💰 In brief: BAFA pays a direct grant (no repayment), while KfW offers a low-interest supplementary loan with a repayment subsidy. For individual building envelope measures, the BAFA grant is often ideal; for comprehensive efficiency house renovations, the KfW loan. Both can be combined!
Two Funding Paths, One Goal
Anyone renovating for energy efficiency faces a key question: BAFA grant or KfW loan? Both programs belong to the Federal Subsidy for Efficient Buildings (BEG) and share the same goal — reducing the cost of energy-efficient renovation. But they work in fundamentally different ways.
BAFA (Federal Office for Economic Affairs and Export Control) pays a direct grant into your account — no repayment required. KfW (Reconstruction Credit Institute), on the other hand, issues low-interest loans, often combined with a repayment subsidy that reduces the loan amount.
Which path is right for your project depends on the type of measure, your available equity, and the scope of the renovation. In this article, we compare both options in detail.
BAFA Grant at a Glance
The BAFA grant targets homeowners implementing individual energy measures (BEG EM) on the building envelope: insulation of facade, roof, or basement ceiling, new windows and doors, or optimization of building systems (e.g., hydraulic balancing, ventilation systems).
Key Figures
• Base rate: 15% of eligible costs
• iSFP bonus: +5 percentage points (when implementing a measure recommended in the iSFP)
• Eligible costs: max. €30,000 per residential unit (without iSFP)
• Eligible costs: max. €60,000 per residential unit (with iSFP)
• Maximum grant: €4,500 (without iSFP) or €12,000 (with iSFP)
💡 Advantage: The grant is transferred directly to your account after the measure is completed — no borrowing, no interest, no repayment. Ideal if you already have the equity for the measure.
KfW Loan at a Glance
The KfW supplementary loan (program 261/262) targets homeowners planning a comprehensive renovation to KfW efficiency house standard or those looking to use the supplementary loan for individual measures. KfW issues low-interest loans through your bank, often with an additional repayment subsidy.
Key Figures
• Loan amount: up to €150,000 per residential unit (efficiency house renovation)
• Supplementary loan for individual measures: up to €120,000 per unit
• Interest rate: significantly below market level (currently from approx. 0.01% eff. p.a. with income threshold)
• Repayment subsidy: 5–45% depending on the efficiency house standard achieved
• Terms: 4 to 35 years, repayment-free initial years possible
💡 Advantage: High eligible amounts and low interest rates enable comprehensive renovations without exhausting all equity. The repayment subsidy significantly reduces the amount you actually need to repay.
Direct Comparison: Grant vs. Loan
BAFA-Zuschuss
Application
Online at BAFA, relatively straightforward
Payout
To your account after measure completion
Max. eligible costs
€30,000 (€60,000 with iSFP)
Repayment
None — it’s free money
Best for
Individual measures with available equity
KfW-Kredit
Application
Through your bank, energy consultant confirms
Payout
Loan provided before measure starts
Max. eligible costs
Up to €150,000 (efficiency house)
Repayment
Yes, but repayment subsidy reduces the amount
Best for
Comprehensive renovation, limited equity
When the BAFA Grant Is Better
The BAFA grant is the simpler and often more attractive option when you’re planning individual building envelope measures and already have the necessary equity. Typical scenarios:
✅ Installing new triple-glazed windows (cost approx. €15,000–25,000)
✅ Roof insulation or top floor ceiling insulation (cost approx. €8,000–20,000)
✅ Facade insulation as an individual measure (cost approx. €15,000–40,000)
✅ Basement ceiling insulation (cost approx. €3,000–8,000)
💡 Practical tip: With an iSFP, eligible costs rise from €30,000 to €60,000 and the subsidy rate from 15% to 20%. For a €40,000 facade insulation, you receive a grant of €8,000 with iSFP instead of €4,500. That’s €3,500 more — just from the iSFP.
When the KfW Loan Wins
The KfW loan is the better choice when you’re planning a comprehensive renovation and cannot or do not want to fund the costs entirely from your own resources. The KfW loan’s strength lies in the high eligible amounts and the possibility of achieving efficiency house standards.
🏠 Complete renovation to efficiency house 70 or better (cost €80,000–150,000+)
🏠 Limited equity — the loan pre-finances the measure
🏠 Multiple measures simultaneously (roof + facade + windows + heating)
🏠 Household income under €90,000 — particularly favorable interest rate
Example: For a renovation to efficiency house 70 with costs of €120,000, you receive a KfW loan of €120,000 at approx. 1.5% interest with a repayment subsidy of 10% (= €12,000 you don’t need to repay). The monthly payment over 20 years is approx. €520 — significantly cheaper than a conventional bank loan.
Combining BAFA + KfW Together
Little known but highly effective: The KfW supplementary loan (program 358/359) can be applied for in addition to the BAFA grant. This lets you finance your share of the renovation costs at preferential terms.
How the Combination Works
1. Apply for the BAFA grant for your individual measure (e.g., 20% of €50,000 = €10,000 grant)
2. Finance the remaining share (€40,000) via the KfW supplementary loan at low interest
3. Supplementary loan up to €120,000 per unit, interest from 0.01% eff. p.a. (household income up to €90,000)
⚠️ Important: The supplementary loan requires an approved BEG grant (BAFA or KfW 458). Apply for the grant first, then the supplementary loan through your bank. Order matters!
The combination is especially attractive for homeowners with limited equity who still want to benefit from BAFA grants. You receive the grant as free money and finance the rest at top conditions.
Note: Subsidy rates and conditions are subject to change. The figures listed here reflect the status as of July 2026. We recommend individual consultation for your specific project. This article does not constitute legally binding advice.
Which Funding Fits Your Project?
We analyze your building, determine the optimal funding strategy, and handle the application — from energy consulting to payout.