How much housing is affordable?

How much property can I actually afford? This is one of the crucial questions that needs to be calculated before buying. © Christin Klose/dpa-tmn

Before you tackle the financing of a property, it is advisable to check your available budget. With a cost calculator, you can determine in just a few steps how much your future property can cost and how much credit you can get from the bank for the purchase or construction. It is a helpful tool for the most important questions of building financing: How much house or apartment can I afford? And how much money should I have available each month for a loan?

Before you use a budget calculator, you should solid budget Only a realistic financial review with all regular income and expenses will show you how much money is available each month for financing:

Regular monthly income

• Net household income
• Additional income / secondary earnings
• Child benefit
• Other income (e.g. rental income, interest income)

Regular monthly expenses

• Rental costs and additional rental costs (possibly fees for property management)
• Household and food expenses
• Insurance and pension provision
• Other expenses (mobility, communication, gastronomy, holidays, education, leisure, etc.)

You should also find out in advance about the Amount of your equity Think about it. These include cash, savings or securities, building society savings accounts or paid-off land and real estate. However, these should be available for financing at any time.

The big guide – Solid construction financing

Safely and quickly into your own four walls. With our comprehensive construction financing guide, you will learn everything you need to know about property financing. Download the clear guide HERE for free.

Download our extensive construction financing guide for free HERE. © Imago Images/Bihlmayerfotografie

Budget calculator: Find the maximum purchase price for your property

Almost all banks, savings banks and building societies as well as comparison portals now offer their own online budget calculators free of charge on their websites. Common budget calculators ask for all the basic key data for real estate financing.

• In a first step It is usually sufficient to enter your monthly net household income, the amount of available equity and the possible monthly rate (determined from your household bill). The budget calculator then gives you a first Indication of possible price level the property.
• In a second step you can find information about the additional purchase costs of your property (notary and land registry costs, property transfer tax, brokerage costs), the desired safety buffer and any modernization costs customizeThe choice of your federal state is also important.

Example calculation – maximum purchase price and monthly financing rate

(New building, net income €4,500, equity €125,000, monthly rate €1,575, state of Bavaria)

Calculation of the purchase price

Financing data

What results does the budget calculator show you?

The assumed net household income of 4,500 euros results in an assumed equity capital of maximum loan amount of 360,000 euros and a maximum monthly rate of 1,575 eurosthat a bank would finance on average. The total budget for the property is 485,000 euros. After the selected 15-year fixed interest rate, a remaining debt of 229,058 euros remains.

The calculator gives you a rough first orientation, how much home you can affordTo find out what budget and conditions apply to your building financing based on your individual financial situation, you should submit a specific financing request to the respective bank online or seek advice in person at the branch.

Important to know:

Budget calculators for construction financing generally work with Preferences in the calculation. The following generally applies:

• The maximum monthly rate corresponds to 35 percent of your net household income.
• The monthly rate corresponds to 80 percent of the maximum monthly rate and provides a financial buffer.
• The calculation is based on an annuity loan, i.e. the calculator assumes that you want to repay your construction loan in constant installments.

Download our extensive construction financing guides for free HERE.

Important terms related to budget calculators

Monthly net household income: This is the basis for determining the maximum monthly rate in the budget calculator. The maximum loan amount that you could take out for your property loan is derived from the net household income. Simple calculation formula: All of your household’s income minus taxes and social security contributions.

Equity capital: The amount of equity should at least cover the sum of all additional purchase costs – but at least 20 percent of the total construction or purchase price is recommended. All funds made available immediately are considered equity. The amount of equity influences the maximum purchase price for the property and your monthly payment. The more equity you state, the higher the purchase price and the lower your monthly payment.

Monthly rate: Most banks finance home loans with a maximum monthly rate of 35 percent of your monthly net household income. Budget calculators usually use this as the basis for your maximum monthly rate. This indicates how much you could invest in a loan each month. Banks sometimes also finance real estate loans up to 50 percent of your available net income.

Fixed interest rate in years: By specifying the fixed interest rate, you specify the period in which the fixed interest rate will not change. In the budget calculator, you can usually choose a fixed interest rate between 5 and 30 years. In times of low interest rates, long terms make sense, while in times of high interest rates, short terms are recommended.

Effective annual interest rate: The effective annual interest rate is the best way to compare offers from banks. It indicates the total cost of financing your property over the agreed term. The lower the effective interest rate, the cheaper your home or apartment loan will be – and of course the monthly installment.

Fixed interest rate: The amount of the debit interest determines your loan interest rate. You pay this interest back to the bank in order to borrow money. Debit interest rates are determined by the banks themselves, based on supply and demand on the capital market and the purpose of your loan, among other things. In the budget calculator you will automatically find the currently cheapest value from all available partner banks.

Initial repayment rate: Your monthly rate is made up of a repayment and an interest portion and remains the same over the agreed term. While the interest portion decreases over time, the repayment portion increases. The initial repayment rate determines how many percent of the loan amount you want to repay in the first year. Experts recommend a repayment of at least two to three percent.

Residual debt: In the vast majority of cases, the loan amount is not fully repaid after the agreed term. There remains a so-called residual debt that you must then finance. You will automatically find out the amount of this debt when you enter the fixed interest rate in years in the budget calculator. If your fixed interest rate ends, you can secure currently cheaper interest rates for future follow-up financing in advance by taking out a so-called forward loan.

Notary and land registry fees: The costs for the notary and land registry entry depend on the purchase price of your property. This changes depending on the price of the property in the budget calculator. The default setting for most calculators corresponds to the average values ​​of 1.5 percent (notary) or 0.5 percent (land registry). Important: These can vary depending on the federal state and municipality.

Real estate transfer tax: The amount of the property transfer tax is also regulated by each individual federal state and is between 3.5 and 6.5 percent of the purchase price. To do this, select the federal state in which you want to buy or build your property in the budget calculator – and the corresponding value will then be automatically displayed.

Brokerage fees: The standard value for brokerage fees in the budget calculator also changes depending on the federal state you choose. This varies between three and six percent of the purchase price. Together with the VAT of 19 percent, brokerage costs amount to between 5.95 and 7.14 percent. Important: The amount of the brokerage commission is not set by law. If you know the exact value, you can correct it yourself in the calculator. If you do not incur any brokerage costs, enter the value “0”.

Safety buffer: There are costs that cannot be calculated exactly at the beginning of a property financing. Unforeseen events can occur during the individual construction phases: suddenly more materials are needed or they become more expensive, tradesmen have to be replaced, individual construction phases are delayed, etc. For such cases and also for any interest charges that the bank may have to pay on the loan, budget calculators generally include a safety buffer (usually five percent). You can also adjust this as you wish – but it should definitely be included in the financing.

Modernization costs: Nowadays, used properties are often purchased. If you want to renovate an old house or apartment, you will usually have to pay modernization costs in addition to the actual purchase price. These depend on the age and condition of the property. You should plan the following guidelines in the budget calculator for modernization:

• Property not older than 15 years: approx. 16 percent of the purchase price
• Property is 20 to 40 years old: approx. 20 to 30 percent of the purchase price
• Property is older than 50 years: approx. 40 percent of the purchase price