What is a Michigan contractor license and who needs one?

A Michigan contractor license for residential work is issued by the Department of Licensing and Regulatory Affairs (LARA), Bureau of Construction Codes under Article 24 of Public Act 299 of 1980 (MCL 339.2401 to 339.2412). Michigan does not issue a single generic general contractor license. Instead it licenses residential construction through two state credentials: the Residential Builder License (the broad credential that authorizes new construction and acting as a general contractor) and the narrower Maintenance and Alteration (M&A) Contractor License, which authorizes repair, alteration, and improvement of existing residential structures within one or more of 14 designated trades. Both credentials require the same path: 60 hours of LARA-approved prelicensure education (6 hours in each of 7 mandatory subjects plus 18 elective hours per MCL 339.2404b), a passed two-part PSI exam (Part 1 Business and Law, 50 questions, 72 percent to pass; Part 2 Practice/Trade, 110 questions, 73 percent to pass), and a good-moral-character review. The license fee is $195, renewal is $150 every 3 years per MCL 339.2404(5), and most applicants finish the full path in 4 to 6 months. There is no statewide commercial general contractor license. Commercial work is regulated at the city building department level.

Every fact below traces to the Michigan Compiled Laws, the LARA Bureau of Construction Codes published fee schedule, or the PSI candidate bulletin. Verify any figure against the source before you pay a fee.

Residential Builder vs M&A Contractor: which Michigan contractor license you need

The first decision is which of the two LARA credentials fits your work. Per MCL 339.2404, the Residential Builder credential is the broad license and the M&A credential is the narrower trade-specific license. Picking the wrong one is the most expensive mistake in the process, because correcting it means a second exam and a second $195 fee.

Residential Builder License (the broad credential)

Per MCL 339.2401, a residential builder is a person engaged in the construction or alteration of a residential structure or a combination residential and commercial structure. The Residential Builder License authorizes a contractor to build new single-family homes, two-family homes, and townhouses; renovate, repair, or demolish existing residential structures; and act as the general contractor coordinating subcontractors across all residential trades. This is the license most Michigan contractors who run a builder business or self-perform across multiple trades will pursue.

Maintenance and Alteration (M&A) Contractor License

The M&A credential is narrower. Per MCL 339.2404(3), an M&A licensee performs repair, alteration, improvement, and demolition of existing residential structures, but not new ground-up construction. Every M&A licensee designates one or more of 14 trade categories, and each designated trade requires its own trade exam on top of the shared Business and Law exam. The trade designations are letter-coded:

• (A) Carpentry: framing, finish carpentry, cabinetry installation
• (B) Concrete: driveways, sidewalks, residential slabs and foundations
• (D) Excavation: site grading, foundation excavation, drainage trenching
• (G) Insulation Work: batt, blown, foam, weatherization
• (I) Masonry: brick, block, stone, chimneys
• (J) Painting and Decorating: interior and exterior coatings, finish work
• (K) Siding: vinyl, fiber cement, wood, aluminum exterior cladding
• (M) Roofing: asphalt shingle, metal, flat roof, repair and replacement
• (N) Screen and Storm Sash: screen windows, storm doors, window hardware
• (O) Gutters: gutter installation, downspouts, related drainage
• (P) Tile and Marble: ceramic, stone, porcelain installation
• (R) House Wrecking: residential demolition
• (S) Swimming Pools: residential pool installation
• (T) Basement Waterproofing: interior and exterior waterproofing systems

Who needs a Michigan contractor license

Per MCL 339.2403, any individual or entity that builds, renovates, repairs, demolishes, or adds to residential structures in Michigan as a contracting business must hold a current Residential Builder License or M&A Contractor License. The statute applies regardless of contract size. Michigan does not maintain a dollar threshold below which unlicensed contracting is permitted, unlike California’s $500 cutoff. Even small repair jobs for compensation fall under the licensing requirement if performed by someone holding themselves out as a contractor.

Statutory exemptions (narrow)

The statute carves out a small set of exemptions. An authorized representative of a federal, state, or local government acting in their official capacity does not require a license. An owner of property performing work on a structure on their own property for their own use and occupancy, not for resale, is exempt. Agricultural buildings on farms used in the operation of the farm fall outside the residential builder definition. Employees of a licensed contractor working under that license do not individually need a license, although the qualifying officer of the employing entity must hold the credential.

Residential vs commercial work

The Michigan contractor license covers residential structures: single-family homes, two-family homes, and the renovation of existing residential property. Work on commercial buildings such as retail, office, industrial, and larger multi-tenant apartment buildings typically falls outside the Residential Builder scope. Commercial general contracting in Michigan is regulated at the city building department level rather than through a separate state commercial license. Contractors moving from residential into commercial work coordinate with each city’s permit office and prevailing-wage rules rather than seeking a separate statewide commercial credential.

Individual vs company license

An individual qualifies and holds the license, but most contractors operate through a company. LARA issues a company license to a corporation, LLC, or partnership when an individual qualifying officer who holds the credential is named on the application. That officer carries the exam credentials and good-moral-character standing for the entity. If the qualifying officer leaves, the company must name a replacement who meets the same standards.

The 60-hour prelicensure course through a LARA-approved provider

Per MCL 339.2404b, every applicant for a Residential Builder or M&A License who was not already licensed on June 1, 2008 must complete 60 hours of LARA-approved prelicensure education before sitting for the PSI exam or submitting the application. The 60 hours must include at least 6 hours in each of 7 mandatory areas of competency, with the remaining 18 hours drawn from LARA’s approved topics list. LARA cross-references the course completion certificate against the approved provider’s roster, so self-study without an approved course does not satisfy the requirement regardless of prior experience.

The 7 mandatory subject areas

1. Business Management, Estimating, and Job Costing (6 hours minimum)
2. Design and Building Science (6 hours minimum)
3. Contracts, Liability, and Risk Management (6 hours minimum)
4. Marketing and Sales (6 hours minimum)
5. Project Management and Scheduling (6 hours minimum)
6. The Michigan Residential Code (6 hours minimum)
7. MIOSHA Construction Safety Standards (6 hours minimum)

The remaining 18 hours fill in from approved electives. Common elective options cover the Michigan construction lien act, advanced framing, energy code compliance, and accessibility standards. The seven mandatory areas and the 60-hour total are set by LARA’s published prelicensure education requirements.

Approved providers and cost

LARA publishes a list of approved prelicensure course sponsors on the Bureau of Construction Codes website. Courses are offered as in-person classroom instruction, hybrid live online, and self-paced online formats. Tuition runs $300 to $450 in the open market for the full 60-hour package. The completion certificate must list hours by subject area and the provider’s LARA-assigned course approval numbers, because LARA verifies the per-subject minimums against the certificate.

The two-part PSI exam: Business and Law plus Practice/Trade

LARA contracts with PSI to deliver the Michigan exams at five PSI testing centers across the state, available six days a week. The exam splits into Part 1 Business and Law (required for both credentials) and Part 2 Practice/Trade (the comprehensive trade exam for Residential Builders, or one trade-specific exam per designation for M&A applicants). Candidates apply first; once LARA approves the application and issues an Authorization to Test, they have one year to pass both parts, or the fees are forfeited and they reapply.

Part 1: Business and Law (50 questions, 75 minutes, 72 percent)

Part 1 is required for every applicant. It consists of 50 multiple-choice questions over 75 minutes, with a passing score of at least 36 correct (72 percent). The content covers regulatory and statutory requirements, business organization, contracts, project management and administration, accounting and finance, insurance, bonds and liens, and personnel. Applicants with strong trade experience but limited business background tend to struggle most on the insurance, bonds, and liens domain (11 questions) and the contracts domain (7 questions).

Part 2: Practice/Trade (110 questions, 180 minutes, 73 percent)

Part 2 is the trade exam. It consists of 110 multiple-choice questions over 180 minutes, with a passing score of at least 80 correct (73 percent). Residential Builder applicants take the comprehensive Practice/Trade exam covering site engineering, plans and estimating, excavation, footings and foundations, concrete, carpentry, masonry, roofing, insulation, and siding. M&A applicants take a trade-specific exam for each designation claimed, so an M&A applicant designating Carpentry plus Roofing sits both the Carpentry and the Roofing trade exams. The M&A path multiplies exam time and fees in proportion to the number of trades designated.

Exam fees and retakes

Per the PSI candidate bulletin, the Residential Builder fee is about $117 for the Residential Builder exam, both parts. M&A exam fees run roughly $70 to $114 depending on how many trade portions you test in. A passing score on one part carries forward for one year while the candidate retakes the other, so most candidates who fail one part retake only that part rather than starting over. Confirm the current PSI fee in the candidate bulletin before you register.

How to apply for a Michigan contractor license: the 8-step process

Most applicants finish the full path in 4 to 6 months. The 60-hour course and exam prep are the two longest phases. Every step below references LARA’s Bureau of Construction Codes process, with statute citations inline so you can verify any requirement directly.

1. Pick your credential: Residential Builder or M&A

   Choose the broad Residential Builder License if you build new homes or coordinate subs across multiple trades. Choose M&A plus the trade designations (carpentry, concrete, roofing, masonry, and so on) if you are a single-trade specialist working only on existing structures. This single decision sets every downstream step, from course focus to exam scope. Map every trade you intend to perform before you commit, because adding a credential later means another exam and another $195 fee.

2. Enroll in a LARA-approved 60-hour prelicensure course

   Pick a LARA-approved sponsor and complete the full 60 hours, with at least 6 hours in each of the 7 mandatory subject areas plus 18 elective hours. Course completion is required before you can sit for the PSI exam or submit the license application. The certificate of completion, showing hours by subject area, accompanies your application package.

3. Register for the PSI exam

   Once your course is complete, register for Part 1 (Business and Law) and Part 2 (Practice/Trade) through PSI. The Residential Builder exam fee is about $117 for both parts. The candidate bulletin published by PSI lists the five testing centers across Michigan, available six days a week. Pick the location and day nearest you and pay PSI directly at scheduling.

4. Pass Part 1: Business and Law (72 percent)

   Sit for the 50-question Part 1 exam and clear the 36-correct (72 percent) passing threshold within 75 minutes. Candidates who fail can retake Part 1 separately while preparing for Part 2, and a passing score carries forward for one year.

5. Pass Part 2: Practice/Trade (73 percent)

   Residential Builder applicants take the comprehensive 110-question Practice/Trade exam over 180 minutes. M&A applicants take the trade-specific exam for each designation claimed. The passing score is 80 correct (73 percent). Plan 4 to 8 weeks of focused prep using the official PSI reference list.

6. Submit the LARA application, then pass the exam within one year of approval

   Complete the Individual Residential Builder/M&A Contractor License application and submit it with the $195 license fee, your prelicensure course certificate, your PSI exam score reports, and any required disclosures to LARA’s Bureau of Construction Codes. Once LARA approves your application it issues an Authorization to Test, and from that approval you have one year to pass both exam parts or you forfeit the fees and must reapply.

7. Clear LARA’s good-moral-character review

   LARA reviews each application for character and disclosure issues under MCL 339.2404, including prior license discipline, criminal convictions, and pending civil judgments. A felony does not automatically disqualify. LARA evaluates the relationship between the conviction and contracting work, so full disclosure with a personal statement passes more often than applicants assume. Omission is grounds for denial regardless of the underlying record.

8. Receive your pocket license card

   LARA issues the pocket license card once the file is approved and records the license on the LARA online verification portal, where general contractors, homeowners, and city building departments confirm a license is current. The license number must appear on contracts, vehicle signage, and advertising per LARA rules. From issuance you can pull permits, sign contracts, and bid residential work within your credential.

Insurance, bonds, and workers’ compensation

Michigan does not require a state-level surety bond for the Residential Builder License or the M&A Contractor License. Financial responsibility is handled through general liability insurance in practice, with workers’ compensation triggered by specific employment thresholds and several cities requiring a separate local contractor bond on top of the state license.

General liability insurance: not statutory, but practically mandatory

The Michigan statute does not mandate general liability insurance for either credential. In practice, virtually every Michigan contractor pulling permits, signing contracts, or working as a sub on a larger project carries it. A $100,000/$300,000 policy is a common baseline for a small builder, and $1,000,000 per occurrence is the practical market minimum on most jobs of any meaningful size. General liability premiums for solo Michigan residential contractors typically run $800 to $2,500 per year, depending on revenue and trade specialty.

Workers’ compensation: mandatory above the employment threshold

Under the Michigan Workers’ Disability Compensation Act administered by the Workers’ Disability Compensation Agency, employers must carry workers’ compensation if they regularly employ one or more workers 35 hours or more per week for 13 weeks or longer in a 52-week period, or employ three or more workers at any one time. Sole proprietors with no employees and contractors below the threshold are exempt. Contractors who later cross the threshold bind coverage before the first qualifying employee starts work, because gaps trigger state enforcement and personal liability for any work-related injury.

City-level bond requirements (variable)

Several Michigan cities and counties require a contractor bond on top of the state license. Jurisdictions known to require a contractor bond as of 2026 include Detroit, Warren, Lansing, Bloomfield, Clinton Township, Eastpointe, Genesee County, Roseville, Shelby Township, Southfield, St. Clair Shores, and Walker. Bond face values range from $5,000 to $25,000 by jurisdiction, with annual premium running 1 to 3 percent of face value depending on credit. Contractors working across multiple Michigan cities map the bond requirements before bidding the first job and budget the premium into project overhead.

Setting up your contracting business in Michigan

An individual qualifies for the Michigan contractor license, but most contractors operate the business through a separate LLC or corporation that holds a company license naming the individual as qualifying officer. Entity formation is a prerequisite, not an afterthought.

Entity choice and Corporations Division registration

Most Michigan residential contractors run as a single-member LLC or a Michigan corporation. The LLC is the most popular structure because it gives liability protection without double taxation. Both register with the LARA Corporations, Securities & Commercial Licensing Bureau. A Michigan LLC files Articles of Organization for a $50 filing fee plus a $25 annual statement fee. Michigan does not impose a minimum franchise tax, so the total state cost for a small LLC contractor is meaningfully lower than in California.

Federal EIN and Michigan tax registration

Pull a free EIN from the IRS. Register with the Michigan Department of Treasury for sales and use tax if your work involves the retail sale of materials. Register with the Michigan Unemployment Insurance Agency once you hire your first employee. Contractors who employ workers above the workers’ compensation threshold bind coverage through a Michigan-admitted carrier before the first qualifying employee starts.

Local business registration

Most Michigan cities require contractor registration and project-specific permits even though no city issues a separate residential builder license that competes with the state credential. Detroit (through the Buildings, Safety Engineering, and Environmental Department), Grand Rapids (through the Development Center), Lansing, and Warren each maintain their own registration and permit tracks. Map local registrations as part of the initial license timeline, not as an afterthought.

3-year renewal and continuing competency

A Michigan Residential Builder or M&A License renews every 3 years per MCL 339.2404(5), not annually or every 2 years. The renewal fee is $150. LARA mails a renewal notice ahead of expiration to the address of record, and continuing competency must be completed before the renewal is filed.

Continuing competency: pre-2009 vs post-2009 distinction

Per MCL 339.2404b, continuing competency depends on initial license date. Licensees who obtained an initial license on or after January 1, 2009 must complete at least 21 hours per 3-year cycle, including at least 3 hours in each calendar year during the first 6 calendar years of licensure. Licensees initially licensed before January 1, 2009 with no disciplinary action complete only 3 hours per 3-year cycle (at least 1 hour each in codes, safety, and legal issues). Newer Michigan contractors therefore carry a substantially higher continuing-competency burden in their early cycles than legacy licensees. Construction code update courses and department-approved safety courses count toward the requirement.

Late renewal and relicensure

Per the LARA fee schedule, a license not renewed on time enters a late-renewal window with a $170 late renewal fee. After the renewal window closes, the license requires relicensure at $185, and an extended lapse can require retaking the prelicensure course and exam before reissuance. Set a calendar reminder ahead of the 3-year expiration and confirm your address of record in the LARA online portal so the renewal notice arrives on time.

Common reasons LARA denies a Michigan contractor license application

The LARA Bureau of Construction Codes reviews every application and denies a meaningful share at first submission. Most denials cluster around a few recurring issues. Knowing them upfront saves a processing cycle and a refile.

1. Incomplete prelicensure course documentation. This is the single biggest denial reason on first review. Applicants submit a completion certificate that does not show the full 60 hours, fails to break out the 7 mandatory subject areas, or comes from a provider not currently approved by LARA. Online self-paced courses that do not log per-subject hours can fail the per-area minimum. The fix is to confirm the provider is on LARA’s current approved list and to request a corrected certificate that shows hours by subject area.
2. Criminal history disclosure issues. Failing to disclose a criminal record is a guaranteed denial regardless of whether the underlying conviction would have qualified for licensure. LARA pulls a background check on every applicant, so the agency sees prior convictions regardless of what the applicant volunteers. Applicants with prior felony convictions can still qualify under Michigan rehabilitation criteria; the conviction itself is rarely a permanent bar. Full disclosure with a personal statement explaining the circumstances passes far more often than applicants assume. Omission is treated as misrepresentation and triggers automatic denial.
3. Wrong credential or wrong trade designation. Applicants who plan to do new construction sometimes apply for an M&A License with carpentry and concrete designations, only to discover that M&A does not authorize new construction. The fix requires applying separately for the Residential Builder credential, sitting the comprehensive Practice/Trade exam, and paying the $195 fee a second time. M&A applicants who plan to bid roofing work but list only carpentry are limited to carpentry until they amend the credential. Map every trade you intend to perform before applying.
4. Trade exam not passed for the designation requested. Each M&A trade designation requires its own trade exam. An applicant who passed the carpentry trade exam cannot use that score to qualify for roofing. The Business and Law exam passes once for all designations, but trade exams are designation-specific. Residential Builder applicants take the single comprehensive Practice/Trade exam instead.
5. Letting the one-year exam window lapse after approval. Once LARA approves your application and issues an Authorization to Test, you have one year to pass both exam parts. Applicants who delay scheduling can run out the clock, forfeit their fees, and have to reapply. Book the exam promptly after you receive your Authorization to Test.
6. Missing application elements. Common missing items include PSI exam score reports for both parts, the original 60-hour course completion certificate, the $195 fee in the correct form, and the signed disclosure section. Fees paid in the wrong form trigger an application hold. Coordinate with LARA’s licensing division before submitting if any element of the package is uncertain.

Total cost of a Michigan contractor license in 2026

Most Michigan applicants complete the full Residential Builder licensing process for a total state-and-exam cost of $600 to $800, with another $1,000 to $3,500 for the first year of insurance, optional exam prep, and city-level registration where required. The timeline depends on how quickly you finish the 60-hour course and prepare for the two PSI exam parts. Well-prepared applicants in an evening or weekend course can finish in 4 months; applicants who retake exam parts or delay the application after passing typically take 6 to 8 months.

Mandatory state and exam fees

PSI exam fees by credential and trades

Other initial and ongoing costs

Beyond LARA and PSI fees, budget for the 60-hour prelicensure course ($300 to $450), optional exam prep school ($200 to $700), general liability insurance ($800 to $2,500 per year), workers’ compensation ($2,000+ per employee per year once over the threshold), local city bond ($5,000 to $25,000 face value, premium 1 to 3 percent), local registration fees ($50 to $300 annually), and continuing competency hours per the post-2009 or pre-2009 schedule. Total estimated initial cost: $600 to $800 in state and exam fees, plus $1,000 to $3,500 in first-year insurance, prep, and local registration.

Local jurisdiction rules across Michigan

The LARA license is the statewide qualification, but every Michigan home-rule city and most counties impose their own permit and registration requirements on top. No Michigan city issues a separate residential builder license that competes with the state credential, but cities can require contractor registration, charge a business tax, require a local surety bond, and pull their own building permits.

Plan local registrations as part of the initial license timeline. Detroit applies the most layered requirements, pairing BSEED registration and bond with a separate electrical license for electrical scopes. Metro Detroit suburbs are the most fragmented, so a contractor crossing the suburban footprint may carry registration in 5 to 10 jurisdictions at once. West Michigan around Grand Rapids is simpler but still layers city registration on top of the state license.

Common pitfalls to avoid

Beyond denial reasons, four pitfalls trip up licensed firms during day-to-day operations:

• Contracting without a license. Per MCL 339.601(6), an unlicensed residential builder or M&A contractor faces a first-offense misdemeanor punishable by a fine of $5,000 to $25,000, up to 1 year in jail, or both. A second offense is still a misdemeanor but raises the maximum jail term to 2 years; only an offense causing death or serious injury rises to a felony with up to 4 years. Contracts entered without the required license are unenforceable, so the unlicensed contractor cannot collect for the work.
• Doing new construction on an M&A license. The M&A credential authorizes repair and alteration of existing structures only. Building new homes on an M&A license is a scope violation and exposes the contractor to enforcement. Step up to the Residential Builder credential before taking new-construction work.
• Letting the qualifying officer lapse. A company license depends on a named qualifying officer who holds the credential. If that person leaves, the company must name a replacement who meets the same standards. An unreported gap can suspend the company license during a LARA audit.
• Letting continuing competency lapse before renewal. The post-2009 schedule requires 21 hours per 3-year cycle (with annual minimums in the first 6 years). A licensee who misses the hours cannot file renewal and falls into late-renewal status with the $170 fee. Track hours each year rather than scrambling before the cycle closes.

Bottom line

Most Michigan contractors land on the Residential Builder License because it covers new construction and full general-contractor scope, while single-trade specialists use the narrower M&A credential. Either way the path is the same: 60 hours of LARA-approved prelicensure education, a two-part PSI exam (Part 1 Business and Law at 72 percent, Part 2 Practice/Trade at 73 percent), and a $195 application, with both exam parts passed within one year of approval. Plan 4 to 6 months, budget $600 to $800 in state and exam fees plus first-year insurance and local registration, and renew every 3 years for $150 with continuing competency hours. Get the credential right the first time and you hold a license that works in every Michigan county.

Resources and next steps

Bookmark these for the application, renewal, or compliance questions:

• LARA Residential Builders: application, forms, license verification
• LARA M&A Contractor information: trade designations and scope
• Article 24 of Public Act 299 of 1980: statutory basis
• LARA prelicensure education requirements: the 60-hour rule
• LARA license fee schedule: current fees
• LARA Corporations Division: entity formation

For a state-by-state overview, see our national general contractor license guide. For a license-model comparison, see our North Carolina general contractor license guide.