Financial planning for new construction with good income and little equity

I already stopped reading at netto 3850 & 1650 => 5500 without children but planned in 2-3 years & little equity, sorry

I see it similarly. As sad as it is: €5.5k today with two full-time salaries is unfortunately no longer an income with which you could afford to build a house – without equity. You’re simply 3-4 years too late.

Hello again everyone!

First of all - a huge thank you for the quick and numerous responses!
Even though the very clear negative assessment of the situation surprised me a bit.
Certainly, I do not want to sugarcoat anything and then end up in a financial crisis. Your answers help me to analyze the whole thing anew. Indeed, either let it go or look for something cheaper (Rheinhaus, apartment) etc.
What I don’t quite understand, where is the problem most likely? That under these circumstances one does not get a loan, or that with this income one can’t manage it based on experience?
There were a few financing offers with our input, even though I (before the current offer from Town & Country house) had e.g. 472,000 EUR, just under 4% interest, 10,000 EUR equity and 15,000 EUR muscle mortgage, with a monthly rate of 2,167 EUR, 1.5% repayment.
I made the following calculation for us or the pros and cons:

- Just under 40% income, online you read about benchmarks of precisely 30-40% income, we would be just under 40% = close to the pain threshold;
- Little equity, even if at the start of the construction project you might have around 15,000 EUR, where you would effectively need to take out, let’s say, another 35,000 EUR as an installment loan for the kitchen and gap in real estate transfer tax/notary. Term 10 years, interest... well. 5%, you would have another 370 EUR/month;
- Additional costs/operating costs for a house, we calculated about 500 EUR;
+ Hessengeld in Hesse, recently decided, with 2 adults 20,000 EUR subsidy, spread over 10 years = 2,000 EUR/year, 166 EUR/month
+ Friendly craftsmen, own work where certain costs for interior and exterior finishing can be saved;
+ Setting priorities, of course you would prefer a garage, fence + electric driveway gate, Grohe fixtures and not DIY store quality etc. etc. Or does a simple equipment suffice, including paving with a professional friend for driveway and parking space, and laying the lawn yourself with a few borrowed tools? If you have the choice between a simpler house or none at all...

Thus we end up in a situation where all costs related to living amount to just under 3,000 EUR. It’s a lot, but then the decision which one has to make for oneself whether they can manage with that.
Or is there a big gap in my calculation that I don’t see?
Again, I don’t want to sugarcoat anything, but understand the framework conditions, on the basis of which a decision should then be made.
Thanks!

I find the project very ambitious.

You speak of "guten Einkommen" in the headline. I absolutely don't see that. I think your income is average. Not particularly low but not really good either - just average.

Anyone who has already built a house knows that the costs (especially through typical prefab house providers) are neither transparent nor "correct." There is simply so much more around it that you don’t expect with the first offer.

We spent 1 year exchanging offers and informing ourselves about every possible variation. The costs after about 1 year compared to the first offer increased by a multiple – you don’t even want to know by how much.

I know you don’t want to convince yourself otherwise, but you do so automatically because you lack the experience.

You will not build such a house for under 500k – definitely not. The outdoor area around it will cost you so much money – even if you do a lot yourself.

Also believe me on one thing: We had planned to contribute a lot of own work at the beginning and in the end you also hope for help around it. But it doesn’t turn out as you imagine it in the beginning.

I see the problem as follows:

- The buffer that you in my opinion need to carry such a project is not there (according to your original calculation).
- No reserves at all (10k is nothing when building a house…)
- 5.5k net together is honestly too little in the long run in the current interest rate and construction cost phase.
- 1.5% repayment over the long term is also too little.
- Over 2000€ monthly payment with that income is definitely too much in the long run.

We took out a loan of 550k – were under 30 years old (2 years ago) and still financed at 1%. Together we earn 6500€ net.

Now with a child, we reduced the repayment rate to 1% and pay back 1,300€. We can live comfortably – but believe me – you have to restrict yourself drastically with a child and so much more will come to you... Your thoughts will constantly revolve around money and you will certainly find yourself in financial trouble from time to time – it is honestly not worth it.

Buy a townhouse or continue saving diligently and hope that the interest rate situation as well as the market situation/construction prices improve a bit.

Building a house has currently become pure luxury that the middle class can hardly afford – especially with children.

Basically, I see some things like you… Together with your income, it is definitely doable – ambitious, but doable.

One child or possibly two children mess up your income situation so extremely over several years that this very tight calculation at the beginning will definitely get into trouble...

What do you want to hear now? Installment + 400€ monthly additional costs + missing income of the woman during child care simply do not match the current construction costs and interest rates. Basically, you don't even have a budget for a kitchen. In the end, it is even a +100% financing.

What do you want to hear now? Mortgage + €400 monthly additional costs + the wife's missing income during parental leave simply don't match the current construction costs and interest rates. Basically, you don't even have a budget for a kitchen. In the end, it's actually more than 100% financing.

You also lose the "connection" to the house relatively quickly as it was at the beginning.

Before the building project, you are, so to speak, willing to give everything for it, to save yourself to death and give everything for the house.

Like with everything... you get used to it quite quickly. When children come along - the priorities shift to a completely different side and you want to afford a few more things as well.

If no reserves are available here (which is the case here) - it becomes extremely difficult...

You can't take parental leave because you can't afford to forgo the income. The new garden table is also not possible. Fly screens neither...

It sounds like small things... but if you have nothing left over and the situation worsens, you simply have too much financial strain.