INVESTOR GUIDE · BRIDGE LOANS
Bridge loans for investors
When to use one. Use a bridge loan when you need to close fast and look like a cash buyer, without waiting on another property to sell.
The short answer
- A bridge loan taps the equity in a property you already own to fund the down payment on the next one.
- You can make contingency-free offers, with no financing contingency and no sale-of-property contingency.
- Fast approval and funding, with flexible repayment: interest-only or deferred payments, and no prepayment penalty.
WHEN TO USE ONE
Close fast and look like cash
You use a bridge loan when you want to close fast and appear to be closing with cash, with no financing contingencies. In a competitive market, that’s often the difference between winning the deal and losing it to a cash buyer.
HOW IT WORKS
Unlock equity you already own
A bridge loan taps into the equity in a property you already own, so you can fund the down payment on the next one without waiting for the first to sell. You can make offers with no contingency on the sale of another property.
WHY INVESTORS USE THEM
Speed and flexible repayment
- Fast approval and funding. Traditional financing can take weeks or months, long enough to lose the property while you wait on a sale.
- Contingency-free offers. No financing contingency and no sale-of-property contingency.
- Flexible repayment. Interest-only payments, or payments deferred until the other property sells.
- No prepayment penalty. When you’re ready to pay it off, you pay it off.
BRIDGE, HARD MONEY OR DSCR
Picking the right short-term tool
Bridge loan: speed and leverage from equity you already own. Hard money: buying and funding a rehab, up to 90% of purchase and 100% of rehab; see fix and flip loans. DSCR loan: the long-term hold, refinancing out of the short-term loan with no seasoning; see DSCR cash-out refinance.
STRAIGHT ANSWERS
Bridge loan questions
When should an investor use a bridge loan?
When you need to close fast and look like a cash buyer, with no financing or sale contingencies, using equity from a property you already own.
Do bridge loans have monthly payments?
They’re flexible. Many are interest-only, and some defer payments until the other property sells.
Do bridge loans have prepayment penalties?
No. When you’re ready to pay it off, you pay it off.
KEEP READING
DSCR KINGS · INVESTOR FINANCING
Need to close fast?
Tell us the property you own and the one you want. We’ll show you how much equity you can put to work.
Business-purpose loans for investment properties only; not for owner-occupied homes. Lending guidelines, leverage and loan programs vary by lender and by state and are subject to change. Terms and approval depend on the property, the borrower’s credit and capital-partner guidelines and are not guaranteed. Examples are for illustration only.
