Is financing a new single-family house feasible?

[..] Of course, times have changed and we cannot use the lifestyle of our grandparents as a benchmark, but many here seem to be in a kind of prosperity bubble and don’t even realize that much of what they consider normal is simply pure luxury.

In the end, everyone has similar needs: physical security, nutritious food, shelter, clothing, health, good social contacts, education, and meaningful activities. Since we are in a house-building forum here, the topic of shelter is probably more than fulfilled for most. Most things asked for as “lifestyle” are rather superfluous. Instead of spending a lot of money on nonsense, I would rather look for a hobby or engagement that is fulfilling in the long term. Be it involvement in the social sector or as a lay judge or in local politics, with the fire department or the THW, hunting or sailing (both can be done inexpensively), learning an instrument, volunteering in a sports club, etc.

This rule does not apply because then there would be nothing to give up – then you might end up with 25% or less for housing – like in the past. This rule is meant to protect against ruin, because with your strategy you are quickly at 50% for housing. Then, in a recession + job loss of one of the two necessary earners, things quickly look grim. And that is exactly what this is about. If both are civil servants, it might be different.

I don’t know which time you are talking about (“like in the past”), but both my grandparents and my parents spent significantly more than 25 percent of their household income on housing in the first years after building a house. And since we live in an area where you can hardly find anything to rent for under 2000 euros a month, I also currently don’t know a single family our age who spends only 25 percent on housing, unless they inherited real estate – and still none of them have to give up anything (I’m excluding luxuries like a Porsche or a Maldives vacation twice a year).

A natural disaster could also come and destroy my house. Then things would look grim too. But I’m very glad not to live my life as a doom-and-gloom prophet and to be afraid of every little risk, because otherwise I would still be doing the same job as ten years ago and wouldn’t even be thinking about building a house.

I don’t want to encourage anyone to overextend financially, but this constant pessimism here really drives me crazy. I’d rather think about how I can earn more money in a year than about what would happen if I didn’t have a job in a year and couldn’t find a new one. Positive mental attitude and all that.

I don’t know what time you’re talking about (“like in the old days”), but both my grandparents and my parents spent significantly more than 25 percent of their household income on housing in the first years after building their house. And since we live in an area where you can barely find anything for rent under 2000 euros per month, I currently don’t know a single family our age that spends only 25 percent on housing, unless they inherited property – and still none of them have to go without anything (I’m excluding luxuries like a Porsche or a Maldives vacation twice a year).

A natural disaster could also come and destroy my house. Then things would look bleak as well. But I am very glad not to live my life as a doom-and-gloom prophet and to be afraid of every tiny risk, because otherwise I would still be doing the same job I did ten years ago and wouldn’t even be thinking about building a house.

I don’t want to encourage anyone to overextend themselves financially, but this constant doom-mongering here really drives me crazy. I’d rather think about how I can earn more money in a year, not about what if I had no job in a year and couldn’t find a new one. Positive mental attitude and all that.

I like your e-sports terminology and otherwise completely agree with you. Of course, one should remain realistic when assessing one’s own finances, but I also find this rigid setting of limits at 35% and so on questionable. Ideally, you observe your own expenses over the long term and can thus estimate how your bank balance and everyday life would change with the construction financing. But doom-mongering is simply not a good philosophy of life, even beyond money and income. Fear is not a good advisor.

I like your e-sports terminology and otherwise fully agree with you. Of course, one should remain realistic when assessing their own finances, but I also find this strict setting of limits at 35% etc. questionable. Ideally, you observe your own expenses over the long term and can then estimate how the account balance and daily life would change with the construction financing. But pessimism is simply not a good life philosophy, even beyond money and income. Fear is not a good advisor.

I have nothing to do with e-sports at all. :D And I am also not someone who believes that with the right mindset you can really achieve EVERYTHING in life. But I am convinced that positive thinking and optimism, as well as a certain willingness to take risks, are indeed beneficial for professional and personal success.

I also see the 35% limit as somewhat too strict in a certain way. These are guidelines that don't always fit. Let's assume you have a net income of over €5,000 and earn €1,000 more net from a new job, this would mean that you could only invest €350 of it per month in your dream property. Here, it is also assumed that you spend €650 more on everything else. It could be that you treat yourself a bit more because you have more available. But of course, you can also control that yourself. It is simply more accurate to know your variable costs per month and deduct everything else monthly. There should still be a few hundred euros left over. As always, you should also look at how high the outstanding debt is and which term I choose. If I finance longer, e.g. 20 years, I have the option to terminate after 10 years and refinance the loan at a favorable opportunity. Especially if you can't yet properly estimate the costs for the child. Certainly, everyone differs in what is important to them. Or whether a vacation, etc., is enough. And let's not kid ourselves. A family vacation to Mallorca during the holidays also costs around €4,000 even at a 4-star hotel, if not more. And well, whether that's necessarily a luxury for everyone. The monthly costs for 2 adults with 1 child are also average values. Of course, you can also be below that. But the bank will not accept everything here either. And if you have to think twice before going to a restaurant with the family or doing any leisure activities just because of the house, I find that borderline. Whether both parents necessarily have to quickly work full-time and always need the grandparents to help out is something everyone has to decide for themselves. There should be a certain buffer. Otherwise, I am forced to take out another loan for a car repair. At least, as I said, you should not calculate too tightly. The income side can also still improve, no question. Especially if you have collective bargaining agreements where you automatically earn more after a few years of service. But I wouldn't speculate on that either. And a job change to a temporary employment contract also carries risks despite higher pay. Things can also go badly sometimes.

Just so, by the way. I simply entered the data into the budget calculator at the Sparkasse. It shows a disposable income of €1,249 with a limit of €321K for what the property can cost. Even if you don’t see it so negatively and these are of course average values, we are quite far from a €440K loan. Is there any news from the original poster?