Bridge loans for real estate investors: rates, structure, and when to use one
Jacob Shimon is a professional finance writer at eBoost Partners with over seven years of experience in the commercial lending industry. A graduate of the University of Florida’s Warrington College of Business with a degree in Finance, he specializes in breaking down complex business lending topics to help entrepreneurs make smart, informed decisions.
A bridge loan is a short-term, asset-backed loan – typically 6 to 36 months – that lets real estate investors close quickly, fund a rehab, or hold a property while they arrange permanent financing or sell.
Rates run 7–13% with origination fees of 1–3 points. The loan is sized against the property’s after-repair value (ARV) or existing equity, not your personal income.
I’ve had clients come to me after losing a deal to a cash buyer – not because they didn’t have the money, but because their lender couldn’t move fast enough. Bridge loans solve exactly that problem.
They’re not cheap. And they’re not meant to be long-term. But in the right situation, a bridge loan is the difference between getting the deal and watching someone else take it.
Here’s what you actually need to know before you apply – including what lenders look for, how the math works, and the mistakes I see investors make when they miscalculate their exit.
What is a bridge loan?
A bridge loan is exactly what the name says – it bridges a gap. Usually the gap between buying a property and either selling it or refinancing into something permanent.
Unlike a conventional mortgage, a bridge loan doesn’t care much about your tax returns or debt-to-income ratio. The collateral is the property.
The lender’s underwriting question is simple: does the asset support the loan amount, and does the borrower have a credible way out?
Terms typically run 6 to 36 months. Most deals I see are in the 12–18 month range – enough time to complete a rehab, stabilize occupancy, and get into a DSCR loan or sell.
These are almost always interest-only. You’re not building equity through amortization. You’re paying to hold the position while you execute the plan.
How bridge loans work
The loan amount is based on a percentage of the ARV – the after-repair value – or the as-is value if the property is already stabilized. Most bridge lenders will go up to 75–80% of ARV, sometimes including the rehab budget in the loan.
Here’s a real deal I worked on with a client in Denver. He found a distressed single-family in the Park Hill neighborhood – $340K purchase price, $85K estimated rehab, and a conservative ARV of $600K based on recent comps in the ZIP.
We structured an 18-month bridge at 75% LTV of ARV – $450K total. That covered the purchase and the full rehab budget with room to spare. Rate was 9.5%, interest-only. By month 14, the rehab was done, the property was rented, and we refinanced into a DSCR loan at a much lower rate. Total cost of the bridge: about $53K in interest over 14 months. Profit on the deal was well north of $150K.
That’s the math when it works. When it doesn’t work is when the rehab runs over timeline, the market softens, and the exit gets complicated. More on that below.
Payments on a bridge loan are interest-only during the term. At maturity – the balloon date – the full principal comes due. You either sell, refinance, or extend. Many lenders offer short extensions, but they charge fees and may reprice the rate.
Why lenders use bridge loans
From the lender’s perspective, bridge loans are high-yield, short-duration assets secured by real property. They’re not looking for a 30-year relationship with you – they want a 12-month deployment at 9–11% with a clean payoff.
That’s why they move fast. Bridge lenders can often close in 7–15 days. Compare that to the 45–60 days a conventional lender needs, and you understand why investors pay the premium.
At eBoost Partners, we see this often – a client under contract with a 21-day close requirement, and the only options are hard money or bridge. The deal is good enough that bridge makes more sense on cost.
Lenders also like the short duration because it limits their interest rate risk. If rates move, they can reprice at renewal rather than being locked into a below-market rate for decades.
Key components of a bridge loan
Loan-to-value (LTV) is the primary underwriting metric. Most bridge lenders cap at 75–80% of ARV. Some will go higher with additional fees or cross-collateral.
Interest rate on bridge loans runs 7–13% annually, depending on lender, LTV, loan amount, and your track record as a borrower. Experienced investors with clean credit and a portfolio of exits get closer to 7–8%. First-timers on thin deals might see 11–12%.
Origination points are typically 1–3% of the loan amount, paid at closing. On a $400K bridge loan at 2 points, that’s $8K up front – factor it into your deal analysis before you make an offer.
Rehab holdback is common on fix-and-flip or BRRRR deals. The lender holds the rehab budget in escrow and releases it in draws as work is completed and inspected. This protects both parties.
Prepayment penalties vary by lender. Some have none. Others charge 1–3 months of interest if you exit early. Always read this clause – if you’re planning a fast flip, a 6-month prepayment penalty changes your numbers.
Extension options are worth asking about before you close. A 3–6 month extension at a reasonable fee gives you breathing room if the rehab hits a snag or the market softens temporarily.
Rates, terms, and costs
Here’s what I typically see across the lenders we work with at eBoost Partners:
Lima One Capital offers rates from about 7.99% on stabilized bridge deals, with terms to 24 months and LTV up to 80% of ARV. Strong on BRRRR and single-family.
Kiavi (formerly LendingHome) is tech-forward, fast to close, good for experienced investors with a track record. Rates start around 7.5% for clean deals.
CoreVest skews toward portfolio lenders and commercial multifamily bridge, with loan amounts from $500K to $50M+. Good if you’re aggregating a portfolio before a blanket refinance.
RCN Capital competes heavily on volume for fix-and-flip investors, with rates from 9–11% and a fast close process. They’re accessible to newer investors who have a solid deal.
Local community banks can be worth a call for stabilized commercial bridge deals – a clean mixed-use property with existing tenants at 65% LTV might get 7–8% from a regional bank that wants to hold the note.
Total cost of a bridge loan on a $450K deal at 9.5% for 18 months comes to roughly $64K in interest, plus 2 points ($9K) origination. That’s $73K in financing cost. If your ARV is $600K and you’re walking away with $150K in equity, that’s a strong return. If your ARV is $490K, the math breaks differently.
Common challenges with bridge loans
Maturity risk is the one that catches investors off guard. You take an 18-month bridge expecting to refinance at month 12, but the rehab takes longer than planned, the property doesn’t appraise where you need it, or rates have moved and you don’t qualify for the DSCR loan you counted on.
Now you’re at month 18 with a balloon payment due and no clear exit. The lender can extend – but at a cost, and on their terms.
I’ve worked with clients in this exact situation, and it’s stressful. The fix is usually to build more time buffer into your deal underwriting. If your rehab plan says 8 months, underwrite for 12. If you need 12 months to stabilize, take an 18-month bridge.
Rehab budget overruns compound the timeline problem. If your draw schedule is based on a $70K rehab and it turns into a $95K rehab, you either bring in more cash or negotiate with the lender mid-deal. Neither is comfortable.
Draw inspection delays are more common than people expect. Some lenders use third-party inspectors who schedule 7–10 days out. If you’re running a tight project timeline, that lag adds up.
Prepayment penalties can bite on fast flips. Always model your exit at 6 months, 9 months, and 12 months to see what you’d owe under each scenario.
How to qualify
Bridge lenders are primarily looking at the asset, not your personal finances. That said, most institutional bridge lenders want to see a 620+ personal credit score, at minimum. Lenders like Kiavi or Lima One Capital prefer 660+.
Experience matters. A borrower with three completed fix-and-flips in the last two years will get better terms than a first-timer. If you’re new to investing, be prepared to document your construction management background, your contractor relationships, or partner with an experienced co-borrower.
The exit strategy has to be specific. “I’ll refinance when rates go down” is not an exit strategy. “I have a commitment from CoreVest for a DSCR portfolio refinance at $X once the property reaches 90% occupancy for 90 days” is an exit strategy. Lenders want to see the logic, not just the optimism.
What I tell my clients during our first call: the deal has to make sense with conservative numbers. Run your ARV at 5–10% below your best comp. Run your rehab at 10–15% over your estimate. If the deal still works, you’re in good shape.
Property type matters for who will lend. Single-family residential is the easiest. Small multifamily (2–4 units) is close behind. Commercial, mixed-use, and ground-up construction are more specialized – fewer lenders, tighter LTV, higher rates.
Reserves help. Even if a lender doesn’t require them, having 3–6 months of interest payments in liquid reserves makes you a more attractive borrower and protects you if the timeline slips.
If you’re new to bridge financing and want to see how it fits into a broader real estate investor financing strategy, our guide covers the full spectrum from acquisition to stabilization.
Bridge loans vs alternatives
The comparison that comes up most often is bridge loan vs hard money. Here’s the honest breakdown.
Hard money loans are faster and less credit-sensitive. A hard money lender might close in 3–5 days and not check your credit score. The trade-off is cost – rates of 12–15% are common, points can hit 3–5, and terms are often 6–12 months.
Bridge loans at institutional lenders like Lima One or Kiavi run slower (7–15 days to close) but cheaper (7–11% rates, 1–3 points). They also offer longer terms – up to 24–36 months – which gives you more runway on a larger or more complex project.
The right choice depends on deal timeline and your credit profile. If you need to close in 5 days and have a 580 credit score, hard money is probably your path. If you can close in 2 weeks and have a 680 score, bridge will cost you less.
Bridge loan vs HELOC is a different comparison entirely. A home equity line of credit (HELOC) draws on equity in your primary residence. Bridge loans are secured by the investment property itself. If you have strong personal equity and want to keep the deal clean, a HELOC on your home can fund a down payment – but it’s not a substitute for deal-level financing on the investment property.
Bridge loan vs fix-and-flip loan – honestly, these overlap heavily. Some lenders call their rehab product a bridge loan, others call it a fix-and-flip loan. The mechanics are nearly identical: short-term, asset-backed, interest-only, with a rehab holdback if applicable. The difference is usually lender branding and whether the product includes a construction draw schedule.
For long-term holds, bridge eventually becomes a DSCR loan exit – the most common refinance path for rental properties after stabilization. If your plan is buy-rehab-rent-refinance (BRRRR), you’re almost certainly pairing a bridge loan with a DSCR refi at the back end.
Getting started with eBoost Partners
At eBoost Partners, we work with real estate investors at every stage – from the first fix-and-flip to portfolio-level bridge financing above $5M.
We’re not a direct lender. We’re a financing partner. That means we shop your deal across Lima One, Kiavi, CoreVest, RCN Capital, and regional banks to find the best combination of rate, terms, and close timeline for your specific situation.
Honestly, the most common mistake I see is investors going directly to one lender, accepting whatever terms they’re offered, and not realizing they left 1–2 points on the table. One call to us costs you nothing and gives you a real market comparison.
We also help with the full picture – if your exit is a DSCR refi, we can structure that in advance so there’s no gap between payoff and permanent financing. If you’re doing a 1031 exchange and need bridge capital to hit a tight identification deadline, we’ve done that before and know how to move quickly.
Bridge financing for investment property starts at $100K and goes well past $2M on the right deal. If you’re ready to discuss a specific transaction, start your application here or reach out directly to talk through the numbers.
Disclaimer: The information in this article is for educational and informational purposes only and does not constitute financial advice. All funding products, rates, and terms are provided by eBoost Partners and are subject to application, credit approval, and our current underwriting criteria. Rates and terms are subject to change without notice.
Frequently asked questions
What’s the difference between a bridge loan and hard money?
Bridge loans and hard money are both short-term, asset-backed financing products, but they differ in cost, speed, and credit requirements. Hard money lenders move faster (sometimes 3–5 days), require less credit scrutiny, but charge higher rates – typically 12–15% with 3–5 origination points.
Bridge loans from institutional lenders like Kiavi or Lima One Capital are slower to close (7–15 days), require a stronger credit profile (620+), but offer lower rates (7–11%) and longer terms (up to 36 months).
For most investors with decent credit and a deal that isn’t ultra-urgent, bridge is the better economics. Hard money makes sense when speed is the only thing that matters or credit is below bridge lender minimums.
Can you get a bridge loan with bad credit?
Most institutional bridge lenders require at least a 620 credit score, and the better-priced programs start at 660. Below 620, your options shift to hard money lenders who focus almost entirely on the asset rather than the borrower.
Some private lenders will bridge deals with credit in the 580–620 range if the LTV is conservative (under 65% of ARV) and the borrower has a strong track record or experienced co-borrower.
But in my experience, the real answer is this: below 600 credit, you’re paying hard money rates regardless of what the product is called.
What happens if my bridge loan matures before I’m ready to refinance?
This is the maturity risk that every bridge borrower needs a plan for. Most lenders offer extension options – typically 3–6 months – for a fee (usually 0.5–1% of the outstanding balance) and sometimes a rate adjustment.
If the property is performing and there’s a credible exit in sight, most lenders will extend rather than force a default. Where it gets difficult is when the property isn’t stabilized, the ARV hasn’t been achieved, or the borrower has no clear refinance path.
The best protection is to take a longer initial term than you think you need, negotiate an extension option at the time of origination, and build your exit strategy around conservative numbers so you’re not depending on a perfect outcome to pay off on time.