Bridge Loans
A bridge loan is short-term financing that "bridges" the gap between where you are now and where you need to be — whether that's closing on a new home before your current one sells, or acquiring a commercial property before permanent financing is in place.
Estimate only. Assumes interest-only payment structures. Does not include origination points, closing costs, taxes, or property insurance. Actual terms depend on property equity, asset evaluation, and underwriting review.
What Is a Bridge Loan?
Unlike a conventional mortgage, a bridge loan is built for speed and flexibility. Terms typically run 6 to 24 months, funding can close in days rather than weeks, and approval is based more on the value and equity of the real estate involved than on a lengthy income-verification process.
Once your permanent financing, sale, or refinance comes through, the bridge loan is paid off — that's the "exit strategy" every bridge loan is built around. Bridge loans work for both residential and commercial properties, though the way they're structured and underwritten differs between the two.
Residential Bridge Loans
Residential bridge loans are most common for homeowners who need to buy their next house before selling their current one. Common scenarios include:
- Buy before you sell: Access equity in your existing home to fund the down payment or full purchase of the new property.
- Avoiding contingent offers: Remove sale contingencies to make purchase offers significantly more competitive in hot markets.
- Renovation & staging timing: Close on a new residence while making repairs or staging your current home for maximum sale value.
- Estate & transition liquidity: Bridge the timing gap while an inherited estate is settled or sold.
Commercial Bridge Loans
Commercial bridge loans serve investors, developers, and business owners who need to move quickly on a property before long-term financing is arranged. Common uses include:
- Acquisition before stabilization: Purchasing underperforming multifamily or retail assets that require lease-up or renovation before qualifying for conventional financing.
- Time-sensitive transactions: Fast execution for off-market opportunities, auctions, or strict 1031 exchange deadlines.
- Repositioning & capital improvements: Carrying a property through major construction until it becomes stabilized and cash-flowing.
- Maturing debt payoff: Refinancing notes coming due to avoid default while permanent financing packages are assembled.
Eligible Commercial Asset Classes
Residential vs. Commercial Bridge Loans
| Residential Bridge Loan | Commercial Bridge Loan | |
|---|---|---|
| Primary use | Buy new home before selling current one | Acquire, reposition, or refinance investment property |
| Underwriting focus | Equity in current + new home | Asset value, business plan, sponsor experience |
| Typical term | 6–12 months | 12–24 months |
| Exit strategy | Sale of current home or conventional refi | Refinance into permanent debt (DSCR) or asset sale |
| Property types | Primary residences, second homes | Multifamily, retail, office, industrial, mixed-use |
| Payment structure | Interest-only or deferred | Interest-only with balloon at maturity |
Speed: Close in days or weeks, not months — critical for competitive purchase offers, auction acquisitions, or maturing debt deadlines.
Flexibility: Underwriting is centered on real estate value and equity rather than rigid debt-to-income and conventional documentation checks.
Leverage Timing: Move on high-upside properties immediately rather than waiting for another transaction or stabilization cycle to finish.
Bridge to Permanent Capital: Secure time to optimize property performance before taking out long-term conventional, DSCR, or agency loans.
Frequently Asked Questions
Do I need to sell my current home before getting a residential bridge loan?
No — that's the point of a bridge loan. It lets you access equity in your current home to fund your next purchase before the sale closes.
Can a bridge loan be used for a property that needs renovation?
Yes, especially on the commercial side. Bridge loans are commonly used to fund acquisition and renovation of value-add properties before refinancing into permanent financing once the property is stabilized.
What's the difference between a bridge loan and a hard money loan?
There is overlap — both are short-term and asset-focused — but bridge loans are typically used for a clear transition (sale, refinance, or stabilization) with a defined exit strategy, while hard money loans are often used more broadly for quick-turn financing, including fix-and-flip projects.
How do I pay off a bridge loan?
Most bridge loans are paid off through one of three exit strategies: sale of the property, refinance into permanent/long-term financing, or (for residential) sale of your previous home.
Is a bridge loan more expensive than a conventional loan?
Generally, yes — rates and fees are higher than conventional financing because of the short term and speed of execution. The trade-off is flexibility and the ability to move on time-sensitive opportunities that conventional financing can't accommodate.