What can we finance?

Hmm, so 800k, probably even more. Then the purchase costs if turnkey. There will easily be another 700k left to finance.

First of all, thank you very much for the many responses. I will now try to answer some questions to make it a bit easier to classify.

General
- we are not private health insurance (PKV)
- I have concerns regarding financial pressure when children are involved (reduced income + higher costs). Right now, it would be easy to manage
- one of us has to reduce working hours because there are no families nearby
- we will definitely stay in Munich (at least 20 years, probably forever)

Current housing situation
- 3-room apartment in a good suburban location
- house is extremely thin-walled, though. Combined with a somewhat communication-weak neighbor, this is really annoying

Search:
- viewed various condominiums and houses. Prices were just extremely high. Tried to negotiate price on some properties, but got immediately rejected. Also, two properties were changed to bidding procedures by the owners. All properties were sold unrenovated for at least 650k (mid-terrace house)
- we do not want a condominium based on friends’ experiences. At least not if it is only 10% cheaper than a house. Prices are simply not normal in the region, but that’s our choice

Property
- empty plot for extension
- good residential location with S-Bahn connection
- offers from 4 general contractors available
- at 800,000 everything is included except furnishings and garden (i.e., land, ancillary purchase costs, ancillary construction costs, house, access path, terrace, connections, etc.)

I hope this helps with the assessment a bit.

I would let go of the idea that the house must be paid off eventually. You pay rent your whole life as well.
You still have the asset growth.
Your salaries will also be higher in 20 years – but the amount to be paid off will remain the same. De facto, it will therefore become less and less.

I consider the plan to be sensible.

I would let go of the idea that the house must be paid off someday. You pay rent throughout your life anyway. You still have the asset appreciation. Your salaries will also be higher in 20 years - but the amount to be repaid will remain the same. So in fact, it will be less and less over time. I consider the plan sensible.

Well, I don't know. If you declare yourself to a European country, maybe you can do it that way. But that doesn't help if the burden becomes too high for the OP during the parenting period. I don't know if the bank will go along with the argument if you want to reduce the installments. What do you do when the first maintenance measures are due and not much has been paid off yet? I’m sure every bank is happy to add something on top again. The financing is bearable now, before planning a family that would be too much for me, especially, as already mentioned, with too low an equity share.

Is it possible to first purchase the property and only build later?

In the Munich metropolitan area, land almost always appreciates in value, increasing equity.

Well, I don't know. If you declare yourself to be part of a European state, maybe you can do it that way.

But that doesn't help if the burden during the parenting period becomes too high for the OP. I don't know if the bank will go along with the argument when you want to reduce the installments. What do you actually do when the first maintenance measures are due and not much has been paid off yet? Surely every bank enjoys adding something on top of it.

The financing is manageable now; before planning a family, that would have been a bit too much for me, especially, as already mentioned, with too low an equity ratio.

I think that's a bit far-fetched given the income. You will be able to manage the installments even during parental leave and will also have the opportunity before/after parental leave to build reserves for maintenance.