Bridge loans explained
A bridge loan is short-term, business-purpose financing that "bridges" the gap between buying a property now and your longer-term exit — a sale or a refinance into permanent debt. Bridge loans are asset-based, typically lend up to roughly 70–80% of value with 6-to-24-month interest-only terms, and close in days. The single most important underwriting factor is a credible, documented exit plan.
When speed matters more than rate, investors reach for a bridge loan. Here is what they are, when they win, and the one thing every bridge lender needs to see.
What a bridge loan does
A bridge loan is interim financing that lets you act now and arrange permanent financing (or a sale) later. It is the tool for time-sensitive situations: an auction purchase, an off-market deal with a tight close, a property that will not qualify for a conventional loan in its current condition, or a cash-out to free up capital for the next acquisition.
Typical structure
Bridge loans are business-purpose and secured by the property, so they are underwritten on the asset and the exit rather than personal income.
- Leverage — commonly up to ~70–80% of as-is value
- Term — 6 to 24 months, interest-only
- Speed — often funded in 7–14 days
- Cost — higher than long-term debt, priced for speed and short duration
The exit plan is everything
Every bridge lender asks the same core question: how does this loan get paid off? A credible, documented exit — a listing and sale strategy, a refinance the property will support, or a defined stabilization plan — is what gets a bridge deal approved. A great property with a fuzzy exit is a hard bridge to fund; a solid property with a clear exit sails through.
Frequently asked questions
How is a bridge loan different from a fix & flip loan?+
How much can I borrow with a bridge loan?+
How long are bridge loan terms?+
What matters most for bridge loan approval?+
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