Renovation Loan In Germany [2026 Guide]

Key takeaways

• Only property owners can get renovation loans in Germany.
• The interest rate on renovation loans is lower than on personal loans, as the banks take property as collateral. Collateral reduces the bank’s risk.
• Banks may request a renovation loan entry in the land registry paper (Grundbuchauszug).

This is how you do it

• Make a list of renovations you want to carry out and how much they cost.
• Add 15 to 20% on top of the planned renovation cost. This gives you the total renovation loan amount you need.
• Compare the loan offers on comparison portals: Verivox*, Finanzcheck*, and Check24*.
• Consult home loan brokers like Dr. Klein*, and InterHyp*.
• Check the loan terms and conditions carefully. The right loan terms can save you thousands of euros.

Table of Contents

What is a renovation loan in Germany? 

A renovation loan is a type of loan that you can use to renovate your property. It is given for a particular property that you own. So, tenants cannot get renovation loans in Germany. 

The only option for tenants is to get a normal installment or personal loan to renovate the rental property.

The biggest advantage of a renovation loan is that it can be obtained at a lower interest rate than personal loans. The low interest rate is because your property serves as security for the bank, reducing the bank’s risk.

A renovation loan is also a purpose-bound loan. This means you can only use it to renovate the property. 

What is the difference between renovation, sanierung, and modernization? 

In Germany, there are three different terms to describe the work you want to do on your property:

• Renovierung (Renovation) refers to the activities you do to maintain the property’s value, such as painting the walls or changing the floor.
• Sanierung is the activity to fix serious defects in the property to ensure it still meets safety standards, such as replacing electrical wiring, rebuilding the bathroom, repairing the roof, etc. There is no English word for Sanierung.
• Modernisierung (Modernization) describes the activities you undertake to upgrade or modernize your property, such as installing energy-efficient heating systems and better-insulated windows. 

PARAMETER	RENOVIERUNG (Renovation)	SANIERUNG	MODERNISIERUNG (Modernization)
Purpose	Activities you do to maintain the property’s value	Activities to fix serious defects in the property to ensure it still meets safety standards	Activities you do to upgrade or modernize your house
Examples of property changes	– Painting the walls – Changing the floor	– Changing the house’s electric wires – Rebuilding the bathroom – Fixing a leaking roof	– Installing energy-efficient heating systems – Better-insulated windows
Does it increase the value of your property?	Not significantly	In some cases	Yes
Is it eligible for subsidies?	Rarely	Sometimes. It depends on the scope.	Often (e.g., KfW programs)

Banks in Germany distinguish between the three terms and offer different loan options for each. So, you must know what you want to do with the loan amount before applying.

How do you get a renovation loan in Germany?

You can get a renovation loan in two ways.

• Compare the loan offers on comparison portals: Verivox*, Finanzcheck*, and Check24*.
• Consult home loan brokers like Dr. Klein*, and InterHyp*.

Getting a loan is like shopping for a shoe. You must explore the market before signing a contract. Home loan brokers can give you a good idea.

However, sometimes home loan brokers cannot find you the best deal.

Thus, you should also check the comparison portals and directly ask your home bank for an offer.

NOTE: You can compare as many offers as you want on comparison portals, but apply for the one that you find the best. Never apply for multiple offers on the same or different portals. It affects your Schufa score negatively.

Here are the steps to search for the cheapest renovation loan

• Go to the comparison portal and select the loan purpose as “renovation.” Renovation loans are available at a lower interest rate than personal loans.
• Enter all the information asked on the portal and apply.
• The bank will review your information. They may ask for further information and documents if necessary.
• If your application is accepted, the bank will give you a loan offer. The interest rate offered might differ from what you saw on the portal. On the portal, banks show you the best interest rates.
• If you like the loan terms and conditions, you can sign the contract and send it back.
• The bank will issue the loan amount. This typically happens within a week. Depending on the bank, they may transfer the amount to your bank account or pay the construction company directly as per the invoice. 

Best bank accounts in Germany ->

Banks may ask for receipts for the renovation work (material and labor). So, you should keep them with you. 

You also need the receipts to claim tax benefits in Germany.

What documents do you need to get a renovation loan in Germany?

When getting a renovation loan, you should be able to prove that you are the property owner. You can do this by showing the entry in the land register document (Grundbuchauszug).

However, not all banks require this for a renovation loan, unless you are applying for a very high loan amount.

There are other important documents you should prepare

• Personal identification proof, like a passport.
• Proof of residence or residence permit 
• Proof of income, like salary slips, bank statements, etc.
• Assets such as investments and savings.
• Liabilities like existing loans, child support, etc.
• Your approval to request your Schufa score.

Some banks also require

• Renovation cost estimates or a contractor’s quote. It’s best to provide a cost breakdown for each task or room to speed up your loan approval. You should also ensure that your renovation quote matches the loan amount you requested.
• Project summary detailing the renovation plan. Include a timeline with estimated start and end dates.
• Building permit
• Collateral, other than your property, such as life insurance policies.

Who can get a renovation loan in Germany?

In Germany, only property owners can get renovation loans. If you want to renovate the property as a tenant, you must get a personal loan instead.

Expats who own a property and want to renovate it can also get a renovation loan. Expats with a permanent residence permit get better loan conditions than Blue card holders.

NOTE: To be eligible for a renovation loan, you must have a German bank account to which the loan amount will be deposited. We find C24* the best bank to offer free checking accounts in Germany as of 2025..

For what purposes can you use a renovation loan?

You can use a renovation loan for

• Cosmetic repairs (e.g., painting walls, wallpapering)
• Structural repairs (e.g., roof repairs, facade renewal)
• Energy-efficient upgrades (e.g, insulation, heat pumps, or solar panel installation)
• Interior renovations (e.g., kitchen upgrades, laying new flooring, replacement of doors)
• Safety and compliance measures (e.g., adding fire protection systems, replacing old pipes or wiring)
• Accessibility improvements (e.g., widening doorways, installing lifts, removing or modifying barriers)

How much renovation loan can you get?

You can take up to 100,000 € of a renovation loan in Germany. But how much of a loan you’ll get depends on

• The cost of the renovations you want to do in your house.
• Your income and expenses
• Creditworthiness
• Loan term. A renovation loan must be paid off before the next renovation is due.

Average costs of renovating a house in Germany

Here are the average renovation costs in Germany as of April 2025.

• Roof insulation (Dachsanieurng): 190 to 560 € per m2. It should be done every 40 to 60 years.
• Bathroom: Approximately 20,000 €. But the costs may vary depending on your bathroom size and if you have any special requests. It should be done every 20 to 30 years.
• Changing the floor: About 20 € per m2, plus labor or installation costs. It should be done every 10 to 40 years.
• Installing new electric wires: 85 to 130 € per m2 of living space. It should be done every 30 to 40 years. 
• Windows: Each window is approximately 600€, plus labor costs (Every 20 to 40 years)
• Doors: Around 200 € (interior door) or 1,500 € (exterior door), plus labor costs (Every 20 to 40 years)
• Solar panels: Ranges from 10,000 to 30,000€ (Every 40 to 60 years).
• Exterior painting: About 7-25 € per m2. It should be done every 10-20 years.

What are the factors that affect renovation prices?

Costs of renovation vary due to different factors. This include

• Labor costs: This is higher in urban areas, such as Munich, Hamburg, etc.
• Material used: Premium or specialized materials can double the price
• Scope of work: Full renovations and special requests raise expenses
• Permits and inspections: Certain renovations require official approval, certifications, or inspections. This adds up to the cost as well.
• VAT: This is often included in contract quotes. The standard rate is 19%. If you operate the property as a business, you can claim the VAT paid in your VAT returns.

How can you save on renovation costs?

Create a detailed list of things you want to renovate. Use it to

• determine what materials you need.
• get quotes from multiple contractors.

Go to hardware stores like OBI, Hornbach, etc., and show them the list of items you need to purchase for your renovation. Ask for a discount if you buy all the items from them. Usually, these stores give you 10% to 15% discounts.

In Germany, you can delegate responsibility for purchasing raw materials to contractors. Sometimes they can get you better deals as they have connections.

Regardless, you need a detailed renovation plan to compare the costs.

What should you consider when getting a renovation loan? 

The first question to ask yourself is: Is this renovation really necessary?

If you’re on a budget, focus on the improvements that matter most. If you’re thinking about selling or renting your home, prioritize renovations that increase your property’s value.

You should also consider these important factors:

• Effective APR: This is the total cost of the loan, which is a combination of mandatory fees, interest rates, and other costs.
• Loan amount (Darlehenssumme): Renovations often surpass your planned budget. Thus, request a loan amount 15% to 20% higher than what you think you need.
• Loan term (Laufzeit): The quicker you repay the loan, the less interest you’ll pay. So, maintain a balance between the loan term and the monthly installment.
• Special repayment option (Sondertilgung): This option allows you to pay additional money on top of your monthly installments to reduce the loan principal. Thus, you can repay the loan early and pay less interest.
• Pause installments (Ratenpausen): If you are self-employed and don’t have a stable income, you should get the option to pause your installments. It allows you to pause the monthly installment payment without penalty. 
• Change the repayment rate during the loan term (Tilgungssatzwechsels): No one knows what the future holds. If your income reduces in the future, having the option to readjust your monthly installments will come in handy. Similarly, if your income increases, you can pay off the renovation loan more quickly.
• How is the interest rate calculated? You should always check the total loan cost instead of the interest rate. Banks use different ways to calculate the interest rate in Germany. One loan may cost twice as much as the other, even at the same interest rate. Learn more about it in our guide on interest rate calculation in Germany.
• Avoid unnecessary insurance: Some banks bundle the renovation loan with optional residual debt insurance. You don’t need this insurance.

What are the alternatives to a renovation loan?

A common alternative to a renovation loan is a personal loan (Ratenkredit). Here’s a quick comparison.

Parameter	Renovation Loan	Personal Loan
Purpose	Tied to renovation/property improvements	Can be used flexibly or for any purpose
Interest rates	Typically lower	Slightly higher due to being unsecured
Collateral	Usually required (e.g., property, life insurance)	No collateral required
Requirements	Has more requirements (e.g., contractor quotes)	Has fewer requirements

Learn how to apply for personal loans in Germany ->

There are also KfW programs if you want to improve your property’s energy efficiency. KfW loans are cheaper than renovation loans. Consult home loan brokers like Dr. Klein*, and InterHyp*..

FAQ

References

• https://www.check24.de/kredit/renovierungskredit/
• https://www.immobilienfinanzierung.de/lexikon/renovierungskredit/
• https://www.drklein.de/renovierungskredit.html
• https://www.handelsblatt.com/vergleich/renovierungskredit/
• https://www.kredite.de/ratgeber/fragen-zum-sanierungskredit