How much house can I afford?

Hello everyone,

I am considering buying a home. Of course, this raises quite a few questions.... so I’ll start and try to explain my situation a little.
Can I even afford a house (build/buy) / condominium?!

I am 28, permanently employed for 10 years at the same company.

- Income: 2250 € net per month
- Cold rent: ~515 €/month (Targeted monthly cold rent installment ~650€ - realistic?)
- Monthly surplus currently: ~400 €/month (All costs, that is, utilities, car installment, insurance, electricity, food, taxes, phone/mobile/internet, etc., are already covered!)
- Ongoing bank loan (car loan): 180€/month, 3 years left (otherwise debt-free)
- Existing equity: ~10k-15k €

The house is to be built in the Cologne/Düsseldorf area, so rather a high-price region; plots under 100k € are practically non-existent. I’m a layman, but I think a house would cost ~150-200k €, so a total of ~300-350k €. Is financing even possible for me with the above key figures?

I am now eyeing a plot of land costing about 110k € including notary fees, broker, etc. Does it make sense to buy a plot now and build in about 7 years (provided the development plan allows it)? I would thus also save property transfer tax on the house construction. Since I have good chances to advance in my job (~2-3 years), but of course, that can’t be counted on now as it is uncertain and my life situation could also change. Building in my mid-30s is, I think, a good time, and I could save up equity.
With my current equity, I think immediate construction is out of the question.

I hope you can understand my point of view and I would appreciate lively feedback.
Thanks in advance!

Best regards
Markus / Largo

Hello Markus,

The house is to be built in the Cologne/Düsseldorf region, so rather a high-priced area, plots under €100k are virtually non-existent. I am a layperson, but I think a house would cost around €150-200k, so a total of approximately €300-350k.

This is a generalization and basically not correct. I currently have a plot with good connections to the A46, the A540 as well as federal road 59; the A61 + 57 are also reachable within a few minutes. It can be built on with a semi-detached house of 129 m[SUP]2[/SUP] living space and the plot price is well below €100k. But I can also offer you one in a popular location in KR, there you can safely assume 2.5 times the aforementioned value for the plot. So, as always, it depends.

Regarding your estimated amount for the single-family house, you should provide more information. The numbers alone do not allow any conclusions as to whether your price expectations are correct.

Is financing even possible for me with the key data above?

You should clarify this with an independent financing broker you trust; the internet can only provide initial impressions, which - btw - should not be taken at face value without verification!

Rhenish regards

Setting that aside, it doesn't matter whether you want to build at 25 or only at 55. You have to answer that question yourself. But it seems to me that you are not really sure about it.

Since your life situation will apparently still change and should change, I would wait with it. Build then and there and above all with the person you want when you are ready.

O.K., buying the plot now and building on it in a few years does not seem to be the best idea. But @HausbauBlog, whether I build at 25 or 55 is a huge difference, isn’t it... or am I mistaken? I went to my house bank and simply got an offer for over €200k (I know that is too little for land + house), so I came to a monthly rate (with additional costs) of about €1000, which would be okay for my income and circumstances. If I were to build at 55, I would have a lot of equity, but I would have to pay a lot in a short time, since I would like to have the loan paid off by a maximum of 60. Therefore, time would run out for me after all; for example, if I had to build at 35, I would have to plan a term of 25 years. I don’t understand how one can or should build at, say, 30 years old if you need, I’ll just say, €60k as equity... or am I misunderstanding this whole financing thing?! At the moment interest rates are very low, so buying land or building a house would actually make sense, that’s my thought. But with my little equity I can’t manage either, from what I read here. Or is it simply not possible to build if you don’t have two salaries available?

Regards Markus / Largo

...and my life situation can still change. Building in your mid-30s is, I think, a good time, and I could save up equity.

You said it yourself
Just because interest rates are low is no reason to go into debt.
By the way, every day women (as well as men) fall into this trap and buy things that don’t fit or are unnecessary, just because they’re cheap. A phenomenon nowadays that can quickly lead to insolvency
But it’s good that you’re thinking about it and considering saving.
The interest rates won’t be at record highs in a few years, and it’s easier to pay off a higher budget with two people. Building the "nest" is also more fun together - who knows where time will take you

With your income and the local prices, you will end up having to pay around €350,000-400,000. That will be tight without equity. My assessment.