Financing Options for Home Construction
James Cole, Financial Services Officer
A two story house being built in the country on a clear sunny day with a GreenStone construction loan

When it comes to financing the construction of a new home, GreenStone can provide options. Whether the construction plan includes hiring a contractor or a DIY approach, there are several advantages and challenges to each option.

What could be more fun and exciting than building a home? Picking and choosing everything and make changes whenever you like because you are in charge of the project. In a perfect world, it would be that easy; but the reality is not everyone is ready for all that is required in building a home themself.

If I had to pick the number one issue do-it-yourself homeowners face, it would be scheduling.  This includes scheduling of materials and sub-contractors. The sub-contractors need to be scheduled out weeks, or even months, in advance. The homeowner will also need to know the correct order to schedule the sub-contractors. Some may be able to work simultaneously, but some will need another sub-contractor to be finished before they can begin their work.

Risk and reward comparison chart for Do-It-Yourself home construction

Depending on the situation, the cost savings of being your own general contractor may not be worth the hassle. While there is flexibility in choosing the sub-contractors and materials, the actual savings may not end up being as much as one might think. Contractors have special pricing deals set up with their suppliers that they often pass on to the homeowner. 

Often, the decision is based on whether the homeowner is up to the task of managing the entire project to make the freedom of choices and changes worth it.


For those that decide to hire a contractor to build the home, be sure to research when choosing the contractor. This is one time when the lowest bid may not always the best bid. Take the time to check references and view their existing work.
The major advantage of hiring a contractor is they know what is required in the home building process. This includes permits, scheduling of materials and sub-contractors, realistic cost estimates, and time frames for work to be completed. 
The disadvantage of a fully-contracted build project is homeowners will likely be giving up some flexibility with changes and materials. Change orders can raise the cost of building a home significantly. The project will also be limited to the schedules of their chosen sub-contractors as to when the work will be completed. 
However, a good contractor will give a professional building estimate package, including a detailed contract and evidence of insurance. There is a fee for hiring a general contractor, but it may worth it once factoring in their discounted material pricing and efficiency. 

A Third Option
The last option to consider is more of a hybrid scenario. An individual would act as their own contractor, but hire a project manager to oversee the construction. This project manager should be well-versed in home construction and able to assist in developing timelines for the project. The homeowner would still be the one in control, but has someone to assist in decision making.

Whichever option, GreenStone’s flexibility and lending solutions will be a benefit. We have significant experience in all three scenarios, and are known as one of few lenders who understand the do-it-yourself concept. We discuss the loan options and draw process with the homeowner and the contractor or your project manager, to help make the construction process a simple and enjoyable experience.

For more information on GreenStone's Country Home MortgageHome Construction and Vacant Land loan, contact or stop by a branch near you. 

James Cole is a financial services officer at GreenStone's Howell office.

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