Bridge loans for real estate investors
A bridge loan is short-term financing on an investment property that needs little or no work. It carries you while you sell the property, lease it up or arrange a long-term loan. Interest only, sized on the property rather than your tax returns, from a licensed direct mortgage lender. For business purposes only.
Prefer to talk? Call 732-686-9999
- Licensed mortgage lender
- NMLS #103098
- Equal Housing Lender
Plan the whole deal
The short-term loan and the long-term one, then a licensed loan officer to talk it through.
Fidelity Residential · NMLS #103098 · Equal Housing Lender
How an investor bridge loan works
A bridge loan finances an investment property as it stands, for a short time, until the next step: a sale, a lease, or a long-term loan. Because the property needs little or no work, there is no renovation budget to hold back and release in draws.
You pay interest only each month, and the balance is repaid at the end of a term measured in months, when you sell or refinance. If you need more time, you can ask for an extension while the loan is current.
A bridge loan can be a purchase or a refinance. It is sized on the property, not on your personal income, and terms depend on the strategy and on your record of completed projects.
At a glance
- Business purpose: you usually borrow through a company
- Never your home: the property is an investment
- One to four units, townhomes and condos
- Generally no prepayment penalty when you sell or refinance
When investors use a bridge loan
When the property is ready, or nearly ready, and what you need is time.
- Buying before the long-term loan is ready. A bridge loan lets you close on the property and put the long-term financing in place afterwards.
- Leasing it up. Short-term money while you find tenants, then a long-term rental loan, such as a DSCR loan, can replace it once the property is rented.
- Carrying it while it sells. A bridge loan carries the property while it is on the market.
- Refinancing a short-term loan. Bridge loans can be a refinance as well as a purchase; terms depend on the strategy and your record of completed projects.
A bridge loan from purchase to rental loan
Jordan Example, an investor with a few rentals, finds a vacant townhome that needs little more than paint and cleaning. Jordan buys it through a company with a bridge loan, gets the terms in writing on a term sheet first, and pays interest only each month while a property manager finds a tenant.
Once the lease is signed, Jordan refinances into a long-term DSCR rental loan read on the property’s rent, and the bridge loan is repaid. Jordan Example is a made-up borrower; every deal is reviewed on its own facts.
Not a loan for the home you live in
Many people search for a bridge loan to buy their next home before they sell the one they live in. The bridge loans on this page are business-purpose loans for investment property, and nobody on the loan may live in the property, so they cannot be used for that.
If you want to buy your next home before selling your current one, talk to a licensed loan officer about the options for a home you live in, such as borrowing against your current home’s equity. See home equity lines of credit, or call 732-686-9999.
Questions about bridge loans
What is a bridge loan in real estate investing?
Short-term financing on an investment property that needs little or no work, while you sell it, lease it up or arrange a long-term loan. You pay interest only each month and repay the balance when you sell or refinance. It is a business-purpose loan.
Does a bridge loan include renovation money?
A bridge loan is for a property that needs little or no work, so it is not built around a renovation budget. If the property needs real work, a fix and flip loan holds the renovation money back and releases it in draws after each stage is inspected. See fix and flip or bridge, compared.
Can I use a bridge loan to buy a home before I sell mine?
Not this one. These bridge loans are for investment property only, and nobody on the loan may live in the property. For a home you live in, talk to a licensed loan officer about the options, such as a home equity line of credit.
Is a bridge loan a hard money loan?
Investors often call short-term, property-based loans hard money. Ours do the same job, sized on the property rather than on your tax returns, from a licensed lender you can look up on NMLS Consumer Access, with your terms in writing before you commit. See hard money loans.
How do the payments and the term work?
You pay interest only each month, and the balance is repaid at the end of a term measured in months, when you sell or refinance. If you need more time, you can ask for an extension while the loan is current.
Is there a prepayment penalty?
Generally no. You can repay the loan when you sell or refinance.
Do I need a company to borrow?
Usually, yes. These are business-purpose loans, so you normally borrow through a company such as a limited liability company. The property is an investment and never your home.
What if I decide to keep the property?
Once it is rented, a long-term rental loan based on the property’s rent can replace the short-term loan. See our DSCR rental loans.
Have a property to bridge?
Request a quote, apply online, or talk the deal through with a licensed loan officer.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on the property, your experience, credit and underwriting review and are subject to change without notice. Business purpose investor loans are for investment property only.
Reviewed by Robert Shamie, CEO, NMLS #241428 · Last reviewed:
Fidelity Residential (PFN Lending Group, Inc., NMLS #103098) is a direct mortgage lender licensed in 40 states and the District of Columbia, with 26 years in business.