A bridge loan is a short-term loan secured by real estate, designed to "bridge" a financing gap between where an investor is today and where they need to be. In practice, that means acquiring a property quickly, funding renovations to stabilize it, or holding an asset while arranging permanent financing. Bridge loans typically run 6 to 24 months, carry higher interest rates than conventional bank loans, and are underwritten primarily on the property's value and the borrower's business plan rather than personal income.
Bridge loans exist because traditional banks move slowly and have rigid underwriting requirements that do not accommodate properties in transition. A 40-unit apartment building with 60% occupancy will not qualify for agency debt, but a bridge lender will fund the acquisition because they underwrite to the stabilized value after renovations. That is the core function: financing the gap between a property's current state and its stabilized potential.
How Bridge Loans Differ from Traditional Financing
The fundamental difference is what the lender underwrites. A conventional lender evaluates the property as it sits today, reviews two years of tax returns, and requires the borrower to meet strict debt-to-income ratios. That process takes 45 to 90 days and only works for stabilized, cash-flowing properties.
A bridge lender evaluates the deal. What is the property worth today? What will it be worth after the borrower executes their business plan? Is the exit strategy realistic? Can the borrower actually do the work? That underwriting approach means bridge lenders can close in 10 to 21 days (sometimes faster) on properties that banks would reject outright.
| Feature | Bridge Loan | Traditional Bank Loan |
|---|---|---|
| Term | 6 to 24 months | 5 to 30 years |
| Interest Rate | 8% to 13% typical | 6% to 8% typical |
| Closing Speed | 10 to 21 days | 45 to 90 days |
| Underwriting Focus | Property value + business plan + exit | Borrower income + credit + stabilized NOI |
| Property Condition | Value-add, distressed, transitional | Stabilized, cash-flowing only |
| Origination Fees | 1.5 to 3 points | 0.5 to 1 point |
Who Uses Bridge Loans?
Bridge loans serve real estate investors at nearly every level. The common thread is that the borrower has a deal that cannot wait for traditional financing.
Fix-and-flip investors use bridge loans to acquire residential properties, fund renovations, and sell within 6 to 12 months. The loan covers the purchase price and a portion of the rehab budget, and the investor repays when the property sells. Residential bridge loans are the most common entry point for newer investors.
Value-add commercial investors use bridge loans to acquire apartment buildings, mobile home parks, RV parks, retail centers, and other commercial properties that need repositioning. These are larger loans, typically $500K to $10M+, with 12- to 24-month terms that give the borrower time to renovate, lease up, and refinance into permanent debt. Commercial bridge loans are a core product for lenders like Requity.
Investors in competitive markets use bridge loans for speed. When a seller has multiple offers, the buyer who can close in two weeks with a bridge loan has a significant advantage over someone waiting on a 60-day bank process.
Common Bridge Loan Structures
Most bridge loans share a few structural features that distinguish them from permanent debt.
Interest-only payments. Bridge loans almost always require only monthly interest payments with no principal amortization. On a $1M loan at 10%, that is roughly $8,333 per month. This keeps the borrower's carrying costs low during the renovation or stabilization period.
Loan-to-value (LTV) based sizing. Bridge lenders size loans based on a percentage of the property's value, typically 65% to 80% LTV. Some lenders underwrite to the as-is value, others to the after-repair value (ARV). The difference matters significantly to borrowers because ARV-based lending can cover more of the acquisition and renovation costs.
Prepayment flexibility. Unlike permanent loans with yield maintenance or defeasance penalties, most bridge loans allow prepayment after a short lockout period (often 3 to 6 months) with no penalty. This is important because the borrower's goal is to exit the loan as quickly as possible through sale or refinance.
What Does a Bridge Loan Cost?
Bridge loans cost more than permanent financing, and that premium reflects the speed, flexibility, and risk the lender is taking on transitional assets. Here is what borrowers should expect in 2026:
Interest rates range from 8% to 13% annually for most deals, depending on property type, LTV, borrower experience, and market conditions. Lower rates go to experienced borrowers with strong properties and conservative leverage. Higher rates apply to riskier deals or thinner borrower track records.
Origination fees typically run 1.5 to 3 points (percentage of the loan amount). On a $1M loan, that is $15,000 to $30,000, usually collected at closing.
Additional costs include appraisal ($2,500 to $5,000 for commercial properties), legal and title ($3,000 to $8,000), and potentially an environmental report or property inspection depending on the asset type.
Total cost of capital for a 12-month bridge loan at 10% with 2 points on a $1M loan comes to roughly $120,000 in interest plus $20,000 in origination fees, or about $140,000 all-in. That sounds expensive in isolation, but if the bridge loan lets you acquire a property $200K below market value because you can close in two weeks, the net economics are strongly positive.
How We Evaluate Bridge Loan Applications
Having originated 70+ bridge loans across manufactured housing communities, RV parks, multifamily, commercial, and residential investment properties, we see consistent patterns in what separates strong applications from weak ones.
The three things that matter most: the asset, the business plan, and the exit. A borrower who can clearly articulate what the property is, what they plan to do with it, and how they will repay the loan is 90% of the way to approval. We deliver term sheets within 24 hours for deals that check those boxes because the underwriting conversation is straightforward when the borrower has done the work upfront.
The deals that stall are usually missing one of those three. The property looks fine, but the borrower cannot explain the exit. The business plan is solid, but the numbers do not support the requested loan amount. The exit is clear, but the property has environmental or title issues that need resolution first. These are solvable problems, and a good lender will tell you exactly what needs to happen rather than just declining.
Bridge Loan Exit Strategies
Every bridge loan needs a clear exit, and the exit strategy is the single most important factor in the underwriting decision. There are three common exits:
Refinance into permanent debt. The most common exit. The borrower stabilizes the property (increases occupancy, completes renovations, raises rents), then refinances into a conventional loan or a DSCR loan at a lower rate and longer term. This is the standard playbook for value-add investors.
Sale of the property. Fix-and-flip investors and some commercial investors plan to sell the property after completing their business plan. The bridge loan is repaid from sale proceeds.
Partnership buyout or recapitalization. Less common, but some borrowers use bridge loans to facilitate a change in the capital structure, such as buying out a partner or bringing in new equity.
For a deeper breakdown of how to structure your exit plan, read our guide on bridge loan exit strategies.
Is a Bridge Loan Right for Your Deal?
A bridge loan is the right tool when the timeline or property condition eliminates traditional financing as an option. If you can answer yes to any of these, a bridge loan likely fits:
You need to close in under 30 days. You are acquiring a property that needs significant renovations or repositioning. The property is not fully stabilized (low occupancy, below-market rents, deferred maintenance). You need to act quickly in a competitive bidding situation. You have a clear exit strategy through sale or refinance within 6 to 24 months.
If the property is already stabilized and cash-flowing, and you are not in a hurry, a conventional loan will save you money. Bridge loans are a tool for specific situations, not a default financing choice.
Frequently Asked Questions
What is a bridge loan in simple terms?
A bridge loan is a short-term loan, typically 6 to 24 months, that real estate investors use to acquire or renovate properties before arranging long-term financing. It bridges the gap between purchasing or stabilizing a property and qualifying for a permanent loan at a lower rate.
How much can I borrow with a bridge loan?
Most bridge lenders offer 65% to 80% of the property's value. On a property worth $1M, that translates to a $650K to $800K loan. Some lenders underwrite to the after-repair value, which can increase the loan amount. Requity Lending originates bridge loans from $200K to $10M.
What is the typical interest rate on a bridge loan?
Bridge loan rates in 2026 typically range from 8% to 13% annually, with 1.5 to 3 origination points. The exact rate depends on the property type, leverage, borrower experience, and overall deal risk. Experienced borrowers with strong assets at conservative leverage get the best pricing.
Do I need good credit for a bridge loan?
Bridge loans are underwritten primarily on the property and the deal structure, not the borrower's credit score. Most private bridge lenders do not have a hard minimum credit score. Significant credit issues may result in lower leverage or slightly higher rates, but they rarely disqualify a deal where the asset and exit plan are solid.
How fast can a bridge loan close?
Private bridge lenders typically close in 10 to 21 days, with some deals closing even faster when the property is straightforward and the borrower is prepared. Bank bridge loans take significantly longer, often 45 to 90 days. Requity Lending delivers term sheets within 24 hours and can close select deals in as few as 72 hours.
Ready to explore bridge financing for your next deal? Request a quote or browse our loan programs to find the right fit.