Bridge
Loans

Typical terms

• Term. 12–36 months, with 6-month extensions (fee 0.5–1%).
• Rate. 9–14% in 2026 — often SOFR + 500–800 bps. Floating.
• Points. 1–4% origination upfront. 0.5–1% exit fee at payoff.
• LTV / LTC / LTARV. 65–80% LTV, 75–85% LTC (loan-to-cost), 70–75% LTARV (loan-to-after-repair-value). Multiple constraints; the binding one wins.
• Amortization. Interest-only during bridge term. Balloon at maturity.
• Recourse. Most bridge is recourse. Institutional non-recourse with bad-boy carve-outs available on larger deals.
• DSCR at entry. Often waived if business plan shows stabilized DSCR 1.25x+ at exit.

Use cases

• Value-add multifamily. Buy underperforming asset, renovate units as they roll, push rents, stabilize, refinance to agency or CMBS.
• Lease-up. New construction delivery with 40% pre-lease. Stabilize over 12–18 months, then refinance at stabilized NOI.
• 1031 identification rescue. 45-day ID period closing in on you. Bridge-finance the replacement property close, refi later when permanent financing ready.
• Opportunistic CRE acquisition. Distressed property, tight DSCR at entry. Bridge closes deal; reposition over 12–24 months.
• BRRRR at scale. Multi-property portfolios, institutional-bridge close with rehab holdback, then stabilized DSCR refi.

Holdback structure

Total loan:                  $3,000,000
  Acquisition disbursement:  $2,400,000 (80% of $3M purchase)
  Rehab holdback:              $500,000
  Interest reserve:             $100,000

Rehab drawn in tranches ($125k each):
  Draw 1: Demo and rough mechanical
  Draw 2: Drywall, flooring, cabinets
  Draw 3: Fixtures, paint, final
  Draw 4: Punch list and COs

Each draw requires:
  - Lender inspection
  - Updated budget vs actual
  - Lien waivers from GC and subs
  - Permits and inspections cleared

Interest reserve pays your monthly carry from the loan
until rent stabilizes. Runs out → cash-call.

Institutional bridge lenders

• Kiavi (SFR/small multi, tech-forward)
• RCN Capital
• Roc Capital
• CoreVest (Redwood Trust)
• Lima One Capital
• Anchor Loans
• Kennedy Funding (larger deals)
• LoanPASS, Easy Street
• Debt funds (Madison Realty Capital, Ares, Blackstone Real Estate Debt)

The carry math

Bridge loan:      $3,000,000 at 11% IO, 24-month term

Monthly interest: $27,500
Upfront points 2%: $60,000
Exit fee 1%:      $30,000

Total carry 24 months:
  Interest:       $660,000
  Points + exit:  $90,000
  Total:         $750,000 (25% of loan in 24 months)

Exit refinance at 30-year am, 6.5%, 70% LTV:
  Stabilized value:    $5,000,000
  Refi loan:          $3,500,000
  Pays off bridge, returns $500k to sponsor

Net deal: $750k cost of bridge capital vs $500k equity returned
         + stabilized 6-7% cash-on-cash on remaining equity
         + tax benefits from cost seg + bonus depreciation

Exit-refi underwriting

Bridge lender cares about three exit scenarios:

• Permanent refinance. Agency, CMBS, bank. Lender wants to see stabilized NOI forecast that supports 1.25x DSCR at takeout.
• Sale. Stabilized disposition at projected cap rate with adequate margin over bridge payoff.
• Extension. If first two fail, 6-month extension at higher fee, higher rate, tighter covenants.

Common pitfalls

• Exit financing falls through. Bridge matures, permanent financing unavailable (rate up, market softened, NOI didn’t stabilize). Forced extension, forced sale, or default.
• Rehab holdback exhausted. Budget overrun, holdback depleted. Must cash-call sponsor or bridge lender may default.
• Rate cap required. Floating rate bridge. Lender requires interest-rate cap purchase. SOFR+500bps cap at 10% cost $100k–$500k on a $10M loan, 2-year term.
• Prepay penalty. Some bridges have 9-month or 12-month yield maintenance. Early refi costs principal equivalent.
• Extension fees compound. Two 6-month extensions at 1% each = 2% of principal on top of ongoing interest.
• Recourse carve-outs. Technical default (failed to carry insurance, unauthorized transfer) triggers full recourse on otherwise non-recourse loan.
• Interest reserve runs dry. Rent stabilization delayed beyond reserve runway. Cash call to cover monthly interest or default.