The right deal rarely waits for your current property to sell. A bridge loan lets you close on the next one now and settle up once the sale goes through.
In short: A bridge loan can finance the purchase of your next investment property while your current one is still listed or under contract. It is short-term financing, often interest-only, with rates from 7.99%, and it can close in as little as 10 days. When the first property sells, you can use the proceeds to pay down or pay off the bridge, or refinance the new property into a long-term DSCR loan once it is leased. The key risk is carrying two properties longer than planned, so budget for a slow sale.
Waiting to sell before you buy can cost you the deal. Sellers favor buyers who can close fast without a sale contingency, and good investment properties draw more than one offer.
Buying first also avoids a gap where your capital sits idle between closings. The trade-off is that you carry two properties and two sets of costs for a while.
In the simplest version, the bridge loan is secured by the property you are buying. You bring a down payment and closing costs from cash or other funds, and the bridge covers the rest. Some programs can also look at equity in the property you are selling, which can lower the cash you need up front.
Bridge loans are underwritten mainly on the property and your exit plan. Some bridge programs require no appraisal, which can help when timing is tight.
| Item | Typical bridge approach |
|---|---|
| Rate | From 7.99% |
| Payments | Interest-only is common |
| Closing speed | As little as 10 days |
| Loan size | From $150K; larger balances case by case |
| Exit | Sale of the old property, refinance into DSCR, or both |
This example is illustrative and not a quote. An investor is selling a rental expected to bring $400,000, with $150,000 owed on it. They find a $500,000 property and want to close now.
A bridge loan at an illustrative 75% of the purchase price is $375,000. The investor brings $125,000 for the down payment plus sample closing costs of $12,000, so $137,000 in total. At a sample interest-only rate of 9.0%, the bridge payment is $2,812.50 a month. If the overlap lasts three months, that is $8,437.50 of interest.
When the old rental sells, the $150,000 balance is paid off. After sample selling costs of $24,000, net proceeds are $226,000. The investor can use part of that to pay down the bridge, or keep it and refinance the new property into a DSCR loan once it is leased.
| Step | Amount |
|---|---|
| New purchase price | $500,000 |
| Bridge loan (illustrative 75%) | $375,000 |
| Cash in: down payment plus sample closing costs | $137,000 |
| Monthly interest-only payment at sample 9.0% | $2,812.50 |
| Old rental sale price | $400,000 |
| Less payoff and sample selling costs | -$174,000 |
| Net sale proceeds | $226,000 |
There are two common exits, and many investors use both. Sale proceeds pay down the bridge, then a DSCR refinance pays off what is left with a 30-year loan. Or the investor keeps the sale proceeds for the next deal and refinances the full bridge balance into DSCR once the new property is rented.
DSCR cash-out is capped at 75% of value and rate-and-term at up to 80% on some programs, and the rent must cover the new payment. Check that math before you close the bridge.
Keep a reserve that covers several months of both properties' costs. If the overlap runs long, that reserve is what keeps the plan on track.
Buying the new property before selling the old one does not fit a standard 1031 exchange, which normally sells first. Structures for buying first exist, but they are more complex. If tax deferral matters, talk to a qualified intermediary and your tax advisor before you sign anything.
Share the purchase contract or target price, the listing or sale contract on the old property, its payoff, your expected sale price and your plan for the new property. We review your scenario and come back with 2–3 options for the bridge and the exit.
Yes. That is one of the most common uses of a bridge loan. The loan is short-term and is paid off by the sale, a refinance, or both.
In as little as 10 days, depending on title, the property and how quickly documents come in.
Some bridge programs require no appraisal. Others order one, often a quicker valuation than a long-term loan needs.
No. We finance non-owner-occupied investment property only. A bridge to buy a primary residence would need a consumer lender.
You still owe the bridge. Options include lowering the price, renting the old property and refinancing it, or refinancing the new property into DSCR. Plan reserves for this case.
Interest-only payments are common on bridge loans, which keeps the monthly cost lower during the overlap.
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