Financial requirement for construction

Good day,

my husband and I wish to start building our own home in the near future. Unfortunately, we are still not clear about the financial aspects, especially our financial situation at the start of the construction. Due to our young age and my lack of financial support during my parental leave, we unfortunately currently have no equity at all.

Here are some key figures about our income:
1. Husband’s income: €3,600.00
1.1. Plus bonus payments & expenses which are not considered here
2. Wife’s income: €1,000.00
3. Child benefit: €384.00
4. [Baukindergeld]

Items on the credit side:
1. Cold rent: €1,000.00
2. Monthly loan costs: €385.00
3. Monthly kindergarten: €450.00
4. For items of daily needs (insurance, mobile phone, ...) standard values can be used.
- for variable costs (fuel, groceries, drugstore items, leisure, ...) we calculate approx. €1,800.00 monthly.

Data on the construction project:
Plot price: €200,000.00
- no brokerage fees
- Bavarian real estate transfer tax
House costs including extras: €350,000.00
- Construction according to [KfW40] standard

Regarding the questions:
1. Is a construction project feasible under these conditions?
2. How would funding from the [KFW] affect the financing?
3. What other funding measures are there, especially for families with children?

Should further questions be needed for a more precise answer, I will be happy to provide them.
Many thanks & best regards,

Elsa

1. Is a construction project feasible under these conditions?

Calculate yourselves. You spend €2,635 monthly with an income of €5,000. On top of that comes the financing (how high will the loan be?) of over €2,000 + additional costs for the house. It will be extremely tight, as I think you won't manage with €350k for the house.

2. How would KfW funding affect the financing?

No, not really.

3. What other funding measures are there, especially for families with children?

I can't tell you anything about that, since I'm not from Bavaria.

My conclusion as a banker: I wouldn't give you a loan. Sorry.

Hello Elsa,

unfortunately, I see very little chance for you.

I already doubt that your estimated costs will be sufficient. There will be a lot that is not yet included (additional purchase costs, secondary construction costs, external facilities kitchen, etc.).
But based on your amount, that is €550,000.
No equity means full financing. More precisely even more, as the additional costs come on top.
Just roughly calculated, you are at about a rate of €2,500 or more.

That is then around 50% of your income. You also still have loan burdens.

Honestly, income/expenses do not match the rate and no equity, that is completely unrealistic, unfortunately.

You can only shake your head at that... first, pay off loans..

Sorry, I’m probably having a bad day today! But where are you all coming from today? Is the border to the country where people have lost the meaning of reality open right now?

The calculation is simple,

- 350k€ house
- 200k€ plot of land
- 40k€ incidental building costs, you completely forgot
- 20k€ outdoor area, you completely forgot
= 610k€

1. no equity, thus a financing over 1X0%! That means 100% of the loan runs at an interest rate as with 100% borrowing. The rest, i.e. the part over 100%, runs on a consumer loan easily over 4%.
2. Baukindergeld is not an income
3. You have a loan pending with 400€
4. a KfW subsidy has a neutral effect. That means no advantages, neither on the interest nor on the borrowing rate
5. Yes, there are interest reductions from the Bayernlabo, unfortunately you don’t get it because the construction project is too expensive and you need to have equity.

Conclusion: Completely unrealistic. Not worth writing more either.

Have a nice evening

you can only shake your head at that... pay off loans first..

Oh, why such a response right away. It was not even mentioned what kind of loan it is. Maybe it is just a car financing, which is not that serious....not everyone can have that much money left over to buy a family car new at any time, without installments (just as an example). That doesn’t mean right away that one cannot service another loan. However, I agree that with the numbers mentioned here it is rather critical.