A bridge loan is short-term commercial mortgage financing, typically 1 to 3 years with extension options, used to acquire, reposition, lease up, or stabilize a property before it qualifies for permanent financing . Floating-rate ( SOFR + spread ), interest-only, higher leverage and price than perm debt, and built around a defined exit.
When is a bridge loan the right answer?
Acquisition of a property that does not yet qualify for permanent financing, vacancy too high, operating history too short, capital improvements not yet completed, or the rent roll has too much rollover within the next 12 months.
Repositioning or value-add programs where the business plan requires 18 to 36 months to execute (rehab units, re-tenant retail, reflag a hotel, lease up a recently delivered building) before the property is ready for an agency, life co, CMBS, or bank perm take-out.
Time-sensitive acquisitions where the seller needs certainty of execution and the buyer cannot wait for the slower process of permanent financing.
What is the exit?
Always defined upfront. Most bridge loans are structured around take-out by an agency loan (multifamily), a CMBS or life co loan (other CRE), a bank perm loan, or a sale to a new sponsor. Lenders underwrite the bridge to the credibility of the exit.
Sources
- Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) · Board of Governors of the Federal Reserve System · 2026-Q1
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Secured Overnight Financing Rate (SOFR) · Federal Reserve Bank of New York · daily