What budget / financing is possible?

Hello everyone,

I have been lucky to have a well-paid job for 18 months now, even though I work in an industry where people usually live hand to mouth.
Now that all my friends and acquaintances are settling down, buying homes, starting families, etc., I have started to reflect as well. I never expected to earn enough money to even own a small condominium, but things have turned out differently. Slowly, the idea of building a house is growing. I am sure it is the same for you: the longer you deal with it, the more expensive it gets... You get more and more crazy ideas (how about a sauna in the basement, for example? etc...)
But I want to come back down to earth and look forward to your advice.
My specific question is this: I want to find the necessary balance between home financing and financial flexibility. I don’t want to feel burdened by the house. Given my possibilities, I lack the imagination. How big of a house should it be? At what point would you consider the risk too high that financing the construction project could become a burden?
However, I am not used to juggling such amounts, so I look forward to your experiences.

Hard facts:
Age: Early 30s
Contract: Permanent
Net income: €4200, but tending to increase, as so far I have been in a so-called provisional service. With permanent employment starting 2021, salary will rise to about €5200 net and up to €8000 net by the end of the career through experience levels, provided all conditions are met (training, health checks, etc.)
Expenses: All in all €1600
Savings rate: €2700
Partner’s savings rate: €1000
My partner’s income is also expected to rise, as she currently only has a doctoral contract and will apply for a “real” job after defending her thesis.
We would finance the construction project together.
Calculated equity by the start of the planned construction project: €125,000 (building savings contract, cash assets, gift from mother-in-law ...)
No children planned.

I have loosely spoken with the bank advisor, and she got excited when she checked my data. But of course, they want to “sell” me money and would finance up to €900,000. That sounds like absolute madness to me!

Our friends have financed construction projects between €300k and €550k. That seems more reasonable to me.
However, I keep seeing model houses in construction blogs and YouTube videos for which I would have to shell out €450k to the prefabricated house company alone, without ancillary construction costs, land, etc...

What budget would you set in my case?
Am I thinking too conservatively?

Totally lost
Best regards
Stephan

At that age without plans for children, with that income and if it is really as secure as you write here. - I would stretch the tight million. But it also strongly depends on the property. A condominium in a big city or an old villa in the countryside would have to be evaluated differently. That then strongly depends on one's own preferences.

However, I keep seeing show homes in construction blogs and YouTube videos for which I alone would have to shell out 450k to the prefab house company, not including ancillary building costs, land, etc...

What budget would you set in my case? Am I thinking too conservatively?

Mathematically, the budget can be astronomical. Perhaps also compatible with your lifestyle. Or maybe not.

Currently, no concrete advice can be given to you. What I can tell you, however, is that with a rising salary comes a rising spending budget. Earning more = more affordable quality of life = higher costs. Whether it’s regular restaurant visits, Caribbean vacations instead of the Eifel, a Mercedes instead of a VW logo, branded clothes vs. H&M, and so on. Besides that, the question arises of what kind of house (or maybe "just" an apartment?) you/you all need or what wishes you have. In the city with short distances, the chic condominium might be just right. In the countryside, a large plot with a great garden is possible; on the outskirts of metropolitan areas, maybe only a semi-detached house. For two people, 100 sqm house + basement or a 125 sqm house without a basement is more than enough. But it’s also very comfortable to live in a four-room house with 300 sqm.

Thank you very much for the feedback. I have to say that I come from a working-class family and my parents somewhat overstretched themselves with their house purchase back then, especially due to the financial crisis and short-time work, and this "trauma" still has some aftereffects, like visits from debt collection agencies and bailiffs. Meanwhile, everything is more stable again, also because my siblings and I have supported them financially. That might explain the caution and worries that trouble me? Of course, that is not irrational, as the financial situations are not comparable.

My lifestyle is very frugal. The only luxury I can afford is my new Mercedes. But I also have a long commute.
My monthly expenses are as follows:
800 € rent and groceries
30 € gym
70 € Netflix, Amazon Prime and mobile phone / internet
400 € car (diesel, insurance, taxes, reserves for service)
50 € insurance
100 € clothing
150 € unforeseen and "fun" (eating out, cinema, gifts for friends and family)

Hi, how do you live now? What do you pay in rent? If it's a bit more, better standard and something of your own, it should be enough. You don't have to push everything to the limit. After all, you still want to live, go on vacations, etc., maybe even treat yourself to one or two toys. Regards Olli

My monthly expenses are as follows:
800 € rent and groceries
30 € gym
70 € Netflix, Amazon Prime, and mobile phone / internet
400 € car (diesel, insurance, taxes, reserves for service)
50 € insurance
100 € clothing
150 € unexpected and "fun" (eating out, cinema, gifts for friends and family)

Very frugal – over time, more will come in with the salary. For example, don’t you take any vacations? Retirement provision is completely missing. And various small things.
But well, time will tell.