How much real estate can i afford? Tips for construction financing

In recent years, real estate prices have risen significantly, especially in metropolitan areas. Rents have also experienced a similar trend in the same context. Not without reason many families think against the background of rising rents about the acquisition of own real estate. Who decides then to this step, must answer in the next directly the question, how much real estate he can afford. Below, those interested in real estate will find answers to this question, which is so important in the search for real estate.

The rent – nothing more than a loan

It reads strange, but everyone who pays rent today is already paying a loan. However, it is not his own, but rather the loan of his landlord. But while at some point the landlord's loan is paid off by the rent payment, the tenant keeps on paying. And unlike the loan for his own four walls, a tenant never acquires ownership of an apartment. Who pays rent, which will get at least in the same height also a financing for a house or an owner-occupied apartment stemmmt.

How much is the loan that I pay with my rent?

At this point a little interest calculation is necessary. In order to arrive at a reasonably reliable result, we will assume a loan with an interest rate of 0.75% and a repayment rate of 2%. The monthly cold rent to be paid is 1.000 euros. Now the monthly rent is multiplied by 12 and now also corresponds to the interest calculation, which is always done on an annual basis. The annual cold rent is now divided by the 2.75. This is the addition of the annual repayment and interest. The result is a value of approx. 436.000 euros. And this is exactly the loan that a tenant pays off for a lifetime. Annual rent adjustments were not taken into account in this example. These increase the possible financing framework.

How much equity should one bring into a construction financing?

In the past, a value of 80% of the purchase price was always mentioned as a realistic value for the income to be contributed to a construction loan. Due to the massive increase in real estate purchase prices, however, fewer and fewer people can afford this amount. It is therefore not surprising if in recent years more and more banks go over to it and also offer financing up to 100% (full financing). You should know in this context, however, that 100% financing is linked to a good credit rating and that the interest rate is significantly higher. Who wants to finance beyond that still the purchase additional expenses, which needs a very high income or further securities. It is therefore advisable to contribute the ancillary costs of the purchase in the form of equity capital.

Our tip: With a financial calculator, the cost of credit can be determined in advance. To compare the interest rates of different providers, consumers should also consult a construction financing comparison. This is the only way to ensure that the most favorable credit offer for construction financing is found.

The available household net income as an alternative size

Especially young couples often live in smaller apartments and accordingly pay less rent. At some point the decision for a house or a free-hold flat falls then. The motives may be offspring, or the desire for more living comfort. In these cases, the above calculation is not sufficient because the rent to be assessed is too low. Here the household net income is often also used. This is understood to be nothing more than the amount that is transferred monthly by the employer. Who wants to calculate now exactly, which subtracts all current monthly expenditures and receives the amount at disposal. Please consider however that you do not consider at this point also the current rent in the expenditures. These you want to replace just by a real estate acquisition. Who does not want to determine the value exactly, which can help itself also with a rule of thumb. Generally thereby always a value of 30 – 40% of the household net income is assumed as maximum monthly rate.

Special features of follow-up financing

After successful initial financing, at some point the loan will run out of the debit interest commitment and must be extended again. However, you do not have to wait until the end of the term. Meanwhile there are also offers of some banks with those up to 36 months before maturity a new loan can be locked. Thus you secure yourselves already today the good conditions and avoid a possible interest increase. In this context, one also speaks of a forward loan. In the context of follow-up financing, you should also think about the new installment in advance. However, this should not be below the previous rate, otherwise the full repayment of the loan is unnecessarily prolonged.


Many tenants are not aware that their rent is equivalent to the purchase of an upscale property. Who decides for the purchase of a free-hold apartment or a house, which must have at least the purchase additional expenses as own capital funds at the disposal. If a 100% financing is chosen, the buyer should know that the interest rates for this are significantly higher. On the other hand, real estate prices have risen so dramatically in recent years that few buyers can contribute more than the incidental purchase costs as equity capital. All in all, however, the purchase of a property is still a worthwhile investment that can be repaid easily over the course of 30 years.

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