When to Use a Bridge Loan for Your Next Deal

Use a bridge loan when the deal economics already work but the property or the paperwork does not yet qualify for permanent debt. In practice that means one of four things: you need to close in 10 to 14 days instead of 60 to 90, the asset needs occupancy or capital work before a bank or agency lender will underwrite it, the seller's books are too disorganized for a permanent lender to underwrite from, or an existing loan is maturing and you need runway to arrange the takeout. Bridge debt is short-term and interest-only, and at Requity it prices between 8.5% and 12%. The rate is the smallest variable in that decision. The exit is the largest.

What a Bridge Loan Actually Does

Bridge loan - short-term, interest-only real estate debt used to acquire, reposition, or hold a property for a defined window, typically 12 to 24 months, until the borrower sells or refinances into long-term financing.

Permanent lenders price off performance history. They want stabilized occupancy, a trailing twelve months of clean financials, and a debt service coverage ratio they can verify from tax returns and bank statements. A property that just changed hands, or that is halfway through a capital plan, has none of that yet. Bridge financing covers the gap between the day you control the asset and the day it can prove itself to a bank.

The interest-only structure matters more than most borrowers expect. You pay interest on the outstanding balance and nothing toward principal, which keeps monthly carry predictable while you execute. On a value-add project where cash flow is thin through the first two or three quarters, that difference in monthly obligation is often what makes the business plan survivable rather than merely attractive on paper.

When Does a Bridge Loan Make Sense?

Five situations account for the large majority of the bridge loans we originate.

• Speed-driven acquisitions. The seller wants certainty of close and will not wait 60 days for a bank credit committee. A 10 to 14 day close is a negotiating asset in its own right, and it frequently buys a better basis than a slower buyer can get at any price.
• Value-add repositioning. The property needs occupancy improvements, infill, utility conversion, or deferred maintenance addressed before it will support permanent debt. You are borrowing against a plan, not against a track record.
• Books and records that will not underwrite. The asset is stabilized and the income is real, but the seller collected rent in cash, never filed a clean return on the property, or kept the rent roll in a spiral notebook. A bank cannot lend against income it cannot verify, no matter how good the asset is. Bridge debt lets you take control, install real accounting and collections, and season twelve months of documented performance the takeout lender will actually accept. This is the single most common reason we see on mom-and-pop manufactured housing and RV park deals.
• A maturing loan. The existing debt is coming due and the takeout is not ready. This is not a niche problem right now: the Mortgage Bankers Association estimates roughly $875 billion of commercial and multifamily mortgage debt is scheduled to mature in 2026, about 17% of the roughly $5 trillion outstanding.
• Structural problems in the capital stack. A partner is exiting, a 1031 clock is running, or a lender pulled out three weeks before closing. Bridge debt buys time to solve a structural issue without losing the asset or the deposit.

The common thread is that all five are timing problems, not pricing problems. If the deal only works at a permanent-debt rate, a bridge loan will not save it.

Bridge Loan vs. Permanent Financing

The two products are not competing for the same slot in a deal. They occupy different points on the same timeline.

That spread is the price of speed and of borrowing against a plan instead of a track record. It is worth paying when the bridge buys you a basis, an asset, or a repositioning you could not otherwise reach, and it is not worth paying when the deal only pencils at permanent-debt pricing.

Rates on the permanent side move with the long end of the curve rather than with Fed policy, which is why the two do not always travel together. The MBA is forecasting a 10-year Treasury averaging 4.2% in 2026. Model your takeout off a forward view of that curve, not off the rate you see the week you sign the bridge.

What We See in Practice: The Exit Kills More Deals Than the Rate

We have originated more than 70 bridge loans and we also own and operate the asset classes we lend on. That second half is why our underwriting conversation starts at the exit rather than at the entry. When a bridge loan goes sideways, it is almost never because the borrower could not carry 10% interest-only for eighteen months. It is because the takeout lender sized the permanent loan differently than the borrower assumed.

Four specific gaps come up repeatedly:

Underwriting revenue the takeout lender will not count. On manufactured housing communities, banks and agency lenders underwrite on lot income and lot-level expenses. Revenue from park-owned homes is generally excluded. A borrower who builds a refinance model on total collections including home rentals will find the permanent loan sized well below the payoff they need. A minority of banks will lend against park-owned homes, and separate lines of credit exist for home inventory, but neither should be assumed in a base-case exit. If you are working in that space, our mobile home park loan program page walks through how we size these deals.

Using the wrong DSCR formula. Borrowers coming from residential rentals often carry over the residential convention of gross rent divided by PITIA. Commercial lenders on properties of five units and up, including manufactured housing communities and RV parks, calculate net operating income divided by annual debt service. Every operating expense comes out before the division. The same property can look like a 1.35 coverage under the residential formula and a 1.05 under the commercial one, and only one of those gets the loan approved.

Assuming the lender will accept your actual expenses. This is the mirror image of the revenue problem, and it catches self-managing owners hardest. Commercial lenders do not underwrite the expenses you actually incur. They underwrite against internal minimums, usually expressed as a floor per pad or per square foot, and frequently alongside a minimum total operating expense ratio. A management fee gets imputed whether or not you pay one, commonly in the 4% to 5% range of effective gross income. Payroll, administrative cost, and annual replacement reserves get charged in on a per-unit basis even when the current owner does the work personally and funds no reserve at all.

The logic is not punitive. The lender is sizing every file apples to apples, and it is underwriting the property as it would perform if a third party had to step in and operate it. So a mom-and-pop owner who mows the lots himself, runs collections from his kitchen table, and reports a 22% expense ratio does not get sized on 22%. He gets sized on the lender's floor, which on a manufactured housing community is normally well above that, and the difference flows straight through NOI into the loan amount. An expense ratio that looks impossibly good is usually a sign that unpaid owner labor is doing work the lender will price back in. Build your refinance model on the lender's expense floor, not on your own operating statement.

Underestimating the takeout timeline. A conventional bank refinance can close in 45 to 75 days, but agency and CMBS execution take longer. Agency on manufactured housing typically requires paved roads, no on-site wastewater treatment plant, and a tenant-owned-home share in the 65% to 75% range or better, with a minimum loan size near $1 million and a 60 to 90 day close. CMBS underwrites toward debt yield and can run 60 to 120 days. If your bridge matures in twelve months and the takeout takes four, you have eight months to execute the business plan, not twelve.

Every one of those is solvable if it is identified at origination. None of them is solvable in month eleven.

How to Underwrite Your Exit Before You Take the Bridge

1. Name the takeout lender type. Bank, agency, CMBS, or sale. Each has different proceeds math and a different timeline. "We will refinance" is not an exit strategy.
2. Size the permanent loan on the income that lender will actually count. Strip out revenue categories the takeout excludes, then check whether the proceeds cover the bridge payoff plus closing costs.
3. Build the stabilized NOI on the lender's expense assumptions, not the pro-forma NOI. Use in-place expense ratios from comparable assets you have operated or seen operated, then test the result against a minimum expense floor including an imputed management fee, rather than trusting the seller's broker package.
4. Get the accounting right from day one. If you are buying into weak books, the seasoning clock does not start until your own records are clean. Set up property-level accounting, bank deposits, and a real rent roll in month one, not month six.
5. Add the takeout timeline to your business plan, not after it. Work backward from bridge maturity and subtract the close time for your specific execution, 45 to 75 days for a conventional bank refinance and up to 120 for agency or CMBS. Treat the remainder as your execution window.
6. Negotiate extension terms at origination. Extension options are cheap to ask for on day one and expensive to ask for in month ten. Get them documented in the term sheet.

If you want a second set of eyes on the exit math before you commit, send us the deal. We will tell you if the takeout does not work, including when the answer is that you should not do the deal.

What a Bridge Loan Costs at Requity

Our bridge loans run from $200,000 to $10 million, interest-only, with terms of 12 to 24 months. Pricing falls between 8.5% and 12%, and 12% is a hard ceiling we do not exceed. You get the terms up front so you can model the deal with real numbers rather than a placeholder. For a fuller view of the programs available across asset classes, see our lending overview or the commercial bridge loan program.

Frequently Asked Questions

How fast can a bridge loan close?

A bridge loan can close in 10 to 14 days when title is clean and the borrower has diligence materials ready. The gating items are usually third-party reports and entity documents rather than lender underwriting.

What does a bridge loan cost?

Requity bridge loans price between 8.5% and 12%, interest-only, with 12% as a hard ceiling. Loan sizes range from $200,000 to $10 million on terms of 12 to 24 months.

Why does my lender use higher expenses than my actual operating statement?

Commercial lenders underwrite against minimum expense assumptions, typically a floor per unit or per square foot plus an imputed management fee, so every deal is sized on a comparable basis. A self-managed property with no payroll or management fee gets underwritten as though a third-party manager were running it, which lowers NOI and therefore the loan amount.

How much more does a bridge loan cost than permanent financing?

Permanent debt can price as low as 6% for a stabilized asset, so a bridge loan generally carries a premium of a few hundred basis points. You are paying for speed, for interest-only carry, and for a lender willing to underwrite a business plan rather than a trailing twelve months.

Can you get a bridge loan if the seller has no financials?

Yes, and it is a common reason to use one. Bridge lenders underwrite the asset, the basis, and the business plan rather than trailing tax returns, so a property with real income but unverifiable records can still be financed while you build the documentation a permanent lender needs.

Is a bridge loan the same as a hard money loan?

They overlap but are not identical. Both are short-term and asset-based. "Hard money" typically implies pricing driven almost entirely by collateral value, while institutional bridge lenders also underwrite the sponsor, the business plan, and the credibility of the exit.

What happens if you cannot refinance before the bridge loan matures?

The options are an extension, a sale, or a payoff from another capital source. Extensions are negotiated deal by deal and are far easier to secure when they were built into the original term sheet, which is why we recommend asking for them at origination rather than at maturity.

Can you get a bridge loan on a mobile home park or RV park?

Yes. These are core asset classes for us on both the lending and ownership side. Underwriting focuses on lot-level income, tenant-owned versus park-owned home mix, utility infrastructure, and whether the stabilized asset will clear agency or bank requirements at exit.

Move on the Deal That Needs Speed

If you have a property under contract and a clock running, the useful conversation is about the exit, not the rate. Request a quote and we will underwrite the takeout alongside the bridge so you know the whole path before you commit capital.