Loan Types

What Is a Bridge Loan?

Fast, short-term financing to bridge the gap between buying and selling or securing permanent financing.

A bridge loan is short-term financing (6-12 months) used to "bridge" a gap in funding—typically when buying a new property before selling an existing one, or securing a property while waiting for long-term financing approval. Bridge loans close quickly (1-2 weeks), provide immediate capital, and are repaid when you sell the property or secure permanent financing. They're common in real estate investing and commercial property transactions.

How Bridge Loans Work

Bridge loans provide immediate capital when timing is critical:

Apply & Get Approved

Submit application with property details and exit strategy. Bridge loans approve quickly (1-2 weeks) because they're secured by real estate.

Receive Funds

Get cash to close on the new property or cover immediate expenses. Loan amounts typically 60-80% of property value.

Repay When Exit Occurs

Repay the bridge loan when you sell the property, secure permanent financing, or refinance. Terms are short (6-12 months) with interest-only payments common.

Common Uses for Bridge Loans

Buy Before Selling: Purchase a new property before your current one sells, avoiding the need to move twice or miss opportunities.
Fix-and-Flip: Finance property purchase and renovations, then repay when you sell the renovated property.
Waiting for Permanent Financing: Secure a property quickly while SBA or traditional loan processes (which take 4-12 weeks).
Auctions: Close quickly on auction properties that require immediate payment.
Time-Sensitive Deals: Act quickly on investment opportunities before competitors.

Bridge Loan Terms & Requirements

Typical Terms:

• Amounts: $100k-$5M+
• Terms: 6-12 months
• Rates: 8-15% APR
• LTV: 60-80% of property value
• Payments: Interest-only common

Requirements:

✓ Property as collateral
✓ Clear exit strategy
✓ 650+ credit score
✓ Down payment (20-40%)
✓ Property value/appraisal

Pros and Cons

Advantages:

✓Fast approval (1-2 weeks)
✓Flexible terms
✓Interest-only payments
✓Enables quick transactions

Considerations:

!Higher rates than permanent loans
!Short terms require quick exit
!Requires clear exit strategy
!Risk if property doesn't sell/refinance

Frequently Asked Questions

What's the difference between a bridge loan and a DSCR loan?

Bridge loans are short-term (6-12 months) for immediate needs. DSCR loans are long-term (15-30 years) based on rental income. Bridge loans are often used to secure properties before getting DSCR loans. Learn about DSCR loans.

Can I extend a bridge loan if I need more time?

Some lenders allow extensions (usually 3-6 months) with additional fees. However, bridge loans are designed to be short-term, so plan your exit strategy carefully.

What happens if I can't repay the bridge loan?

The lender can foreclose on the property since it serves as collateral. Always have a clear exit strategy before taking a bridge loan.

Need Fast Real Estate Financing?

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