Is building a house financially feasible?

Inspired by my construction project, my brother and his wife are also considering whether such a project is feasible for them.

A plot of land including all additional costs worth 85,000 euros has already been paid from equity. There is no building obligation.

Income is composed as follows:
He: 2,500 euros net after deduction of the company car
She: 1,900 euros net
Both are 33 years old.

They copied the construction costs including kitchen and furniture from me: 500,000 euros including all incidental construction costs.

Since they still have freely available equity of 150,000 euros, they would need a loan of 350,000 euros.

One child is already on the way, and they are now considering whether the project is affordable for them with a child.

From my point of view, there is no objection, but I would appreciate your input.
What would be the smartest way to finance it?

It is the question how the income situation with a child is.

Was the equity saved up or inheritance etc?

If, for example, 3,500 net are left over with 350k, it is very tight

The question is what the income situation is like with a child.

You can figure that out. If SHE receives parental allowance, that will be around 1200-1300 euros. Plus 2500 from HIM, that would be about 3700-3800. Child benefit aside, tight but doable. Why does the construction have to be so expensive? They should build smaller or with less luxury, then there would be room.

The building does not have to be that big. We only compared everything with me at first so that he has a first reference point about the costs, etc. Do you think a monthly rate of 1250,- Euro for a full repayment loan over 30 years is reasonable or feasible? Approximately 50,000,- of the equity comes from an inheritance.

one more thing: which tax classes make sense in this constellation? Both are now in tax class 4

I would be able to sleep very well with the financing. Child benefit is a fixed income, so it can definitely be considered - after all, there are expenses for three. First child, so still quite young parents. Why then a full repayment over 30 years? Why not start with 2% repayment and agree on an option to change in the contract. If there is regularly more money available (the wife goes back to work properly), the rate can be increased. If she stays at home permanently or a second child comes, it doesn't hurt. And even if there is a residual debt after 30 years, that is also unproblematic.