Commercial Real Estate Bridge Loan 2026: Terms, Rates, and When Investors Use Them

A commercial real estate bridge loan is a short-term loan used to fill a financing gap between acquisition and permanent financing or stabilization. It is a commercial lending instrument, not a residential mortgage product. MLOs whose investor clients are acquiring income-producing properties often encounter bridge loan questions. Understanding the basics helps you give the right answer and make the right referral.

Standard Bridge Loan Terms

• ✦Term: 12 to 36 months, with extension options of 6 to 12 months available for additional fees
• ✦LTV: typically 65% to 75% of current as-is appraised value
• ✦Rate: floating, tied to SOFR plus a spread; total rate typically in the 8% to 12% range depending on property type and borrower strength
• ✦Interest only: principal is not amortized during the bridge period
• ✦Origination fee: typically 1 to 2 points
• ✦Exit fee: 0.5 to 1 point at some lenders

When Investors Use Bridge Loans

Bridge loans are used for value-add acquisitions where the property needs renovation or lease-up before it qualifies for permanent CMBS or agency multifamily financing. They are also used as construction takeout loans (temporary financing after construction before a permanent loan is placed) and for time-sensitive acquisitions where permanent financing cannot close in the required timeframe.

Bridge vs. Hard Money vs. DSCR

Hard money is the short-term, asset-based predecessor to structured bridge lending. Commercial bridge lenders are typically debt funds, insurance companies, and bank CRE divisions with more defined underwriting criteria than hard money. DSCR loans are permanent residential investment property loans requiring stabilized rental income; they are not bridge products. An investor buying a vacant 10-unit building to renovate needs a bridge loan, not a DSCR loan.