Everything You and Your Bank Need to Know
Financing a custom home build is different from buying an existing home. Construction loans are released in stages — called draws — as work is completed and inspected. Dream To Reality Construction is experienced at working alongside lenders and understands exactly what your bank needs to feel confident releasing funds at every phase of your project.
We provide clear, written contracts, detailed scopes of work, draw request documentation, lien waivers on every payment, and progress photos at every milestone — the exact paperwork your banker wants to see.
Talk to your local bank or credit union — they often have the best rates for UP Michigan construction projects.
The most common option for custom builds. One loan covers both the construction phase and converts to a traditional mortgage when the Certificate of Occupancy is issued. One closing, one set of fees. Your lender releases draw payments to us as work is completed and inspected.
A short-term loan (typically 6–12 months) that covers only the construction phase. Once the home is complete, you refinance into a permanent mortgage — meaning two closings and two sets of fees. Some clients prefer this if rates change significantly during the build.
For qualifying buyers in rural areas of the Upper Peninsula and Northern Wisconsin, USDA construction loans can offer low or zero down payment options. Many UP Michigan communities qualify. We have experience working within USDA inspection and draw requirements.
If you own land or are paying cash, the process is simpler — no draw schedule required, and payments are milestone-based per our contract. We can also help cash clients structure the payment schedule to match their own financial planning timeline.
A draw schedule is a pre-agreed timeline between you, your lender, and Dream To Reality that defines when funds are released based on completed construction milestones. Your bank's inspector (or appointed inspector) visits the site to verify completion before each draw is released. Here is a typical draw structure for a custom home build:
| Draw # | Milestone | Typical % of Loan | What We Provide |
|---|---|---|---|
| 1 | Lot preparation, permits pulled, foundation poured & inspected | 10–15% | Permit copies, foundation inspection card, lien waiver |
| 2 | Framing complete, roof sheathing on, windows and doors set | 20–25% | Framing inspection card, progress photos, updated schedule |
| 3 | Rough electrical, plumbing & mechanical complete and inspected | 15–20% | Rough-in inspection cards, sub-contractor lien waivers |
| 4 | Insulation, drywall, exterior siding and roofing complete | 15–20% | Insulation inspection card, progress photos, lien waiver |
| 5 | Interior finish work — trim, cabinets, flooring, fixtures | 15–20% | Progress photos, updated punch list, lien waiver |
| 6 (Final) | Final inspections passed, Certificate of Occupancy issued | 10–15% | CO copy, final inspection card, full lien release, warranty documentation |
Dream To Reality Construction provides complete documentation at every draw request — signed lien waivers, inspection cards, progress photos, and updated schedules. We're familiar with the draw inspection process and will have the site ready and documentation prepared before your inspector visits. For questions or to request a builder information packet, contact Kory Williams at kory@dreamtorealityllc.com or (906) 221-1206.
A detailed construction contract — Lump Sum, Cost-Plus with GMP, or Time & Material with NTE depending on the project — with a complete scope of work. Every contract includes a firm number your lender can underwrite against. No vague estimates or open-ended costs.
A written construction timeline showing anticipated start and completion dates for each phase. Banks use this to set draw release expectations and plan the loan term.
Copies of our Michigan residential builder licenses (Kory #242400541, Max #242400568), Wisconsin DCQ licenses, and current general liability insurance certificate — available on request for your loan file.
You and your lender receive a signed lien waiver with every payment, confirming that all subcontractors, material suppliers, and laborers have been paid. This protects your property from mechanic's liens.
Dated progress photos at every draw milestone, giving your bank inspector and appraiser clear visual confirmation of completed work before funds are released.
Copies of all municipal inspection cards at each phase, and the Certificate of Occupancy at project completion — the final document your lender needs to convert to a permanent mortgage.
Before we begin design conversations, talk to your local bank, credit union, or mortgage lender about construction financing. Lenders typically want to see strong credit (680+), a down payment of 20–25%, and a debt-to-income ratio in their comfort zone. Getting pre-qualified first gives you a real budget and makes the whole process faster.
Once you have a pre-qualification letter and a general budget, start by filling out our Custom Home Pre-Estimate Checklist on our website. It walks you through your project details — lot information, square footage goals, finishes, timeline, and more — so we show up to your consultation already prepared. No back-and-forth, no wasted time.
From there, we'll schedule a site visit, walk your lot or review your plans, and prepare a detailed written estimate. This estimate is what your lender uses to finalize your loan amount.
Your lender will ask for a builder information package. We provide everything they need:
Once your loan closes, the signed contract and deposit are in place, and permits are pulled — we break ground. Your loan funds sit in an escrow account controlled by your lender. No money is released until work is inspected and verified.
As we complete each phase, we submit a draw request to your lender with supporting documentation (inspection cards, lien waivers, photos). Your lender's inspector visits, verifies the work, and releases the draw. This protects both you and the bank throughout the build.
When all inspections are passed and the CO is issued, the construction loan converts to your permanent mortgage. We provide the final lien release and warranty documentation. You get the keys. That's the finish line.
For a typical custom home in the UP Michigan area, plan on 8–14 months from permit approval to Certificate of Occupancy. Variables include square footage, design complexity, permit timeline (varies by township), and Michigan's winters. We provide a written project schedule at contract signing so you and your lender know what to expect.
Yes, in most cases. If you own your lot free and clear, many lenders will count its appraised value as part of your down payment or equity contribution. This can reduce or eliminate the cash down payment required. Bring your property deed to your pre-qualification meeting.
All changes are handled through a written Change Order signed by both parties before any extra work begins. Each Change Order clearly states the cost impact and any schedule adjustment. Your lender may need to be notified if a change significantly affects the total loan amount.
Your lender assigns an independent inspector (or their in-house staff) to verify completed work at each draw milestone. We schedule the inspection, have the site ready, and provide all required documentation. Draws are typically released within 3–7 business days after a successful inspection.
Yes. Many areas of the Upper Peninsula and Northern Wisconsin qualify for USDA Rural Development financing, which can offer low or no down payment options. USDA loans have specific inspection and approval requirements — we are familiar with the process and can work within those guidelines.
Every contract includes a firm number your lender can underwrite against. We use three pricing structures: Lump Sum (fixed price) for defined-scope jobs like kitchens, bathrooms, decks, and shops. Cost-Plus with a Guaranteed Maximum Price (GMP) for custom home builds — you're billed actual costs with a hard ceiling. Time & Material (T&M) for repair work and smaller undefined-scope jobs, with an optional Not-To-Exceed cap. Either way, the loan amount ties to a firm number and no scope change happens without a signed Change Order.
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