Bridge Loans 101: Short-Term Money for In-Between Moments

A bridge loan is a short-term loan that carries an investor from where a property is today to where it's headed: a sale, a long-term loan or the next stage of a plan. It's secured by real estate and approved mostly on the property and the exit, not on personal income.

The basic shape

Terms vary by lender, but most bridge loans share these traits:

• Short term: commonly about 6 to 24 months.
• Interest-only payments: you repay the whole balance when the term ends.
• Sized on current value: using a loan-to-value (LTV) limit.
• Little or no construction money: for properties that need light work, if any.
• Business-purpose: for investment property, usually borrowed through an LLC.
• Fast closing: because underwriting focuses on the property, not years of income records.

At RSC Private Lending, bridge loans run from $150K to $5M on a 12-month term, interest-only, with no prepayment penalty. Purchase loans go up to 85% LTV. Rate/term refinances go up to 80% LTV and cash-out refinances up to 75%.

What investors use them for

• Buying before selling. Tap equity in one property to buy the next before the first one sells.
• Closing fast. Win a deal against cash buyers or meet a short contract deadline.
• Buying a not-quite-ready property. Vacant or a bit dated, so a long-term lender won't touch it yet.
• Lease-up. Hold a rental while you place tenants, then refinance.
• Short-term cash-out. Pull equity from a property you own to fund another move, while you plan a sale or permanent loan.

A simple example

Example: An investor finds a vacant duplex that needs paint, flooring and a few fixtures. It's priced well, but the seller wants to close in two weeks, and a long-term rental lender won't finance a vacant property in that condition anyway. A bridge loan funds the purchase. Two months of light work and leasing later, the investor refinances into a debt service coverage ratio (DSCR) loan and pays off the bridge.

The trade-off

Bridge loans cost more than long-term debt. Expect a higher rate, and many lenders also charge points. The value comes from speed and flexibility. That's worth it when the deal earns more than the extra financing cost, and when you have a clear, timely way out.

How it differs from other loans

A Fix & Flip loan adds a rehab budget released in draws. A New Construction loan funds a build. A DSCR loan is a long-term loan for a rental that's already producing income. A bridge sits between them: fast, short and built for transitions.

What this means for you

Think of a bridge loan as a tool for timing. Use it when acting now creates value and you know exactly how you'll pay it off.

Have a deal that needs a bridge? Send RSC Private Lending your scenario for a term sheet in 24 hours. Subject to underwriting.