What Is a Bridge Loan?
A bridge loan is a short-term loan that “bridges” the gap between an immediate financing need and long-term financing. In commercial real estate, bridge loans are used when a borrower needs to close fast, the property doesn’t qualify for conventional financing yet, or there’s a time-sensitive opportunity that can’t wait for a bank.
Bridge loans are typically funded by private lenders and hard money lenders — not banks. They close in days, not months.
When Do Texas Investors Use Bridge Loans?
- Buying before selling: You’ve found your next property but haven’t sold your existing one yet — bridge loan covers the down payment gap
- Distressed properties: Banks won’t lend on properties in poor condition; bridge loans fund the purchase and rehab until the property qualifies for permanent financing
- Auction purchases: You have 24 to 48 hours to close after winning a foreclosure auction — only private lenders move that fast
- Lease-up period: A newly constructed or repositioned property isn’t stabilized yet (occupancy below 85–90%) so it doesn’t qualify for a CMBS or agency loan
- SBA loan in process: Your SBA approval is 60 days out but you need to close now — bridge loan holds the deal
- 1031 exchange timing: You need to close on your replacement property before your exchange period expires
Bridge Loan Terms in Texas
- Loan amounts: $100,000 to $10,000,000+
- LTV: Up to 70–75% of as-is value; up to 65% of ARV on rehab projects
- Rates: 9% to 13% interest-only
- Term: 6 to 24 months (extensions available)
- Origination: 1 to 3 points
- Credit: Flexible — asset-based approval, no minimum FICO
- Closing time: 5 to 10 business days
Bridge Loan vs. Hard Money: What’s the Difference?
In most cases, very little. Both are short-term, private, asset-based loans used for investment properties. The terms are often used interchangeably. The distinction, when it matters, is typically the exit strategy:
- Hard money: Often used for fix-and-flip — buy, renovate, sell
- Bridge loan: Often used for buy-stabilize-refinance — buy, lease up or improve NOI, then refi into long-term debt
If your exit is a sale, it’s usually called hard money. If your exit is a refinance into conventional or agency debt, it’s usually called a bridge loan. Either way, the underwriting and structure are nearly identical.
What Properties Qualify for a Bridge Loan in Texas?
- Multifamily (value-add repositioning)
- Office and retail (repositioning, lease-up)
- Industrial and warehouse
- Mixed-use commercial
- Single-tenant NNN
- Self-storage
- Hotels and hospitality
- Single-family investment properties
- Land (with clear development plan)
How to Exit a Bridge Loan
A bridge loan is always temporary. Before you close, you need a clear exit strategy:
- Sell the property — pay off bridge at closing, keep the profit
- Refinance into conventional debt — once the property is stabilized, a bank or CMBS lender takes out the bridge
- Refinance into commercial mortgage — permanent 5, 7, or 10-year term loan after stabilization
- Refinance into SBA — owner-occupied properties can exit via SBA 504 once the business is established
Get a Bridge Loan Quote for Your Texas Deal
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