For many people, the dream of owning their own home is the biggest financial project of their lives. But before the search for the perfect property begins, there is an important question: How much house can I actually afford? Realistic budget planning protects you from financial difficulties and unpleasant surprises – if you know the most important rules and proceed systematically.
The 35 percent rule: This is how much the monthly rate can cost
The foundation of any solid real estate financing is the correct assessment of monthly resilience. Like from the t onlineAs the article shows, banks use a tried and tested rule of thumb: the monthly loan installment should be a maximum of 35 to 40 percent of the household’s net income. This limit ensures that after financing costs have been deducted, there is enough money left for living expenses, reserves and emergencies.
As the calculations by the consumer advice center show, the monthly net income largely determines the loan amount that is possible. For example, with a household net income of 3,000 euros, the recommended maximum monthly rate is 1,050 euros. At 4,000 euros net it is 1,400 euros. Importantly, this concerns the entire household income of all people who are liable for the financing.
However, more needs to be calculated for the monthly rate. Anyone who owns a property pays not only the loan installment but also ongoing additional costs such as property tax, insurance, heating and water. Like Dr. As Klein lists in his budget calculator, this costs around 2.50 to 4 euros per square meter of living space per month. In addition, homeowners should set up a maintenance reserve – around one euro per square meter per month for later repairs.
A simple formula helps with the budget calculation: The current rent plus the available surplus minus 200 euros risk buffer minus additional costs of the new property minus maintenance reserve results in the maximum loan installment. If you have previously lived cheaply, you can set a higher amount than your previous rent – the only important thing is that this remains affordable in the long term.
Equity: At least 20 percent for better conditions
Equity plays a crucial role in real estate financing and has a significant influence on both the loan amount and the interest rates. As the Sparkasse emphasizes in its recommendations, at least 20 to 30 percent of the total costs – i.e. purchase price plus additional costs – should be financed from your own resources.
There are good reasons for this recommendation: the higher the equity share, the lower the risk for the bank and the correspondingly cheaper the interest rates. As the t-online article further shows, even a few percentage points difference in interest rates can mean thousands of euros in additional costs or savings. For a loan of 300,000 euros, an interest difference of one percentage point amounts to around 350 euros in additional monthly costs.
As a minimum, the equity capital should at least be able to cover the additional purchase costs. Depending on the federal state, these amount to around 10 to 15 percent of the purchase price and consist of real estate transfer tax (3.5 to 6.5 percent), notary and land registry costs (around 2 percent) and, if applicable, brokerage costs (3 to 7 percent). With a purchase price of 400,000 euros, additional costs of 40,000 to 60,000 euros will be incurred.
Equity includes various types of assets: balances in savings, daily money and fixed-term deposit accounts, building savings contracts ready for allocation, securities such as ETFs or shares and life insurance. As the Sparkasse emphasizes in its recommendations, government funding or loans from relatives can also be used as equity. If you are skilled in craftsmanship, you can even have your own work recognized as a replacement for your own capital.
Total costs at a glance: From additional costs to follow-up financing
Realistic budget planning takes into account not only the purchase price and equity, but also all costs that arise when purchasing real estate. In addition to the additional purchase costs already mentioned, other expenses may arise: With a new building, there may be development costs; with older properties, renovation costs must be taken into account.
Planning the financing conditions is particularly important. As can be seen from the t-online article, financing experts currently recommend a long interest rate fixation of 15 years or more for planning security given the current interest rate level. According to the calculations, the initial repayment should be at least 2, preferably 3 percent, so that the loan does not run for 30 or 40 years.
A calculation example illustrates the connections: With a household net income of 4,000 euros and a maximum rate of 1,400 euros (35 percent), an interest rate of 3 percent and 2 percent repayment results in a possible loan amount of 336,000 euros. With 20 percent equity (84,000 euros), a property worth around 420,000 euros could be financed.
Follow-up financing should not be forgotten: After the fixed interest rate expires – usually after 10 to 20 years – the remaining debt must be further financed under the then valid conditions. A high initial repayment and possible special repayments reduce this risk.
Government subsidies can also improve financing: As the information from the consumer advice center shows, KfW offers low-interest loans for energy-efficient new buildings and renovations, and BAFA subsidizes the replacement of old heating systems. Wohn-Riester can also be used as equity or to reduce debt. Early advice from your bank or a financing agent will help you find the optimal financing concept and take advantage of all available funding options.
D. Maier / editorial team finanzen.net