Financing single-family house construction approximately 140 sqm

We had promised the plot of land, but everything is still dragging on and the notarization would not be before 2025.

We now wanted to fix the contract with our preferred general contractor for applying for and securing the subsidy, and a form was attached allowing us to withdraw from the contract if we do not have a plot of land after all. The seller has now sent us the revised documents again but said that he could not grant the right of withdrawal. This basically means that if, for whatever reason, something goes wrong with the purchase of the land, we would be stuck with a house construction contract?

The seller then said on the phone that this was not the case because we have the KFW300 suspensive condition in the contract and would not receive financing if we did not have a plot of land = then we could invoke the suspensive condition.
We have looked at the suspensive condition again and as we understand it, it ultimately does not depend on the bank's loan approval but on the prior subsidy approval from the KFW (KFW website: "Once you have received the KfW approval, your subsidy funds are reserved for you -> From this point, the suspensive condition would no longer be given. Now you can conclude the loan agreement with your financing partner.").
According to my understanding, the contract becomes effective as soon as we have the subsidy approval (which we want to obtain quickly) from the KFW, regardless of whether the bank later approves the loan if we have a plot of land.

Am I wrong or are we generally being too cautious, should we just trust and sign? It irritates me that such a change suddenly comes up shortly before the contract conclusion.

I would not sign ... and with such amounts I would consult my trusted lawyer and not a forum, which can at most give an opinion because only your summarized presentation is available. And a forum does not assume any liability.

Yes, I will do it one way or another. I will upload the documents to my [RS] tomorrow. Since I don't have house construction contracts in front of me weekly, I would just like to know if something like this is common.

By the way, you are not the person who applies for the funding. That is done by a bank.

By the way, you are not the person applying for the funding. The bank does that.

I am aware of that, I may have expressed myself unclearly.

We have now received the green light for a preliminary inquiry through Dr. Klein at a local Sparkasse.

216k contributed equity
616k total volume

We would now first use the equity to buy the land and simultaneously talk to the general contractor (GU) so that they prepare everything for us, allowing us to secure KFW300 + an additional subsidized loan.

Currently, the financing would look approximately like this:

Nominal / Effective	Loan amount	Fixed interest period	Monthly installment
1.88 % / 1.92 %	400,000 €	10 years	1,399.71 €

For KfW, we would choose five years without repayments on 220k. The main thing is that the fund is not empty tomorrow.
Repayment rate 2.667 % and 1.902 %; 35 years term.

In the meantime, I have already considered building something bigger, but recently I read a rather interesting study about large houses and familial alienation, which made me feel quite comfortable with 145 sqm and that the rate would still be manageable in case I - for whatever reason - return to an employee position. Especially since you never know how interest rates will look in ten years, and we wouldn’t have paid off that much by then.

1.92 % effective interest rate at a local Sparkasse. What must one do to get such dream conditions? I was told that I have to calculate with 3.2 (with a 20-year fixed interest period), or with 2.8 at 10-year fixed interest period for a similar loan amount with significantly more equity.

Banks are confusing, really.