California Bridge Loans
Bridge the Gap to Your Exit

A bridge loan is short-term financing (typically 12-24 months) used to 'bridge' a gap in funding. Common uses include: closing quickly on an acquisition before permanent financing is ready, financing a property during lease-up or stabilization, or bridging between selling one property and buying another. Bridge loans focus on the exit strategy (sale or refinance) rather than long-term debt service.

Bridge loans and hard money loans are similar but have some distinctions: Bridge loans typically have lower rates (8-11% vs 9-12%), are used for stabilization or light value-add (not heavy rehab), and often have longer terms (12-24 months vs 6-18 months). Hard money loans are designed specifically for fix-and-flip with higher leverage for rehab costs. Many lenders offer both products.

Bridge loan qualification focuses on: (1) Property value and equity (up to 75% LTV), (2) Clear exit strategy (refinance to permanent loan or sale), (3) Minimum credit score (typically 640+), (4) Experience with similar properties (helpful but not always required), and (5) Reserves for carrying costs if no interest reserve. Income documentation is minimal compared to conventional loans.

Bridge loans typically close in 10-21 days, with some lenders offering 7-day closings for straightforward deals. Speed depends on property type, appraisal timing, and borrower responsiveness. Having documents ready (entity docs, insurance quotes, title work) can expedite closing. 1031 exchange bridges can often close fastest due to deadline urgency.

An interest reserve is a portion of the loan held back to cover monthly interest payments. For example, on a 12-month bridge loan at 10%, the lender might set aside enough to cover 6-12 months of interest. This means you have no out-of-pocket monthly payments during that period - ideal during property stabilization or lease-up.

Yes, bridge loans are common for commercial properties including multi-family (5+ units), office, retail, industrial, and mixed-use. Commercial bridge loans typically have lower LTVs (65-70%) than residential bridge loans and may require more documentation. Terms and rates are similar to residential bridge products.

At maturity, you need to either: (1) Refinance into permanent financing (conventional, DSCR, or commercial), (2) Sell the property and pay off the loan, or (3) Request an extension (if available, usually for a fee of 0.5-1%). It's critical to have a clear exit strategy before taking a bridge loan and to start the refinance/sale process well before maturity.

Use a bridge loan when: the property isn't stabilized, you need to close faster than DSCR allows, or you plan to sell within 12-24 months. Use a DSCR loan when: the property has stable rental income, you want long-term financing, and you can wait 14-21+ days to close. Many investors use bridge financing initially, then refinance into DSCR once the property stabilizes.