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5 Best Construction Loans in Michigan

Key Terms

Construction loans in Michigan offer financing from land purchase to complex builds, ideal for creating dream homes amidst the state’s natural beauty.
The process of obtaining a construction loan is more streamlined than traditional home loans, enabling faster project starts and easing anxieties of homebuyers.
Various Michigan lenders provide one-time closing options and interest-only payment phases, catering to diverse building needs and financial landscapes.

Famous for its Motor City roots, Michigan also boasts over 11,000 lakes and stunning natural landscapes. High-income professionals are seizing the opportunity to use construction loans to create dream homes or vacation retreats in these idyllic surroundings.

The most recent real estate report from the Michigan Realtors Association pegs the average sales price for a house in Michigan at $253,557. But when it comes to home construction, you can expect to pay $90 to $150 per square foot in Michigan per industry sources. Given those expenses, you wouldn’t be unreasonable for wanting to build something yourself rather than acquiring an existing property.

Construction loans are distinct from conventional mortgages in that the loan amount is based on the estimated worth of the property once it’s completed rather than the purchase price. They also involve a different procedure of evaluations during the building process. If you’re considering a construction loan in Michigan, read on to learn about the advantages along with a list of lenders in the state.

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Advantages of a taking out a construction loan in Michigan

With a construction loan, you can secure financing for everything from the initial cost of the land through the more problematic aspects, like plumbing, foundation and electrical work. Plus, with a construction loan, you choose the lender that best suits your needs and the lender becomes a partner in the construction loan process since they have a vested interest in seeing a completed house.

The process of construction financing can be much more streamlined for borrowers than the process of getting a traditional home loan. This is because the lender is taking on less risk by lending money short-term.

This quick underwriting and approval process can significantly benefit home builders and property buyers alike. It can allow home builders to get started on their projects quickly and give property buyers the peace of mind that they will be able to purchase their dream home without waiting weeks or months for approval.

However, eventually you will convert your home construction loan into a traditional mortgage loan, so consider the long run as you make a decision about taking out a construction loan.

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5 Best Michigan construction loans lenders

If you’re ready to check out the top construction loan lenders in Michigan, here are the best options we’ve found through our research.

1. Warsaw Federal

Warsaw Federal started in 1893 in Cincinnati, Ohio but now offers services in many locations throughout the country, including Indiana. They’ve been providing mortgages for over 100 years, so naturally can assist with your construction product.

We corresponded with a loan officer at Warsaw Federal to learn more about their construction loan options and here is what we found:

Minimum 700 credit score required
5% down payment up to $548,000
10% down up to $900,000
20% down up to $2,000,000
25% down on Lot Loans
One-Time Closing! Loans convert to permanent financing at the end of construction
Construction periods of 8-12 months
5/1, 7/1, 10/1 ARMs (adjustable rate mortgages) amortized over 30 years
Both stick-built and modular homes are eligible
No Self Builds must use an approved builder.
The loan balance may be paid down until the final draw, reducing the mortgage amount and the monthly payment will be based on the new principal balance.