How much house can we afford?

Hello everyone,

my partner and I want to fulfill the dream of owning a house.
In my opinion, we have already set the financial framework well and relatively precisely, but of course I still have a certain respect for such a project. Therefore, I am also interested in the opinions/experiences of other forum members!

About us:

He (29), permanent employment with €2200 net/month (40h)
She (27), permanent employment with €1900 net/month (40h)
One child (1), for whom we receive €204 child benefit per month.

We could imagine having another child in a few years.
In that case, my partner’s salary would only be about €1100 for one year.
Whether she can work 40 hours after that is also questionable.

Financial situation:

Income of €4300 is opposed by expenses of around €3200.
The €3200 includes warm rent (€800), daycare (€240), all insurance, car repairs, fuel, vacation, clothing, food, and leisure. Also, a stock savings plan of €300/month.

So more than €1000 remain.

Equity: €64,000
Stocks/ETF depot: €15,000
Other, non-liquid assets (occupational pension, employee savings scheme): €5000
We have no loans, we bought our two cars (2 years and 5 years old) in cash.

Our building project:

We (want to) build in a village in Saxony-Anhalt, and with some luck, we found an inexpensive plot.

The plot is 2000 sqm and costs €42,600 including incidentals.
We already have a notary appointment. We are financing the plot from our equity.

After buying the plot, about €20,000 equity remains.

We have already been to a general contractor with whom we already have a good feeling, but we still want to get other offers. The price for a 130 sqm city villa was about €230k in the preliminary discussion, excluding painting and flooring, with KFW55 (except tiles in bathroom/hall/kitchen). The fittings were not the cheapest and made a good impression.

Our preliminary calculation:

- House €230k
- Painting + floors in electrical level €6k
- House connection costs (offers already obtained) €14k
- Other incidental construction costs (construction power, construction supervision, insurance, etc.) €6500
- Outdoor facilities (only terrace, driveway, carport, more comes later) €15k

Makes a total financing amount of around €270,000.

Until the concrete start of construction, we plan to save more equity to have enough money for buffers and furniture. After buying the plot, there are still €20k available after all.

In financing, we can comfortably manage €900 repayment/month (around 3%), plus there is the building allowance of €12,000 over 10 years. Compared to our previous cold rent, that would be only €240/month more.

Please note that, as said, we are building in Saxony-Anhalt and not in Bavaria.

I hope that we are well positioned with our project and look forward to hearing your assessments.
Sorry for the long text, I wanted to provide as much information as possible directly

It will be tight but feasible. Better to finance 20k more and plan it as a buffer. Just the new kitchen (which I don’t see listed here yet) will definitely add at least a high four-figure amount, and 6K for flooring + painting might also be tight. Take a look at the incidental construction costs thread, there you’ll get an idea of what you’ve still forgotten in the calculation. What you plan to set aside now until the start of construction, I would rather save for parental leave. Because not only does the salary go down then, but also the costs go up. Also, you can be sure that there will be further cost increases until you start. If you’re just at the stage of choosing the general contractor, then with luck you’ll start building next fall. Speaking of time factor: I also wouldn’t count on the child construction grant so securely if I were you, you’re pretty late with it.

In your calculation of the outdoor area, I also don't see a carport yet. That alone is for the driveway, terrace, and a bit of soil on it.

Up to your calculation, it read very well and everything sounds reasonable, however, in my opinion the costs are calculated too low.

You are certainly still missing about 10% for the final price of the house. Earthworks, drainage, inspection shaft, etc. will also still be added.

Painting + floors are also calculated very, very tightly. With the 15k for the outdoor facilities, the carport will surely no longer fit in.

Thank you very much in advance for all the answers

parental leave is still a long way off. We can imagine having another child, but first we have to see how things go once the house is finished and how we stand month by month.
Construction child allowance can be applied for if the signature on the construction contract is submitted by 31.12.20. That is definitely planned, a decision should be made within a year.

and

We arrived at the price based on the experience of acquaintances and our own research. I will have to investigate that further.

Excavation work up to 30cm is included in the fixed price, we have a flat piece of land. Therefore, I can hardly estimate what else might come up here.

In the end, it probably won't make a huge difference whether we finance 270k or 290k - both are conceivable.

You need a buffer. Finance a bit more than you have to, unless you have family who can easily help out. At least 20k. What you then don’t need you pay back through special repayments.

I would finance the outdoor facilities right away, not later. Unless it is planned and feasible as DIY.

You are scraping by the 20% equity threshold at which interest rates get better. With the necessary buffer, it gets even tighter. Make sure the bank loans for all construction costs and the outdoor facilities. Because of the 20%, I would go into stocks to increase equity.

After moving in, you won’t stop spending money for a long time. That is quickly underestimated.