Old into New?

In June 2026, new housing loans carried an average effective interest rate of 4.0 per cent. Someone financing €360,000, for example, with an initial repayment rate of two per cent would face monthly payments of around €1,800, before maintenance and other running costs are even taken into account.

And before that, buyers need equity to cover transaction costs and part of the purchase price.

Anyone who receives financial support from their parents, inherits assets or already has access to a plot of land therefore has an enormous advantage. Those starting from zero often have to save for years despite earning a good income. In fact, a comparison of census data shows that access to home ownership has shifted between generations.

Perhaps that means we need to think differently about owning a home.

Not: buy a plot of land and build from scratch.

But: buy an older house and turn it into our home.

This is precisely where the German government’s “Jung kauft Alt” programme comes in. Since 3 August 2026, its conditions have been significantly improved. Families with children can receive a subsidised KfW loan with a reduced interest rate to purchase an existing property with poor energy efficiency.

The maximum loan amounts are:

€140,000 with one child
€160,000 with two children
€180,000 with three or more children

When the new conditions were presented at the end of July, KfW quoted an effective annual interest rate of 0.53 per cent for a loan with a 35 year term and a ten year fixed interest period. This allows a substantial part of the purchase price to be financed at a considerably lower cost.

The funding is not, however, available for a newly renovated dream home. At the time of purchase, the property must have an energy efficiency rating of F, G or H. It must then be improved in terms of energy efficiency within 54 months.

Since August 2026, this has become more flexible. Instead of having to bring the entire building up to an Efficiency House standard, several individual measures can also be implemented, such as replacing windows, insulating the roof and façade or installing a new heating system.

This turns an old house into a different model of home ownership:

buy, move in, modernise.

One important point remains: the “Jung kauft Alt” loan finances the purchase price, not the actual renovation costs. Other funding programmes may be available for these expenses, such as Germany’s Federal Funding for Efficient Buildings programme.

“Jung kauft Alt” is not a general home ownership programme for the younger generation.

At least one child under the age of 18 must live in the household. With one child, annual household income must not exceed €90,000. The limit rises by €10,000 for each additional child. In principle, the property purchased must also not simply be an additional home alongside residential property already owned.

Singles and couples without children therefore do not benefit.

And families still need equity and a viable overall financing plan.

The traditional promise of prosperity cannot simply be restored through this programme. Home ownership remains harder to achieve for younger generations if they do not already have assets behind them.

But if a first home does not have to be new, perfect and finished, perhaps it is already standing there.

A house from the 1960s, 70s or 80s. Outdated in terms of energy efficiency, dated in design, but with solid substance that can be turned into something new.

“Jung kauft Alt” does not suddenly make home ownership cheap. But the programme opens up another path: turning old into new instead of insisting on new at any price.

Sources

Deutsche Bundesbank, 2026: Interest rate statistics: interest rates and volumes for new business of German banks, housing loans to private households.
https://www.bundesbank.de/resource/blob/615036/63d6ec83323c77e0c44b9a1b4e14fc82/472B63F073F071307366337C94F8C870/s510athyp-data.pdf

KfW Banking Group, 2026: KfW and the Federal Government improve funding for families purchasing residential properties in need of renovation.
https://www.kfw.de/%C3%9Cber-die-KfW/Newsroom/Aktuelles/Pressemitteilungen-Details_903168.html

KfW Banking Group, 2026: Jung kauft Alt: Home Ownership for Families, Purchase of Existing Properties, Loan 308.
https://www.kfw.de/inlandsfoerderung/Privatpersonen/Bestehende-Immobilie/F%C3%B6rderprodukte/Wohneigentum-f%C3%BCr-Familien-Bestandserwerb-%28308%29/

Federal Ministry for Housing, Urban Development and Building, 2026: Improved funding conditions for Jung kauft Alt.
https://www.bmwsb.bund.de/SharedDocs/pressemitteilungen/DE/2026/07/Verbesserte-F%C3%B6rderbedingungen-f%C3%BCr-Jung-kauft-Alt.html

Kohlhepp, Frederic; Tatzel, Alexander; Dreschmitt, Kai; Pfahl, Miriam / Federal Statistical Office of Germany, 2026: Home ownership rates compared. Selected results from the 2022 Buildings and Housing Census.
https://www.destatis.de/DE/Methoden/WISTA-Wirtschaft-und-Statistik/2026/02/eigentumsquoten-vergleich-022026.html

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