What is a Tilgungszuschuss?
Tilgungszuschuss literally means “repayment grant”. It is a direct subsidy that is deducted from the original loan amount, thereby reducing the remaining debt owed by the borrower.
Instead of receiving a separate cash grant, this subsidy is integrated into the loan structure itself and is usually deducted at the end of the construction phase or after the completion of the relevant measures.

Where is the Tilgungszuschuss used?
The Tilgungszuschuss is mainly used within KfW (Kreditanstalt für Wiederaufbau) funding programmes, such as:

• KfW 261/262: For the construction of energy-efficient, climate-friendly new homes (Klimafreundlicher Neubau).

• KfW 159: For renovating or converting buildings to high-efficiency standards (Effizienzhaus).

• Programmes supporting energy-efficiency refurbishment (Energieeffizienz Sanierung).

How is the Tilgungszuschuss calculated?

• The amount of the grant depends on the target energy-efficiency level of the building.

• The higher the energy performance (for example reaching standards such as EH 40 or EH 55), the higher the grant.

• Depending on the programme, the grant can range from around 5 % up to about 45 % of the loan amount.

Example

• Loan amount: €150,000

• Grant rate: 20 %

• Tilgungszuschuss = €30,000

• Actual amount to be repaid to the bank: only €120,000

Advantages of the Tilgungszuschuss

• Reduced financial burden:
  It directly lowers the principal of the loan, which also reduces the total interest paid.

• Incentive for sustainable construction:
  It encourages property owners to choose energy-efficient and environmentally friendly construction and refurbishment solutions.

• Non-repayable support:
  As long as the conditions are met, the grant does not have to be repaid.

Eligibility requirements for a Tilgungszuschuss

• Compliance with recognised energy-efficiency standards (e.g. Effizienzhaus, EE class).

• Provision of documentation and verification by a certified energy consultant (Energieberater).

• Completion of the project within the deadlines specified in the contract.

• Some programmes may require additional certificates, such as a sustainability label (e.g. Nachhaltigkeitsklasse / sustainability class).

Relationship between Tilgungszuschuss and the interest-rate environment
When the Tilgungszuschuss is combined with the reduced interest rates offered in KfW programmes, the borrower effectively receives:

• a low-interest promotional loan and

• a grant that is deducted from the loan principal.

This combination significantly lowers the overall cost of financing and makes energy-efficient construction or refurbishment much more affordable.

Risks and important points to consider

• If the project is not completed according to the required standards or within the specified timeframe, the grant may be cancelled and the full loan amount may become repayable.

• These programmes often come with strict administrative requirements: documentation, regular reports, inspections, and proof of compliance.

• In some cases, interest is initially calculated on the full loan amount before the grant is deducted, which can slightly increase short-term costs.

Tips for making the most of the Tilgungszuschuss

• Plan early in cooperation with a qualified energy consultant to maximise energy-efficiency levels and thus the amount of the grant.

• Read the KfW conditions and funding guidelines carefully, especially the technical details and requirements for each efficiency standard.

• Keep all relevant documents, invoices and certificates so that you can present them when applying for the grant.

Conclusion
The Tilgungszuschuss is a powerful support instrument within KfW funding schemes. It helps make the dream of owning or renovating an energy-efficient, environmentally friendly home more realistic and less expensive.
By combining the grant with reduced interest rates, substantial savings can be achieved while simultaneously meeting high sustainability standards. With careful planning and strict adherence to the programme requirements, this form of support becomes a real opportunity for anyone who wishes to build or renovate for an energy-efficient and financially secure housing future.

The editorial team of this website strives to provide accurate information based on in-depth research and consultation of multiple sources. Nevertheless, mistakes may occur or some details may later turn out to be uncertain or outdated. Therefore, please treat the information in our articles as an initial point of reference and always contact the competent authorities or qualified professionals to obtain binding and up-to-date information.