Nobody takes out a bridge loan because it's a good rate. You take one out because it's fast, it's flexible, and it's the only lender picking up the phone when a building isn't ready for permanent debt.
Bridge debt is short-term money for a property in transition. Half-vacant, mid-renovation, not yet stabilized enough for agency debt. Typical terms run six months to three years — most quotes I've seen lately land at twelve to twenty-four months — and they close in weeks, not months.
The pricing looks like this: floating rate, SOFR plus a spread, usually 350 to 550 basis points over the benchmark. That puts all-in rates in the high single digits to low double digits right now. Interest-only on nearly every quote, which is the whole point — you're not paying down principal, you're buying time.
The structure is what it is. Leverage runs 60 to 80 percent of value, with a median around 67.5 percent in recent Northeast multifamily bridge quotes. Origination fees run about one to two percent — a lot of lenders charge one point in and one point out. Most bridge loans under $20 million carry full recourse, meaning you personally back the loan.
Here's what took me a while to internalize: the rate isn't the real cost. The month is. Every month the reposition runs long is another month of bridge-rate interest, another month of burn, another month the exit refinance drifts. You don't underwrite the coupon — you underwrite the clock.
And you never take bridge without the takeout already mapped. Agency debt once occupancy and seasoning hit, or a clean sale. The exit is the entire thesis. A bridge loan with no defined exit isn't a financing strategy, it's a wish.
Two bits of small print matter more than people think. Many bridge loans carry an interest rate floor, so if SOFR drops, your rate stops falling at the floor — the lender keeps the downside protection, not you. And most have a minimum interest period, often around six months, so paying off early doesn't save what you hoped. Treat the fee and the floor as sunk costs and plan for them.
When does a bridge loan actually make sense? When the gap is real, specific, and short. A lease-up that needs a few months of seasoning before agency debt will fund the takeout. A light renovation with a clear finish date and a hard stop. When is it a trap? When the plan is hoping rates fall or the market turns. Hope is not a business plan, and bridge debt is the most expensive way to wait.
My rule of thumb is simple: if the bridge term is longer than my patience for the renovation, the plan is too optimistic. Keep the timeline honest, keep the reserve real, and keep the exit boring. Boring exits are the profitable ones.
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