Building your dream home in West Michigan is one of life’s most rewarding journeys, but figuring out how to pay for it can feel like a maze. But here’s the good news: most custom home clients follow one of just a few tried-and-true financing paths. Whether you’re working with equity from a current home, planning to finance the full build, or considering paying cash, you have options, and we’re here to help you navigate them.
R-Value Homes builds high-performance homes in Grand Rapids and beyond with long-term value in mind. That means thoughtful design, efficient systems, and yes, a financing approach that supports your lifestyle now and in the future. Let’s break down your choices and highlight which ones work best for your current situation and long-term success.
Here’s a quick overview of the three most common ways our clients fund their custom builds to kick things off.
| Financing Type | Best For | Key Features | Things to Watch |
|---|---|---|---|
| Construction Loan |
Most clients (approx. 80%) | Interest-only during build, converts to mortgage, funds released in “draws” | Choose a lender who understands custom building timelines |
| Bridge Financing |
Homeowners who haven’t sold their current home | Temporary financing to bridge the gap between homes | May require strong equity or dual qualification for two properties |
| Cash Build |
Clients with significant liquid assets | No lender required, no monthly payments during build | Reduced protections; ties up funds and reduces financial flexibility |
When it comes to financing a custom home in West Michigan, construction loans are by far the most common choice, and for good reason. This popular option offers flexibility, security, and aligns beautifully with the custom build process.
A construction loan is a short-term, interest-only loan that covers the cost of building your home. Once construction wraps up, it usually converts into a traditional mortgage (also called a construction-to-permanent loan).
You’re only paying interest on the money that’s actually been disbursed, not the full loan amount. That helps keep payments manageable during the build phase.
Funds are released in phases, called draws, which are tied to specific construction milestones (like pouring the foundation or framing). Each draw is verified, often with a site inspection, before funds are disbursed to the builder.
Working with a title agency adds an extra layer of protection for both the homeowner and the builder, ensuring payments align with progress.
Keeps your cash available while you build
Creates transparency with clear budgeting and milestones
Offers predictable transitions from build to mortgage
Can be used even if you already own the lot
While we don’t have a financial partnership with any lender, Lake Michigan Credit Union has consistently made life easier for our clients. They offer:
A streamlined approval process
Familiarity with the local building process
Draw schedules that work for both clients and contractors
Responsive communication and fewer delays
Pro Tip: If you're building in West Michigan, start the financing conversation early, ideally before breaking ground. Lock in your rate and make sure your construction and mortgage terms are aligned from day one.
If you’re planning to build a new home while still living in your current one, a bridge loan can help you avoid the disruption of moving twice or rushing to sell.
A bridge loan is a short-term financing solution that allows you to start building your custom home while you’re still in your existing home. It “bridges” the gap between buying your new home and selling your current one. Once your existing home is sold, the proceeds are used to pay off the bridge loan or reduce the balance on your new mortgage.
You have substantial equity in your current home
You want to avoid renting or moving twice
You need access to funds before your current home is sold
You want to stay in your home until your custom build is ready
Stay in your current home during construction
Avoid storage and moving costs
Flexibility to time your home sale for the best outcome
Must qualify while still carrying your existing mortgage
May involve higher interest rates and fees
Risk of temporarily owning two properties if your home doesn’t sell quickly
Not all lenders offer bridge financing, and requirements vary. You’ll typically need strong credit, stable income, and a clear plan for your home sale. Work with a lender who understands custom home timelines to avoid unnecessary pressure or delays.
While it's less common, some homeowners choose to finance their custom home project with cash, either from savings, liquidated investments, or retirement funds. About 10% of our clients go this route.
No monthly payments or loan interest during construction
Faster closings and fewer lender-related delays
Greater flexibility with some builders or subcontractors
Freedom from mortgage underwriting requirements
Despite its appeal, cash builds come with trade-offs that aren’t always obvious at first.
Reduced financial flexibility – A large portion of your assets are tied up in a non-liquid investment during the build
No draw schedule protections – Without a construction loan, you may not benefit from title agency oversight or third-party inspections
Less cushion for changes or cost overruns – Cash buyers sometimes skip pre-budgeting processes that help prevent financial surprises
Potential tax or investment implications – Withdrawing from retirement or selling assets to fund a build could come with costs
You have significant, easily accessible assets
You’re comfortable managing payments and milestones without lender oversight
You’ve built before and know how to manage construction-related risks
Some of our most financially savvy clients choose to take out a construction loan even when they technically don’t need one. Why?
Keeps cash liquid for other investments or emergencies
Adds built-in protections (title agency, inspection milestones, controlled disbursements)
Offers better long-term flexibility if circumstances change mid-build
Choosing the right lender is just as important as choosing the right builder. Some banks and credit unions offer excellent construction financing programs, others... not so much.
Some lenders only release funds after materials are installed, rather than when they are delivered. This creates cash flow problems for builders and can delay your project. In extreme cases, clients may need to pay for materials, then get reimbursed by a future draw.
If your loan officer passes you off to someone else to close the loan, it may be a sign he/she doesn’t understand the custom home process or how draw schedules and inspections work, which often can lead to frustration, slow approvals, and unnecessary risk. We've also seen problems arise when lenders that typically work with fixed-price contracts are asked to work with cost-plus; and vice versa.
Avoid lenders that enforce “one-size-fits-all” draw schedules that don’t match your actual build phases. These policies can slow down progress or force builders to front materials and labor. Make sure your lender is ok with the number of draws your builder needs to keep everyone paid.
Lenders who don’t work closely with experienced title agencies, inspection partners, or surveyors can cause bottlenecks that affect everyone involved.
Your financing partner should be just that, a partner. If they’re hard to reach, slow to respond, or can’t clearly explain your loan terms, that’s a red flag.
Experience with custom home builds in West Michigan
Flexible draw schedules that align with your contractor’s payment structure
Strong working relationships with local title companies
Transparent, upfront loan terms and fees
Responsive, knowledgeable loan officers
Pro Tip: Don’t just compare rates, compare processes. Ask homeowners and builders who they prefer, and why. The best lender for your build is the one who wants to work with your builder, not force you into a cookie-cutter loan. They strive to keep your project moving smoothly, communicate clearly, and help you understand construction financing from the ground up.
High-performance homes, like the ones we build, offer long-term savings through better insulation, tighter envelopes, and high-efficiency systems. But many of those benefits require upfront investment. Good financing helps you capture that value now while spreading out the cost over time.
Yes, and in many cases, it's smart to roll those costs into your construction loan so you can:
Lock in better indoor air quality, comfort, and efficiency from day one (think of it like pre-paying your utility bills)
Qualify for a larger mortgage thanks to lower utility expenses
Take advantage of green mortgage incentives (ask what's currently available in Michigan)
Triple-pane windows and advanced air sealing
High-efficiency HVAC systems (including heat pumps and ERVs)
ICF walls
Solar-ready infrastructure
All-electric design for net-zero readiness
Most construction loans require 10–20% down, depending on the lender and loan amount. Some allow the value of your land (if owned) to count toward your down payment.
Yes. Some lenders offer extended rate locks for construction-to-permanent loans, but terms vary. Ask your lender early to avoid surprises.
It’s important to build a contingency fund (often 5–10%) into your loan. If the loan doesn’t cover added costs, you may need to pay out of pocket or apply for a loan modification.
Need real figures to help you plan? Our updated local cost guide is here for you.
Not always. If you qualify, bridge financing can let you build first and sell later, giving you more flexibility and less disruption.
Yes. Many clients pay directly for landscaping, appliances, or upgrades not covered in the contract. Just coordinate with your lender and builder so there are no surprises. The critical requirement nearly all lenders share is: you cannot begin a construction project, then finish with a construction loan! I've only heard nightmares from people that have tried this.
R-Value Homes regularly coordinates with local lenders and title agencies to make sure your construction loan process is seamless. We’ve worked with many local institutions and are happy to provide lender recommendations based on your goals. Whether you’re pre-approved or just starting to explore options, we’ll help you structure your timeline and budget in a way that aligns with your financing plan.
Whether you’re just exploring your options or ready to apply for a construction loan, the R-Value team is here to help you understand your choices and build a home that fits your life, now and in the future. Schedule a call with our team to talk through your construction options and start planning your next steps.