Michigan Construction Loans
🏗️ Build Your Dream Home
Edward Kalavitz · Michigan Mortgage Lender & Broker · MLO NMLS #138424 · Private Mortgage Guarantee LLC · Licensed Michigan Realtor #6501386956 · Turnkey Realty LLC
In This Guide — Michigan Construction Loans
Ready to build your dream home in Michigan? Michigan construction loans provide the financing you need from breaking ground to moving in. Learn about your options with Edward Kalavitz, your trusted Michigan mortgage broker.
Not Sure Which Loan You Qualify For? — Michigan Mortgage Broker
See the rates. Not sure which loan fits your situation? The Michigan Mortgage Advisor answers that in 60 seconds — analyzing your credit, down payment, and goals to recommend the best loan program and show you your real monthly payment on Michigan real estate.
- Instant loan-type recommendation — FHA, VA, USDA, or Conventional
- Live rate and APR for your exact scenario
- Michigan-specific closing cost estimate
- No credit check required to start
Best loan for you: FHA
3.5% down
~$1,830/mo principal + interest
Your actual recommendation is calculated live based on your inputs.
Mortgage Rates in Michigan
Competitive pricing personalized to your scenario. Rates shown reflect 740+ credit, 30-year fixed terms unless noted.
Purchase Loans
Conventional Purchase
15-Year Conventional
FHA 30-Year Purchase
VA 30-Year Purchase
USDA Purchase & Refinance
USDA 30-Year Purchase
FHA Streamline Refi
Conventional Refinance
Jumbo & High-Balance
Jumbo / High-Balance
Understanding Michigan Construction Loans
Michigan construction loans provide financing to build a new home from the ground up. Unlike traditional mortgages that fund the purchase of an existing home, Michigan construction loans release funds in stages as your home is being built. These specialized loans require more documentation and oversight but allow you to create a custom home tailored to your exact specifications.
Building a new home in Michigan offers many advantages: you can choose your floor plan, select all finishes, ensure energy efficiency, and often get more home for your money compared to buying existing. The financing process for Michigan construction loans is more complex than a standard home purchase, but I’ll walk you through every step.
As a Michigan mortgage broker with over 25 years of experience, I help buyers throughout all 83 Michigan counties navigate Michigan construction loans. From finding the right program to managing the draw process, I guide you every step of the way.
💡 Key Point About Michigan Construction Loans
Michigan construction loans work differently than regular mortgages. Funds are released in “draws” as construction progresses, and you typically pay interest-only during the build phase. Understanding this process before you start is essential for a successful project.
Types of Michigan Construction Loans
🏠 One-Time Close (Construction-to-Permanent)
The most popular Michigan construction loans option — combines construction financing and permanent mortgage into one loan.
- Single closing, single set of closing costs
- Rate locked before construction begins
- Automatic conversion to permanent mortgage
- No requalification required
🔄 Two-Time Close
Separate construction loan and permanent mortgage with two closings.
- More flexibility in permanent financing
- Shop for best permanent rate later
- Two sets of closing costs
- Must requalify after construction
🏗️ Construction-Only Loan
Short-term financing for the build phase only.
- Interest-only during construction
- Must arrange separate permanent financing
- Good for investors or cash buyers
- Higher rates, more risk
🏡 FHA/VA Construction Loans
Government-backed Michigan construction loans options.
One-Time Close Michigan Construction Loans
One-time close Michigan construction loans are the most popular choice because they offer significant advantages:
How It Works
You close on the loan before construction begins
Interest rate is locked for the entire loan term
During construction, you pay interest-only on funds disbursed
Once construction is complete, the loan automatically converts to a permanent mortgage
No second closing, no requalification, no new fees
✓ Why One-Time Close is Usually Best
You save thousands in closing costs, eliminate the risk of rate increases during construction, and don’t have to worry about requalifying after the build. If rates drop significantly, many lenders offer a one-time float-down option on Michigan construction loans.
Michigan Construction Loan Requirements
Documentation Required for Michigan Construction Loans
- Personal: ID, income verification, tax returns, bank statements
- Property: Building plans, specifications, plot survey
- Contractor: License, insurance, references, signed contract
- Budget: Detailed cost breakdown, allowances, contingency
- Timeline: Construction schedule with milestones
Learn more about credit score requirements for Michigan mortgages.
The Michigan Construction Loan Process
Get Pre-Approved
Before you finalize plans or hire a builder, get pre-approved for Michigan construction loans to know your budget.
Secure Land
Purchase your lot or include land in your Michigan construction loans if not already owned.
Finalize Plans
Complete architectural plans, specifications, and detailed cost estimates.
Select Builder
Choose a licensed contractor and sign a construction contract.
Submit Application
Provide all documentation including plans, permits, and builder information for Michigan construction loans.
Appraisal
Lender orders appraisal based on plans and specifications (subject-to completion).
Close the Loan
Sign closing documents and lock your interest rate.
Construction Begins
Builder starts work; funds released in draws as stages complete.
Conversion
After final inspection, your Michigan construction loans convert to a permanent mortgage. Move in!
Construction Draw Schedule
Michigan construction loans release funds in stages called “draws.” A typical draw schedule:
⚠️ Important: Inspections Required
Before each draw is released on your Michigan construction loans, the lender sends an inspector to verify work is complete. This protects you and the lender from paying for incomplete work. Budget extra time for inspection scheduling.
Michigan Construction Loan Costs and Rates
Interest Rates
Michigan construction loans typically have rates 0.5–1% higher than standard mortgages due to increased risk. However, with a one-time close loan, your permanent rate is locked at closing.
Typical Costs
- Origination fee: 0.5–1% of loan amount
- Appraisal: $500–$800 (plans review appraisal)
- Inspection fees: $100–$150 per draw inspection
- Builder’s risk insurance: Required during construction
- Permits: Varies by municipality
- Contingency reserve: 5–10% of construction cost recommended
Learn more about Michigan closing costs.
Finding a Qualified Builder for Michigan Construction Loans
Your lender will require a licensed, insured general contractor for Michigan construction loans. Here’s what to look for:
Builder Requirements
- Valid Michigan builder’s license
- General liability insurance ($1M+ coverage)
- Workers’ compensation insurance
- Track record of completed projects
- Good references from recent clients
- Financial stability (lender may verify)
Questions to Ask Builders
- How many homes have you built similar to mine?
- Can you provide references and show completed projects?
- What is your typical timeline?
- How do you handle change orders?
- What warranty do you provide?
Land Loans in Michigan
If you don’t already own land for your Michigan construction loans project, you have several options:
Include Land in Construction Loan
Many lenders allow you to include land purchase in the construction loan. The land becomes part of your down payment equity when using Michigan construction loans.
Separate Land Loan
Purchase land with a lot loan, then refinance into a construction loan. Land loans typically require:
- 20–50% down payment
- Higher interest rates
- Shorter terms (5–15 years)
Already Own Land
If you already own your lot free and clear, the equity can often count toward your down payment on Michigan construction loans.
Tips for a Successful Construction Project
Get pre-approved first
Know your budget before designing your Michigan construction loans project
Build in contingency
Add 10% for unexpected costs
Choose your builder carefully
Cheapest isn’t always best
Get everything in writing
Detailed specs and contracts
Visit the site regularly
Monitor progress yourself
Don't make changes mid-build
Change orders are expensive
Communicate clearly
Stay in touch with builder and lender
Plan for delays
Weather, materials, and labor issues happen
Frequently Asked Questions About Michigan Construction Loans
QWhat is a construction loan and how does it work?
A Michigan construction loan is short-term financing used to build a new home. Unlike traditional mortgages, funds are disbursed in draws as construction progresses. Once the home is complete, the loan converts to a permanent mortgage. Michigan construction loans typically have higher rates and require larger down payments than traditional mortgages.
QWhat is the minimum down payment for a construction loan in Michigan?
Michigan construction loans typically require 10–20% down payment, though some programs allow as little as 5% down. FHA construction loans require 3.5% down, and VA construction loans may offer 0% down for eligible veterans. The down payment often needs to cover the land cost if you don’t already own it.
QWhat credit score do I need for a construction loan in Michigan?
Most Michigan construction loans require a credit score of 680 or higher. Some lenders require 700+ for the best rates. FHA construction loans may accept scores as low as 620 with compensating factors. Higher credit scores typically qualify for better interest rates and terms.
QWhat is a one-time close construction loan?
A one-time close construction loan combines the construction loan and permanent mortgage into one loan with one closing. This saves money on closing costs and eliminates the risk of rate changes between construction and permanent financing. It’s the most popular option for Michigan construction loans.
QCan I be my own general contractor with a construction loan?
Some Michigan construction loans allow owner-builders, but most lenders require a licensed general contractor. If you want to act as your own contractor, you’ll need to demonstrate construction experience and may face stricter requirements including larger down payments and additional inspections throughout the build process.
QHow long does it take to get approved for a construction loan?
Michigan construction loans approval typically takes 30–45 days due to the additional documentation required including building plans, contractor information, and detailed cost breakdowns. The timeline can be longer if plans need revisions or if land purchase is involved. Getting pre-approved before finalizing plans can speed up the process.
QWhat are the interest rates for Michigan construction loans?
Michigan construction loans typically have interest rates 0.5–1% higher than standard mortgages due to increased lender risk. During construction, you pay interest-only on funds disbursed. With a one-time close loan, your permanent rate is locked at closing, protecting you from rate increases during the build.
QCan I include land purchase in my Michigan construction loan?
Yes, many Michigan construction loans allow you to include land purchase in the financing. The land becomes part of your down payment equity. If you already own land free and clear, that equity can often count toward your down payment requirement, reducing the cash you need at closing. Contact me to discuss your options.
Free Tools & Next Steps
📊 Which Michigan Construction Loan Is Right for You?
Our free Mortgage Advisor helps you compare Michigan construction loans — one-time close, FHA, VA, and conventional — and recommends the best fit for your build in 60 seconds.
🏠 See What Your New Michigan Home Could Be Worth
Before you break ground, explore home values in your target area and run the affordability numbers to make sure your Michigan construction loans budget is on track.
📄 Ready to Get Pre-Approved for Your Michigan Construction Loan?
Get your pre-approval letter so you can finalize your builder, lock your lot, and start your build with confidence.
Related Resources
Renovation Loans
Finance improvements to existing homes
Learn More →Mortgage Process
Understand the loan process
Learn More →Closing Costs
Know what to expect at closing
Learn More →All Loan Programs
Explore all financing options
View Programs →Why Work With Edward Kalavitz
Dual-licensed Michigan Mortgage Loan Originator (NMLS #138424) and licensed Michigan Realtor (#6501386956) — so the financing and the property are handled by one person who answers for both.
You are never required to use Edward for both. Financing and real estate representation are separate services — you are free to use any lender or any agent you choose, and use of one service is never a condition of the other.
Why Work With Me?
- ✓ 25+ years mortgage experience
- ✓ Construction loan specialist
- ✓ Access to multiple lenders
- ✓ Guide you through draws
- ✓ Available 7 days a week
- ✓ Serving all of Michigan
Construction Loan Facts
- ✓ One-time close available
- ✓ 10–20% down typical
- ✓ 680+ credit score needed
- ✓ Licensed contractor required
- ✓ Interest-only during build
- ✓ Funds released in draws
Popular Loan Programs: → FHA Loans → VA Loans → Conventional Loans → Renovation Loans → All Loan Programs
Helpful Resources: 📊 Mortgage Calculator ❓ Mortgage FAQ 🔍 NMLS Consumer Access 🏛 CFPB
Watch: Meet Edward
Get to know Edward Kalavitz — learn how he helps Michigan families buy, sell, and finance homes with dual-licensed real estate and mortgage expertise.
What Clients Say About Working with Edward
These are verified Google reviews from Edward’s Google Business Profile. Edward is dual-licensed — Mortgage Loan Originator (NMLS #138424) and Michigan Realtor — so reviewers include both financing and real estate clients. Your Michigan mortgage broker can tell you how much room this leaves you.
“Very Professional and Thorough”
“Edward’s is very professional and thorough. Had a great experience working with him. Everything went very smooth.”
“Great to Have 2 in 1”
“Ed was very responsive, knowledgeable, and made our first home buying experience great! He’s a relator and lender, which was great to have “2 in1”. We were able to look at houses and run number the same day. He was very flexible with times we needed to set up showings, as well as very informative and organized with paperwork! I appreciate his expertise greatly!” Ask your Michigan mortgage broker to sanity-check the numbers you have been quoted.
“Works Hard 24/7”
“Ed is wonderful to work with! He is very thorough, experienced, and friendly. Ed works hard 24/7 to give you the best mortgage experience and is always able to help with whatever you need!”
“Above and Beyond”
“Edward is a great relator and loan officer. He helped my fiance and I buy our first home. We called him back when we were ready to sell and buy our forever home. He again went above and beyond to make the process swift and easy. I recommend him to my friends and family who are looking into buying, selling or refinacing their home!”
“Closing Came Sooner Than Anticipated”
“Edward was up front, professional and most helpful in first determining if I was a good candidate for a mortgage re-Fi. My case was Probably not the easiest , however, he made my “homework” manageable. The closing came sooner than anticipated , thanks to his perseverance, knowledge and professionalism .”
“Not Only My Realtor — My Friend”
“Edward was an excellent help in the most stressful time of my life. My son passed away in 2018 and I had to sell his home. Edward alleviated some stress by being patient, organized and communicated thoroughly the entire process. He not only was my realtor/loan officer but he was my friend! Highly recommend him for any home needs!”
Available When You Need Answers
Real estate questions don’t wait for business hours — and neither does Edward Kalavitz.