of this program.

Requirements for the new funding program

Energy efficiency class of the property:

One goal of KfW funding is the overall reduction of energy consumption in existing residential buildings; only existing properties with an energy demand certificate or energy consumption certificate are eligible for funding Energy efficiency class F, G or H.

• The average income (which is stated as taxable income in the income tax assessment) of the year before last and the year before that (for applications in 2024, therefore the average of 2022 and 2021) max. 90,000 euros per year with one child
• max. 100,000 euros per year with two children
• max. 110,000 euros per year with three children
• + 10,000 euros for each additional child

Owner-occupancy of the property:

As the owner, you must live in the property yourself; it may not be used as a holiday home or apartment.

Renovation obligations for old buildings

Within 4.5 years (54 months) of the grant approval, you must renovate the property and achieve at least the „Efficiency House 70 Renewable Energies Class“ in accordance with the „Federal Funding for Efficient Buildings“.

To achieve this, a Energy consultant be consulted. At the latest after the renovation, the latter certifies the required efficiency house standard.

Before completing the purchase, you should definitely discuss all renovation measures with an energy consultant, calculate them, and plan the timeline in order to comply with all funding requirements. This will also show you in advance what amount of investment to expect.

Combination with other funding programs

• BEG funding for renovation:
  Also a KfW funding program that supports the energy-efficient measures of a complete renovation to reach at least Efficiency House Standard 80 (which is given since the „Young buys Old“ funding requires a higher/better efficiency house class), in addition to a low-interest loan, you receive a repayment subsidy. Further information can be obtained here here.
• KfW Homeownership Programme:
  Traditional loan for anyone who wants to buy or build residential property and live in it themselves. Here Find more information about this.
• Heating subsidies for private individuals:
  Here, a very large grant of up to 70 % of eligible costs beckons. You can find out more at the following Link.
• Exclusion of certain programs:
  The KfW clearly specifies here that combination with certain other programs is excluded. These include „Baukindergeld“ (424), „Home Ownership for Families – New Construction“ (300), or „Home Ownership for Families – Acquisition of Existing Properties“ (308).

Your financing partner, through whom you can apply for the subsidized loan, can show you which combinations are possible and which are not.

Application process and procedure

• Date of application
  Absolutely important: this one must BEFORE BUYING belong to the property!
• Required documents:
  1. The income tax assessments of the spouses or registered partners or single parents for the year before last and the year before that
  2. The birth certificate of all children under 18 living in the household
  3. The valid energy performance certificate or energy consumption certificate showing the classification of the residential property intended for purchase into energy efficiency class F, G, or H.
• Role of the house bank:
  As a rule, you can process this funding program through your primary bank. From submitting the application and submitting documents to disbursing the loan, they will handle everything with KfW for you. If your primary bank does not offer this, you can also contact another commercial bank, savings bank, cooperative bank, building society, or insurance company.

Contact us – we are always available

CONTACT US

Pros and cons of the program

Opportunities for families

The KfW funding program „Young buys old“ offers a promising opportunity to make the purchase of residential property easier for young families while simultaneously contributing to climate protection. Despite some challenges, the benefits for families, municipalities, and the environment outweigh the drawbacks. With the right planning and advice, this program can make the dream of owning a sustainable home a reality for many families.

Criticisms and challenges

Despite the promising approaches of the „Young buys Old“ program, there are also critical voices and challenges. A main point of criticism is the limited availability of suitable properties, particularly in metropolitan areas where the real estate market is already tight. In addition, experts point out that renovation costs are often underestimated, which can become a financial burden for young families.

The short period of 54 months for energy-efficient renovation is considered ambitious and could overwhelm some buyers. The complexity of the funding guidelines and the associated bureaucratic effort are also criticized.

Finally, there are concerns that the program could lead to an increase in the prices of existing properties, which would counteract the goal of creating affordable housing. These aspects show that, despite the positive intentions of the program, challenges still need to be addressed in order to achieve its full effectiveness.

Opportunities and challenges for young families and climate protection

The KfW funding program „Young buys old“ is an exciting step to make the dream of homeownership possible for young families while simultaneously advancing climate protection. It not only offers financial support for the purchase of existing properties, but also promotes their energy-efficient renovation – a win-win situation!

Despite some challenges, such as the availability of suitable properties and high renovation costs, the program has the potential to sustainably change the real estate market. In the coming years, we could see adjustments that make investing in old houses even more attractive.

If everything goes well, „Young buys old“ could not only improve the living situation of many families, but also serve as a model for similar initiatives in other countries. It remains exciting to observe how this program develops and what positive changes it can bring to our cities!

FAQ – Frequently asked questions about the KfW program „Young buys old“

Who can take advantage of the Young Buys Old funding program?

The program is aimed at families with at least one minor child who want to purchase an existing property for personal use.

What income limits apply to the program?

The exact income limits vary depending on family size and region. For a family of four, for example, the limit is an annual gross income of 90,000 euros.

What is the maximum grant amount?

The maximum loan amount is 200,000 euros per project.

What interest rates and terms does the program offer?

The interest rates are discounted compared to standard market conditions and start at 1.5 % effective p.a. The terms can be up to 30 years.

Does the subsidized property need to be renovated?

Yes, within three years of purchase, the property must be renovated to the Efficiency House 70 EE standard.

Can the program be combined with other funding programs?

Yes, a combination with the BEG funding for energy-efficient renovation is possible. Other programs may be excluded.

When can the application be submitted?

The application must be submitted to the KfW via the house bank before the purchase agreement is concluded.

What documents are required for the application?

Required are, among other things, proof of income, children's birth certificates, the draft purchase agreement, and an energy assessment of the property.

Is there a minimum holding period for the subsidized property?

Yes, the property must be used personally for at least 10 years.

What happens if the renovation obligation is not met?

If the renovation obligation is not met, KfW can cancel the loan and demand early repayment.

Can single parents also use the program?

Yes, single parents with at least one minor child can also apply for the funding.

Is partial financing possible?

Yes, the entire purchase price does not have to be financed through the KfW program.

Are there regional differences in the funding?

Income limits may vary by region to account for different costs of living.

How long does the funding program run?

The program is initially open-ended, but can be adjusted or terminated depending on funding utilization.

Can I repay the KfW loan early?

Early repayment is possible, but may be subject to prepayment penalties.

What is the maximum age my child can be?

At least one minor child (under 18 years of age) must live in the household. The child may turn of legal age on the day the application is submitted.

Are unborn children also considered?

Children who are not yet born at the time the application is submitted will not be taken into account.

Is new construction also eligible for funding?

No, the new KfW subsidy only applies to existing properties.