Project house construction. What can I finance?

Without the equity from the apartment, in my opinion, simply not feasible.
Half a million with €3800 net income is just too much.
And whether a bank would really give much on the 2nd lien on a half-mortgaged apartment, no idea.
Especially if you say you can't do much yourself, renting out an apartment is often not a good business. A few months of rent loss, a handyman has to come for every little thing because you can't do anything yourself, etc., and suddenly the whole thing is a losing proposition.
If you sell and then really have just under €200k equity, it is feasible, but a tight squeeze.
What do you currently get for €400k for a house? 120m², no basement, then it fits.
But that lacks a lot of storage space for the family, well, the plot is large, so you can build big sheds.
By the way, are you sure the land can be subdivided legally and used as another building plot without any problems? That is not a given and, depending on the layout, also practically difficult. If possible, I would sell it right away. 800m² is more than enough, even with dogs.
You will need the extra €40k.

I would try to keep the apartment. Start with a low repayment rate and then increase it when your wife has an income.

You have to be able to afford to keep something. Whether it's an apartment or land. The wife is still studying for 3 years. One child is already here, the second is planned. When is your wife supposed to take an appropriate job? I don’t know how the jobs are in the psychology field, but at mid-30s as a beginner with a part-time job, it’s probably only going to bring in some “extra bread”?! You probably didn’t miscalculate, but I don’t see it as something to “hold,” no big leaps, rather keeping a household budget for 20 years because it’s necessary. Children and house cost money, the older they get, a large property has to be maintained – what about public transport, car, if your wife gets a job somewhere far away? Utilities are not free either... then also good insurance for the wife and children... Don’t fool yourselves: she will study, raise 2 children and economically bring more home working at Lidl nearby than in a part-time job 20km away...

It doesn’t all have to be done immediately with the outdoor facilities...

No, it really doesn’t have to. But you also don’t want to live for several years in a garden dust desert. And there’s no extra money coming in that you can just spend: where would you suddenly get €10,000 without savings? When reading I had exactly the same thoughts as The thing has to be properly planned, meaning the calculation, the size of the house... we discussed that too... luckily it is only BS and a corner, building there is not as expensive as elsewhere. I’ll be honest: for me there was always a salary floor: €4000 and some savings, every situation is different, then it works. By now we have the “there-is-no-wood-era,” and you want what is expensive. I see too many hurdles without liquid funds.

There is an outstanding debt of just under €90,000. The financing runs out in 2024

What about adjusting the repayment rate to 1.5% p.a. of the remaining balance?

Assuming an interest rate of 2%, the annuity would then be around €260 per month until 2024. In contrast, there are rental income of €800 minus €80 taxes and non-allocable ancillary costs/IH of about €150. So a surplus from the condominium of €310.

€310 means €110,000 more bank loan. Ergo, the condo would have to be sold for €200,000 plus VfE to break even. Admittedly then without rental risk.

However, the interest rates for the condo are expected to drop significantly in 2024 (loan-to-value ratio < 60%) and the surplus will increase accordingly.

Have you already talked to the financing institute? I would develop an overall financing concept with them.

currently still a psychology student, income: €0, studies expected to be completed in 3 years

In which direction do you want to go then? Adult education? Therapy? Market research?

The plot of land we purchased is divisible, so that we could easily separate 500 sqm here (it shouldn’t be more, since we want to call 800 sqm our own) and sell it to improve our finances. But that should only be the "ultima ratio". If at all possible, we want to keep the 1300 sqm.

oh yes, I would divide and hawk off the land. Then it makes sense.

BTW: Neighbors are a nice thing ;) Where else would you later borrow a hammer from ;)

Without sale of the apartment 0 representable

The property is partially and in the rear area developable. There is already a positively approved preliminary building inquiry. Thank you all for the feedback. My wife is leaning towards therapy. However, she had already completed training before and earned around €2000 net. She is therefore not a beginner in her profession. I will calculate everything exactly again. I have to say that our respective parents are doing well financially and would certainly contribute something to the project or help us out if things got tight. But I don’t want to plan based on that...

The property is partially and in the rear area developable. There is already a building inquiry with a positive response. Thank you all for the feedback. My wife is heading towards therapy. However, she had already completed a training before and earned around €2000 net. She is therefore not a beginner in the profession. I will calculate everything again exactly. I must say that our respective parents are doing well financially and would certainly contribute something to the project or support us if it got tight. But I do not want to plan that way...

In the clinic where I work, we have many psychologists and neuropsychologists. They earn well. However, there are quite a few on the market. Speech therapists/ occupational therapists and physiotherapists are more in demand.