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What is the difference between a “light rehab” and “heavy rehab” loan?

A light rehab real estate loan typically refers to a loan used for minor renovations or cosmetic upgrades to a property, such as painting, flooring, or updating fixtures. These renovations are usually intended to make the property more appealing to potential buyers or tenants, but they do not involve major structural changes or repairs.

On the other hand, a heavy rehab real estate loan typically refers to a loan used for more extensive renovations or repairs that involve major structural changes, such as adding or removing walls, updating electrical or plumbing systems, or repairing a damaged roof. These types of renovations are often necessary to make the property habitable or to bring it up to code, and they can be more expensive and time-consuming than light rehab projects.

In general, heavy rehab projects require more funding and expertise than light rehab projects, so the loan terms and requirements may differ accordingly. Lenders may require more documentation and a higher down payment for a heavy rehab loan, and they may also impose stricter guidelines for the scope and timeline of the project.

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