Knowing when to use a bridge loan comes down to one question: does the speed and flexibility of the capital create more value than its cost? A bridge loan earns its place when a fast close, usually 10 to 14 business days versus 45 to 60 for conventional debt, wins a deal or unlocks value that a slower process would forfeit. It is short-term, interest-only financing, typically $200K to $10M over a 12 to 24 month term, built to move quickly, reposition an asset, and then transition to permanent debt or a sale.
What a Bridge Loan Actually Does
A bridge loan covers the gap between where a property is today and where it needs to be to qualify for long-term financing. Payments are interest-only during the term, which keeps monthly carry predictable while you execute the business plan.
- Speed: Fund in days rather than weeks, so you can compete with cash buyers and hold a seller to a tight close.
- Flexibility: Finance assets that do not yet meet the debt service coverage or occupancy thresholds permanent lenders require.
- Runway: A defined term gives you room to stabilize occupancy, complete capital work, or season the income before you refinance.
When Does a Bridge Loan Make Sense?
A bridge loan makes sense when a specific, time-bound event drives value and you have a clear way out. Three situations account for most of the bridge deals we fund.
1. Time-Sensitive Acquisitions
When a seller wants certainty of close, the buyer who can fund in two weeks often negotiates a better basis. Shaving 3 to 5 percent off purchase price usually outweighs a few months of interest-only carry, and it is frequently the difference between winning the deal and losing it to a cash buyer.
2. Value-Add Repositioning
If you are raising rents, submetering utilities, improving lot infrastructure, or lifting occupancy from 70 to 90 percent, a bridge loan funds the hold period until the asset performs well enough to qualify for agency or bank debt. Once the income is stabilized and seasoned, you refinance into permanent terms. This is the standard path on the mobile home park loans and RV park loans we originate.
3. Refinancing Ahead of a Maturity Wall
When an existing loan matures before a sale or refinance is ready, a bridge buys the runway to complete the exit on your timeline instead of your lender's. This is not a fringe scenario. The Mortgage Bankers Association estimates that roughly $875 billion of commercial mortgages mature in 2026, and with lenders granting fewer extensions, more borrowers need short-term capital to bridge to a stabilized refinance.
The right question is not what the rate is. It is whether the deal creates more value than the cost of holding it. Our bridge rates are interest-only and standardized between 8.5% and 12%, with a hard ceiling of 12% that we never exceed.
The Bridge Loan Math: An Operator's Example
Operator's perspective: The reason bridge pricing rarely decides a good deal is that the value you create dwarfs the carry. Here is the underwriting logic we walk through on a typical value-add manufactured housing community, using round numbers to show the mechanics.
Take a $2M park acquisition at 70 percent occupancy, with lot rents roughly 20 percent below market and several park-owned homes. A bridge loan at 11 percent interest-only on about $1.5M of debt carries roughly $165K per year, or about $14K per month. In isolation, that carry looks expensive.
Now look at the value being unlocked. Bringing 30 lots from vacant or below-market up to a $350 market lot rent adds on the order of $125K to $150K of annual net operating income once expenses are covered. At a 7 percent cap rate, that is roughly $1.8M to $2.1M of created value. Eighteen months of bridge carry, around $250K, is a small fraction of that upside.
The nuance most first-time borrowers miss is how the permanent lender will underwrite the exit. Banks and the agencies underwrite manufactured housing communities on lot income and lot expenses, and they exclude income from park-owned homes. Agency debt (Fannie Mae and Freddie Mac) also typically wants paved roads, no on-site wastewater treatment plant, and a tenant-owned-home share in the 65 to 75 percent range, with closings that run 60 to 90 days. If your park does not check those boxes yet, you cannot refinance into that debt, no matter how strong the trailing income looks. The bridge exists precisely to fund the work, converting park-owned homes to tenant-owned, submetering utilities, and paving roads, that makes the property financeable. That is the operator lens conventional lenders do not bring, and it is why we structure commercial bridge loans around the exit, not just the entry.
When a Bridge Loan Is the Wrong Tool
A bridge is the wrong tool for a fully stabilized asset on a long hold with no near-term event. If the property already qualifies for permanent debt and there is no repositioning to do, the lower rate on conventional or agency financing wins. Bridge financing is built for transition periods with a clear beginning and end, not as a substitute for cheap long-term leverage. If your exit is a rental hold rather than a sale, plan the takeout early: a DSCR loan that qualifies on the property's own cash flow is a common permanent landing spot.
How to Decide Whether a Bridge Fits
Before you borrow, run the deal through three checks:
- Define the exit first. Know whether you are selling or refinancing, and exactly what the property must look like to qualify for that takeout.
- Match the term to the plan. Confirm the 12 to 24 month term covers your repositioning timeline with margin for slippage.
- Model the carry against the value created. If the interest-only carry over the full term is a fraction of the value you expect to unlock, the bridge pays for itself.
With the 10-year Treasury forecast to average around 4.2 percent in 2026 and lenders steering borrowers toward shorter-term structures, disciplined bridge borrowing is more relevant than ever.
Frequently Asked Questions
What is a bridge loan?
A bridge loan is short-term, interest-only real estate financing used to acquire or reposition a property and then transition to permanent debt or a sale. Terms typically run 12 to 24 months, and closings happen in days rather than weeks.
When should you use a bridge loan instead of conventional financing?
Use a bridge loan when speed or flexibility creates more value than the higher rate costs: a time-sensitive acquisition, a value-add project that does not yet qualify for permanent debt, or a maturing loan that needs runway before refinancing.
How fast can a bridge loan close?
Most Requity bridge loans close in 10 to 14 business days, with expedited closings as fast as 72 hours on select programs when diligence and third-party reports are ready.
What interest rate do bridge loans charge?
Requity's bridge rates are interest-only and standardized between 8.5% and 12%, with a hard ceiling of 12%. Pricing within that band depends on property type, leverage, and borrower experience.
What happens when the bridge loan term ends?
You exit through your pre-planned takeout, either a sale or a refinance into permanent financing such as agency, bank, or DSCR debt. Defining that exit before you borrow is the single most important step in structuring a bridge.
Talk Through Your Deal
If you have a deal with a firm timeline and a clear exit, our team can tell you within 24 hours whether a bridge fits your numbers. Explore our bridge lending programs or request a quote with no credit pull and no obligation.