Buying a house without equity at a relatively young age

Hello everyone,

my wife and I are currently looking at one or two houses and now have one in mind that we like in terms of location, size, and overall. However, there is a crucial point in our current situation; the equity. We are both quite young (23 and 24 years old), have been out of training for almost a year, she is still doing a master's degree, but both are permanently employed, out of the probation period, and salary-wise I think we are quite well positioned for our age. Our combined net monthly income currently amounts to €5000, potentially increasing in the coming years.

Now we have a house with a granny flat in mind. It costs €360,000 (excluding purchase-related costs), for renovation etc. we are currently planning around €40,000. The granny flat is currently unoccupied, but that will change, the cold rent would be €400 per month.

Do you think the financing would be possible like this at the moment, even if we don't bring any equity?

Far too little information ….

How old is the house?
Condition?
What is supposed to be renovated for 40k?
Children planned?

Without equity difficult, but not impossible.

However, does it make sense? Always being short on cash and constantly saving everywhere is not everyone's thing either. It's always good to have a little emergency money set aside.

On the other hand, 5000 euros is also a lot of income. The house costs you 1000 euros in operating costs. You have a 2000 euro installment.
2000 remain for living expenses. You can actually manage very well with that.

Now you just have to find a bank that will finance it for you. At least the 10 percent purchase incidental costs you should get from somewhere.

Ah sorry, yes gladly. The house is from 1965, the building fabric is good, the granny flat needs renovation, the main apartment upstairs needs a complete renovation. The basement is dry, there is a garage directly in the house, a separate garage, heating is not an issue because the house is connected to district heating, a photovoltaic system with battery storage is available. The 40k renovation costs include floors throughout the entire house, plastering walls, retiling 2 WCs, 2 new WCs, all room doors new, new kitchen in the HW and small things like baseboards etc. No children are planned.

Sorry, a clear "NO." There would be no credit with us or the banks working with us. I can hardly think of an institution that finances this way ad hoc. Maybe a Sparda, Volksbank (which usually just brokers further), or Spaßkasse.

Cost of living allowance: +/- €2,700 to €2,900 monthly.
Monthly installment due to lending over 100% of the lending value: from €2,350 upwards (if a bank can be found that finances more than the house is worth, interest should be slightly under 5% effective + 2% repayment)

As a loan, I have calculated "only" €400,000. The additional costs would have to be covered anyway from equity.

Honestly, you don’t have good creditworthiness for the financing you have in mind. Even if you can live well with the income – but just not with regard to such financing. Sorry

I also see it as not possible. I wonder whether a new kitchen is really necessary given the financial situation, but in the end that doesn't make the structure healthy either. You are very young, so you simply couldn't build up equity, but that's exactly what will be your downfall. Build up equity and take another calm look in 2 years. Of course, this is not a nice answer, but unfortunately that's the reality. You are young and already have good salaries, save diligently, and in a few years your chances will increase. If you put aside €2000 per month for 2 years (which you would at least have as a payment), you will have €50k in equity and can then slowly start looking again.