Federal Building Minister Klara Geywitz has unveiled a new loan initiative that should help low-income families to buy a house in Germany, even without a large deposit. 

Loan scheme to support low-income families with home ownership

A total of 1 billion euros will go towards the scheme, which is intended to primarily benefit “families with small and medium-sized incomes”, Geywitz told the newspapers of the Funke Media Group. 

The programme will be aimed at families with at least one child under the age of 18 who have a maximum combined income of 60.000 euros - with an additional 10.000 euros added to this threshold for each extra child. 

The scheme would allow families to receive a low-interest loan from the state development bank KfW, rather than having to save up enough equity to secure a mortgage with a deposit. The first round of funding will be available from April 2023. 

However, since the money for the scheme is coming from the government’s climate transformation fund, only buildings that meet the highest energy efficiency standards will be eligible for funding. 

Scheme replaces German government’s Baukindergeld subsidy

“In view of the tight housing market and price increases for building materials, [families] find it particularly difficult to create affordable living space for themselves,” Geywitz said in the interview with the Funke Media Group. “That’s why we deliberately focused on them with our new funding.” 

The new loan scheme will replace the Baukindergeld subsidy, a scheme introduced in 2018 by the former “grand coalition” government that expired in 2021. Under this subsidy, families with a household income of up to 90.000 euros could apply for a 12.000-euro subsidy per child to either build or buy a house or apartment.