I would simply put it along the wall it shares with the powder room, as you are capable of putting a fireplace abutting a garage, my neighbors did. However, it would have to be a gas fireplace, which is probably what you were planning on doing anyway. Hope this helped!

Yes it will be a vent-free gas fireplace, but then there is the problem of where to place furniture? Thanks for your input.

I would put two chairs on either side of the window directly across from the couch and with a coffee table in between. That way, the fireplace would be your focal point.

And then possibly a buffet table or low table of some sort against the staircase directly across the fireplace. As for the fireplace, I would flank it with bookcases if there is enough room.

Thank you so much, this is really helpful. The real problem is my builder wants to put the fireplace against the staircase. His argument is that it is already a walkway for traffic flow. I think that's crazy to put it there, but want to see what others think?

I think he's crazy...The only place I could really see a fireplace work in that space is on the wall opposite the stairs.

What about if you moved the powder room further into the garage space and put a FP wall where the opening between the DR and LR is, with room to walk on either side. Then all three rooms would have a view of FP and the eating/food preparation area would be partially open to LR but still be partially private as well. Put TV on garage wall and furniture on window wall and stair wall. I would move front door a little to the right as well so it doesn't open directly into the staircase and MB.

That sounds like a great plan! I think moving the powder room would give the house much better sight lines and improve flow

@4Lynn, they actually refused to move the Powder room more into the garage so we removed it completely, from the 1st floor, in hopes of added one later ourselves that we can push more into the garage (sorry, I should have stated that earlier). I like the idea of putting the FP between the DR and LR. We can't move the front door though because of the symmetry of the windows in the rest of the house, plus everything is already framed :(

I agree that moving the powder room is key if you plan to locate a fireplace on the same wall. (You don't want the door into the toilet as part of the focal point!) If you put the powder room along the back of the garage, at least partially into garage, you could add a small pantry where the powder room sink currently is shown. Then you create a little vestibule from the garage, and hide the powder room door from view.
I am also noticing there are no windows on the master bedroom side wall, or in the master bath. Natural light can do a lot to open up small rooms. I'd consider adding windows.

What do you mean "they refused"? You're paying them, so unless the slab has been poured, your opinion should rule.