Bridge Loan
Short-term financing that bridges the gap between purchasing a property and securing permanent financing.
Definition
A bridge loan is short-term financing (typically 6–24 months) used to 'bridge the gap' while an investor transitions from one financial situation to another. Common uses include buying a new property before selling an existing one, funding a renovation before refinancing, or securing a deal while arranging permanent financing.
Bridge loans typically carry higher interest rates (8–14%) and origination fees (1–3 points) because of their short term and the speed with which they're deployed. They're most commonly used by flippers and BRRRR investors who need fast, flexible capital.
Unlike hard money loans — which are also short-term — bridge loans can sometimes come from conventional lenders and may allow higher LTVs. However, both require clear exit strategies. If you can't sell or refinance by the maturity date, you risk default and potentially losing the property.
Related Terms
Hard Money Loan
Short-term, asset-based loans from private lenders — used for acquisitions and rehabs when speed matters.
Refinance
Replacing an existing loan with a new loan — often to access equity, lower the rate, or change loan terms.
BRRRR Method
Buy, Rehab, Rent, Refinance, Repeat — a strategy to recycle capital into multiple rental properties.
Exit Strategy
The plan for how and when an investor will eventually sell or dispose of an investment property.
Loan-to-Value (LTV)
The ratio of a loan's balance to the property's appraised value, expressed as a percentage.