What’s the difference between ‘structural’ and ‘non-structural’?

The terms ‘structural’ and ‘non-structural’ refer to the specific elements of the construction project that the loan will be used to fund.

A construction loan will generally be used to fund the cost of a new home construction or major renovation. Items that would indicate a major renovation are altering the foundation, adding or changing beams, roofing, columns, and load-bearing walls. These elements are essential to the structural integrity of the building, and the loan is typically used to ensure that these elements are constructed to meet specific building codes and regulations. Construction loans may have a higher interest rate due to the lender considering it a higher risk.

A regular mortgage loan, on the other hand, will typically be used to fund the cost of non-structural elements or a small renovation, including painting or cosmetic repair of walls, floor covering, ceilings, and finishes. These elements are not necessarily essential to the structural integrity or habitability of the building. This type of home loan might have a lower interest rate as the risk is considered lower, and is generally not subject to progress payments.