What is a bridge loan?
A bridge loan is short-term, interest-only financing that fills a gap — typically the time between buying a new property and selling or refinancing an old one. It lets you act on a deal now and repay the bridge when your long-term plan comes together.
The most common residential use is buying a new home before selling your current one. Instead of making a contingent offer (which sellers often reject in competitive markets), a bridge loan taps your current home's equity to fund the down payment on the new one. You pay interest-only on the bridge until your old home sells, then repay the bridge from the sale proceeds.
For investors, a bridge loan acquires and stabilizes a property — covering the purchase and initial carry costs until the property is ready for long-term financing. Once the property is rented or improved, you refinance the bridge into a DSCR loan or sell for a profit. The trade-off is cost: bridge rates are higher than conventional (typically 7 to 12%), but the speed and flexibility let you close deals that conventional financing cannot.
Bridge loans at a glance
Things most people don't know about bridge loans
The details that make bridge financing work.
A bridge lets you make a non-contingent offer
In a competitive market, sellers reject offers contingent on selling your current home. A bridge loan gives you the cash to make a clean, non-contingent offer — which often wins the deal even when it is not the highest price. The bridge is the reason you get the house.
You borrow against equity you already have
A residential bridge loan is secured by your current home's equity — not the new home. If your home is worth $450K and you owe $180K, you have $270K of equity. Most lenders let you bridge up to 80% of that equity to fund the down payment on the next property.
You only pay interest during the bridge
Bridge loans are interest-only: you pay the monthly interest on the bridge amount, not principal. This keeps your carrying cost predictable while you wait for your old home to sell or your investment to stabilize. The full balance is due when the bridge term ends or the property sells.
Investors bridge to DSCR all the time
Buy a distressed rental with a bridge, renovate it, get it rented, then refinance into a DSCR loan based on the new appraised value. The bridge is the tool that gets you in fast; the DSCR is the long-term hold. This is one of the most common investor strategies we see.
Speed is the whole point
A bridge loan at 9% that closes in 5 days can beat a conventional loan at 6.5% that takes 45 days — because the deal does not wait. In real estate, the cost of missing a deal often exceeds the cost of the bridge. The rate is the price of certainty and speed.
You need a clear exit strategy before you apply
Every bridge lender wants to know how you will repay the loan before they fund it. Sell the current home, refinance to DSCR, or pay from other proceeds — the exit must be realistic and documented. No exit, no bridge. This protects you and the lender.
Calculate your bridge loan
See how much bridge capital you need to buy before you sell, what the interest-only payments cost while you carry both homes, and whether your current equity covers the bridge at typical 80% LTV.
Bridge Loan Calculator
See how much bridge capital you need to buy before you sell, what the interest-only payments cost while you carry both homes, and whether your current equity covers it.
Your Current Home
New Home
Bridge Loan Needed
$70,000
Interest-only payments while you carry both homes
Your current equity of $270,000 can secure the $70,000 bridge at typical 80% LTV.
Important Note
Bridge loans are short-term (6–24 months), interest-only, and asset-based. Rates are higher than conventional. You need a clear exit: sell the current home or refinance into long-term financing. Terms vary by lender and property type.
Who a bridge loan fits best
- Homebuyers buying a new home before selling their current one (non-contingent offers).
- Investors acquiring a property that needs stabilization before long-term financing.
- Investors doing a BRRRR (bridge to buy and rehab, then refinance to DSCR).
- Anyone who needs to close fast and has equity in an existing property.
- Investors or owners of commercial property needing short-term capital between transactions.
Frequently asked questions
For a residential bridge, most lenders let you borrow up to 80% of your current home's equity (value minus mortgage balance). For an investment property bridge, up to 75 to 80% LTV. The exact amount depends on the property value, your equity, and your exit strategy. Use the calculator above to see your specific numbers.
Educational content only. This page is not financial, legal, or tax advice, a commitment to lend, or an offer of credit. Program requirements and terms vary by lender and change over time; figures cited reflect the sources below as of the dates noted, and eligibility always depends on your full financial profile. Liuver Duran, NMLS #2579601. Sociable Mortgage LLC, NMLS #2498240. Equal Housing Opportunity.
Sources
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