Construction financing - Your experiences and tips?

Hello everyone,

I ask for your opinions on the following situation: we have an income of about €5,000-5,500 net. That is not particularly much for BY, unfortunately neither of us made it into the industry. We also missed the years of "gifted" money, now interest rates are over 3%. We paid for the plot with equity, now a new single-family house is to be built on it. A soil survey showed that soil replacement is still necessary because the plot is not suitable for building. Before the purchase, I spoke with the neighbor, who said that it was not bad building ground—only later did it emerge that he has a full basement, contrary to the specifications in the BB plan.

It will be a single-family house (10.85x9 m, ground floor + upper floor full stories, small south balcony) built brick by brick with a double garage, soil replacement & embankments (slight slope). I estimate pure construction costs of €600,000 at kfw 40 without exterior facilities, where I want to do the upper floor as much as possible myself.

Our equity has shrunk to €170k after the land purchase. From your experience, do we have a chance to get the rest financed over 25 years? I am not an employee (civil servant), if that helps. My calculation is based on the fact that a city single-family house in BY costs €1 million today overall, we are in the district, which is why the land only cost a quarter of a million and not half. Are my assumptions realistic?

How do I combine the kfw40 subsidy (only up to €100,000) (credit no. 124) with a construction loan? If I pay part of the kfw monthly, don’t I miss this money for the very expensive construction loan? If I think right, it should always be cheaper to service only one loan and pay the largest possible rate on it.

I also have a Riester home savings contract. Of course stupid, because I probably would have made more money if I had invested the installments in the MSCI World. Can I still use the home savings contract sensibly somehow? (It is not yet eligible for allocation).

Thanks for your experiences and tips.

Make a complete calculation. Costs, income, expenses.

Then you can also get an answer

Income of about €5,000-5,500 net.

I am calculating with €600,000 pure construction costs

I also have to admit that these are too many approximate figures for me. The forum side does not even know how many people you are. Based on the number of people and mobility costs, one would have to roughly estimate the living costs from the forum side. But that is your task, not only because it then results in a learning curve about your own costs. By the way, here is the questionnaire that is supposed to provide support https://www.hausbau-forum.de/threads/informationen-um-baufinanzierung-finanzierungs-angebot-zu-bewerten.18200/ Ultimately, it would have to be broken down who earns what and how much salary would be lost in case of possible child planning. And then the calculation of the house is missing.

Thank you for the answers, I am providing the necessary information here afterwards:
- We are (still) unmarried, 2 people both working full-time.
- Are 33 & 30 years old, no desire for children so far
- I am a civil servant, she is an employee

- Income €5,500 net / month in tax class 1
- Remaining equity for new construction €170,000, land is free of encumbrances.
- Currently €800 rent, after ALL expenses about €1,000 remains. Savings rates for construction & building savings contract are included here, which will then disappear. Consequently, I see a loan rate of €1,600 as feasible. Do you see this differently?
- After the house construction or moving in, her commuting costs will drop massively (can walk to the office), however, the car is already 10 years old: a new purchase will be necessary in the next 10 years, mine is newer but will soon have 250,000 km.
- We do not benefit from the Bayernlabo because the income limit is exceeded. The only possible funding is the above mentioned KfW 40, although nothing is saved there since the house costs more as well.
- At my above-mentioned income, the private health insurance (PKV) is already deducted. Since private health insurance is the worst cost trap in old age, the contributions will rise sharply. Switching to public health insurance (GKV) is not possible.

I have estimated the construction costs as follows:
- House according to an offer for a brick-on-brick house from the newspaper turnkey without floor slab, KfW 40 eligible: €325,000
- Floor slab: €25,000
- Garage 6x6 m with floor slab: €25,000
- Retaining walls: €8,000 (L-stones), max. retaining height 1.50 m, no separate statics required
- Filling & compaction, 350 m³: €50,000
- Kitchen: €15,000
- Driveway/access with curb lowering: €5,000
- Sewer connection: €10,000
- Terrace: €15,000
- Garden (plantings): €10,000
- Drainage, inspection shaft in the access road: €5,000
- Adjustment requests from the offer (floor-to-ceiling windows, balcony, no stairs from the 80s, etc.): €75,000
- Gable roof on garage and possibly extension: €10,000
- Building permit, preliminary static calculation, soil survey: €8,000 (already paid)
- Buffer
- Total: €586,000

I understand that some points are difficult for outsiders to assess. Ultimately, it is always like this in construction; no one knows beforehand what it will cost, but do I come close with a rough figure or am I way off somewhere? Is a house for max. €600,000 with the above dimensions and a bit of earthworks in Bavaria feasible?

Can you help me with my questions about construction financing?

In consequence, I see a loan installment of €1,600 as doable. Do you see it differently?

I see a doable installment of €3,000 – lifestyle must be adjusted, but you can live on €2,500 per month. Whether you want that, I don't know.

Is a house for max. €600,000 with the above-mentioned dimensions plus some earthworks feasible in BY?

Definitely. With those dimensions, it's somewhere around 160 sqm of living space. Currently, people estimate around €3,000 pure construction costs +/- plus additional construction costs (earthworks etc.) plus garage and outdoor facilities. So that fits. But please reconsider the balcony – from experience, nobody uses such a thing anyway if you have a garden. It just costs unnecessary money.

House according to an offer for a turnkey stone-on-stone house from the newspaper

Turnkey often means without painting and flooring. So please check whether those are included or not. And lastly: Please reconsider, without wanting children, whether such a huge house for two people is really necessary. There is a lot of unused space. The saved money can be better invested than in ballrooms. P.S. With a €1,600 installment on a loan of €430,000, you get an annuity of 4.47%. That is extremely tight and means only a repayment of 1.5%. Do you really have to spend €4,000 every month? That is a luxury lifestyle – would fit the house. But not the income (just like the house).

But please reconsider the balcony - from experience, nobody uses such a thing anyway if you have a garden. It just costs unnecessary money.

I'm actually of the same opinion. However, the other night during the walk with the poodle, I realized: actually, a balcony, or even more so a roof terrace, would be cool for a single-family house as well. Specifically for stargazing. In the garden, there's often too much in the way when you want to target objects just above the horizon.
Whether the additional 10-20 thousand euros is worth it and whether you wouldn't rather go to a dark-sky reserve in a meadow anyway - well, I guess everyone has to decide that for themselves...