Short-term real estate financing for acquisition, value-add, and transitional scenarios. When to use bridge loans and how to exit cleanly.
A bridge loan is short-term real estate financing typically lasting 6-24 months, designed for transitional scenarios where conventional financing isn't a fit. Common use cases include time-sensitive acquisition (close in 5-10 days vs 30-45 for conventional), distressed property stabilization, value-add projects, 1031 exchange replacement property, and seasoning before refinancing to long-term DSCR. Bridge loan pricing typically runs 9-12% interest plus 2-3 origination points, with LTV maxing at 65-75%. Bridge underwriting weighs asset value and exit strategy more than borrower income, which is why bridge loans qualify scenarios that conventional financing can't. Most bridge programs allow prepayment without penalty, making them flexible for unpredictable exit timing.
Bridge loans are short-term real estate financing (typically 6-24 months) designed for transitional scenarios where conventional financing isn't a fit. The most common use cases:
Bridge loans cost more than long-term financing for two reasons: shorter terms mean less time to amortize lender risk, and underwriting flexibility commands premium pricing.
| Component | Typical Range | Notes |
|---|---|---|
| Interest rate | 9% - 12% | Higher rates for distressed or higher-LTV scenarios |
| Origination points | 2 - 3 | Some programs offer 1 point for stronger borrowers |
| Closing costs | $2,500 - 5,000 | Title, appraisal, attorney, recording |
| Extension fees | 0.5% - 1% | If extending the loan beyond original term |
| Prepayment penalty | Usually none | Most bridge loans allow early payoff without penalty |
Total effective cost: roughly 12-16% APR equivalent for typical 12-month hold.
Bridge loans emphasize the asset and exit strategy more than borrower income (which is the opposite of conventional underwriting):
| Loan Type | Speed | Cost | LTV |
|---|---|---|---|
| Bridge Loan | 5-10 days | 9-12% + 2-3 pts | 65-75% |
| Hard Money | 3-7 days | 11-15% + 3-5 pts | 60-70% |
| DSCR Long-Term | 21-30 days | 7-9% | 75-80% |
| Conventional Investment | 30-45 days | 6.5-8% | 70-80% |
| Cash-Out Refi | 30-45 days | 7-9% | 70-75% |
Bridge is the right tool when speed or property condition rules out conventional financing.
Bridge loans close in 5-10 days for clean files. Some specialty programs close in 3-5 days for cash-comparable speed.
660+ standard for most bridge programs. 640+ accepted for strong asset and exit scenarios.
Yes — many bridge programs include rehab/renovation funding alongside acquisition. Funds release in draws as work completes.
Less than conventional loans. Most bridge programs require asset documentation and credit but skip W-2/tax return verification.
Most bridge loans have built-in extension options — typically 3-6 month extensions at 0.5-1% of loan amount.
Worst case: extend the loan or face default. Mitigation: secure refi or sale commitment BEFORE closing the bridge.
Most bridge loans require personal guarantees from principals. Non-recourse bridge exists for institutional-size deals ($2M+).