Hello Janitor,
Short version: Of course, you can build because you have enough leeway that others do not have. Whether you want to use it for building a house is ultimately your decision, but with your income/employer, your approach to the costs incurred, and your equity, you will always get a loan in the targeted amount.
You also have the option to approach the matter differently by simply setting yourself a limit of 1000€ loan installment and seeing what loan amount you can realistically get for that currently. It naturally also depends on whether you prefer short- or long-term loans, whether you want to include special repayments, and how high the repayment rate or loan term should be. But you can certainly sort all that out relatively quickly with your bank advisor; you quickly get a feel for what you want and how much the house may cost overall.
Then you know how much you can spend at most on the house, calculated defensively including equity about 450K€. From that sum, you subtract 10-15% as a buffer and tell the architect that you want/can spend 375-400K€ including the land. For extras, you still have potential, and if it actually ends up being 500K€ (or should be), your loan installment will actually be close to or slightly above 1000€. You can still decide that later.
Even then, there is enough buffer built into your entire family cost calculation because you set some items realistically but also high. Between the lines, it resonates that your wife can possibly earn something extra as well. If your wife manages to earn about 1000€ net additionally, the installment would be covered and you would still have at least 3000€ net monthly (excluding your private health insurance and minus estimated additional tax after joint assessment) for everything else.
That can definitely be considered a solid financing, and you must not forget that you are exchanging the apartment you described as too small at your parents for a new house, so you also have more living value.
Best regards Dirk Grafe