Construction financing - What is possible regarding credit limits?

Hello,

first of all, I have only limited experience with construction financing so far. My knowledge comes from corresponding calculators and websites. After using several calculators, I need your advice and experience. I would like to explore where the limits for financing lie and what you consider "healthy."

Currently renting: 1.2k
Equity: 400k
Monthly household net income: 7k
Unaccounted monthly reserve: 1k (variable salary components)
Maximum monthly installment: 4k
Full repayment in 20 years
No land available

The calculators give me a maximum loan of just under 800k based on the above information, so a total budget for house construction of 1200k. From this, purchase fees and possibly a buffer still have to be deducted. Maybe 1050k remain for the property including land. Is this realistic?

Does full repayment over the period mentioned above make sense, or are there better options with residual debt? The age at the start of financing is assumed to be 39. At the moment, I cannot imagine how residual debts should be repaid when retiring. Seven to eight years of buffer would still be available.

As far as land prices and incidental acquisition costs are concerned, I am now quite familiar. However, I am still very uncertain about construction costs. There is often talk of 2k per m2 of living space, which seems a bit tight given current prices. The goal is a two-story house, modern style (preferably flat roof and large glass surfaces, depending on the specifications of the plot), no basement, but as much building area as possible (at least 250 m2 of floor area), plus a double garage. High-end standard equipment, no cost-driving expectations regarding interior. I am estimating at least 500k for the house costs, rather more. Your opinion on this?

I am happy to provide any missing information.

Thanks in advance for the sparring!

250m2 of floor space will cost you rather 600-700k in Bavaria. Additional construction incidental costs, outdoor facilities, garage, and fittings will be added. Large glass surfaces are also expensive. If I read between the lines, you would probably end up at 1 million without land. You are still in the cutting phase, so that's okay. What are the land prices like for you? You have a substantial equity and income. That fits.

250m2 of floor space will cost you more like 600-700k in Bavaria.

In Munich maybe? Or was that a typo? Two years ago we paid 500K for 1400 sqm including well usable old stock (Berchtesgadener Land, near Berchtesgaden in a nice panoramic location, so not the cheapest area )

He means the house, not the property.

Also living space. Yes, that also seems correct from my point of view.

Thank you for the answers.

Land prices of course depend on the location. On the open market, we have to expect at least 350 euros per m2 in an attractive location with good infrastructure. Currently, we have the opportunity to purchase two different plots, both of a nice size of around 1300 m2. However, here we are talking about m2 prices of 550 euros. I think this will not be affordable, even with significant compromises on the house. Possibly something could be done through land subdivision.

A good distribution would, in my opinion, mean around 300k for the land and the rest for the house (e.g., 700k). We do not necessarily have to push the budget to the limit. The big problem right now is acquiring a suitable plot. A large house requires a large plot; the desired modern architecture can really only be realized without a development plan. Such plots are hardly available, and if they are, only in prime locations (see above).

For municipal plots, we meet all the conditions and we are almost at the top of the list in the order. However, the restrictions there are typically Bavarian: traditional construction methods, many requirements, and smaller parcels around 800 m2. If we were to accept this due to the lack of availability of other alternatives, the costs would probably no longer be an issue. The reason is that it is cheap (max. 200 euros per m2) and the building will also decrease in price due to the requirements.

I would appreciate it if someone could also address the topic of financing and residual debt, or has tips on that.