California Bridge Loans FAQ

A bridge loan is a short-term real estate loan that “bridges the gap” between buying a new property and selling an existing property.

This form of temporary financing gives you quick access to cash, with the expectation that you’ll repay it soon through the sale of a property.

For a deeper dive on everything you need to know, check out our article, What is a hard money bridge loan?

Most California bridge loans have a duration of 6 to 24 months, with a 12-month term being the most common.

Bridge loan lenders typically have a 3 or 6-month prepayment penalty, but this can oftentimes be negotiated or waived depending on the bridge lender.

California bridge loans are typically used when speed, flexibility, and short-term capital are critical to making a deal work.

Bridge loans are commonly used to:

• Buy a new property before selling an existing one
• Compete with cash buyers in desirable markets
• Renovate a property before selling
• Tap into equity for investment needs
• Prevent foreclosure 
• Purchasing a distressed property
• Stabilize a property through leasing or repairs before obtaining permanent bank financing

Most California bridge loan lenders can close in 5 to 10 business days, depending on how organized the borrower’s documentation is and the appraisal speed.

For a deeper dive, check out our article, How Long Does It Take to Get a Bridge Loan?

Factors that determine a property’s eligibility for a bridge loan depend on property condition & location, loan-to-value ratio, and the borrower’s exit strategy.

Bridge loans are commonly used for:

• Single-family residences
• Multi-family properties
• Condos 
• Mixed-use properties
• Office, retail, or industrial properties

Rural properties and land are not as favorable asset classes. 

Bridge loan lenders in California primarily focus on a property’s value, equity, and the borrower’s exit strategy rather than tax returns, pay stubs, or debt-to-income ratios. 

That said, some lenders may request basic borrower financial information, making it a case-by-case or lender-by-lender determination.

While most lenders look for a score of 600 or higher, the property is the real star of the show. In California's fast-moving market, private lenders often prioritize equity and exit strategy over a credit report.

The truth is, if you have a high-value property and a solid plan to sell or refinance, you can often secure funding even with "bruised" credit.

Most California bridge lenders have a loan minimum of at least $200,000 and a maximum of a few million; however, some commercial lenders can borrow in the 10s of millions, depending on property equity and lender guidelines.

LTV limits are determined by property type, location, condition, and exit strategy. Bridge lenders commonly lend up to 60 to 75% of the property value.

Yes, generally speaking, most California bridge loans are interest-only, with a balloon payment upon the maturity of the loan, which helps keep monthly payments low.

California bridge loan interest rates vary based on property type, LTV, and overall deal strength or risk.

• First-position bridge loans: Typically range from 9% to 12% annually
• Second-position bridge loans: Typically range from 11% to 13% annually

Deals with lower risk, strong equity, and solid exit strategies generally get more favorable terms, while higher risk deals usually see higher interest rates.

For a deeper dive into the costs of a bridge loan checkout our article Bridge Loan Rates & Fees.

It depends on the bridge lender; some lenders have no prepayment penalty, while other lenders require a minimum interest payment period of 3 to 6 months, but this can oftentimes be negotiated with the lender.

Yes, one of the most common uses of a bridge loan is to purchase a new property before selling your existing property.

A bridge loan allows you to tap into the equity of your existing property to make a down payment or to purchase another property.

How it Works:

• You obtain a bridge loan secured by your current property
• Use the funds to purchase the new property.
• Once your existing property sells, the proceeds from the sale are used to pay off the bridge loan.

Bridge loans help real estate investors to avoid rushing the sale of a property or accepting a lowball offer.

Yes, they are commonly used for property renovations before selling or refinancing.  

It is normal for lenders to require 3 to 4 months of interest reserves, depending on the borrower’s risk profile.

Common Bridge Loan Fees Include:

• Origination Fees: 1% – 3% of the loan amount
• Interest Rate: 8% to 12% annually, usually interest-only
• Professional Appraisal: $500 to $2,500
• Escrow: $1,000 to $3,000
• Title: $1,500 to $5,000
• Underwriting: $500 to $2,500
• Documentation Preparation: $500 to $2,000
• Closing Costs: 2% to 5% of the loan amount

For a deeper dive into rates and fees checkout our article Bridge Loan Rates & Fees.

Bridge loans are a type of hard money loan, but not all hard money loans are bridge loans.

• Bridge loans are typically used to “bridge the transitional gap” between buying a new property and selling an existing one.
• Hard money loans are typically used for purchases, refinances, or renovations.

Yes, refinancing a bridge loan into a traditional long-term bank loan is one of the most common exit strategies by borrowers. 

Yes, lenders want to know how they will be repaid.

Any serious potential borrower should present a clear plan to sell, refinance, or repay the loan.

Learn more in our 5 Best Exit Strategies article.

Yes, bridge loans can be made to LLCs, corporations, partnerships, and trusts.

The majority of bridge lenders won’t lend on owner-occupied properties due to higher legal and regulatory exposure than lending on investment properties.

Owner-occupied loans are considered consumer-purpose loans and therefore must comply with more government regulations.

Most bridge lenders only lend on investment properties as they have far less red tape. 

Yes, bridge loans can provide a short-term solution to preventing foreclosure, but qualifying will be difficult unless the borrower has sufficient equity, a clear exit strategy, and can demonstrate the ability to make the monthly interest payment. 

Bridge loans are asset-based loans that require much less documentation than a traditional bank mortgage.

 Bridge Loan Lenders Commonly Request:

• Loan application
• ID
• Purchase contract (if applicable)
• Current mortgage statement
• Property address, photos, & rent roll 
• Sound exit strategy 
• Proof of reserve funds 

For more background checkout our article Common Hard Money Documents.

Property value is typically determined by an appraisal company or broker price opinion (BPO).

Some lenders might require borrowers to use an appraisal company selected by the lender.

Yes — it’s possible to have multiple bridge loans simultaneously, as long as you qualify.

Lenders want to see:

• Sufficient equity across your properties
• An exit strategy for each loan
• Experience with a proven track record
• Ability to make monthly payments

Some lenders may also require you to cross-collateralize with another property you own to reduce their risk.

Extensions may be available for a fee and can sometimes be negotiable ahead of time; this varies lender-by-lender.

While bridge loans are regulated, they are considered business-purpose loans and therefore have fewer regulations than traditional consumer loans, which allows for faster funding.

Typically, no, unless they are personally guaranteed and reported.

A strong California bridge loan application should include:

• Strong equity: A low loan-to-value (LTV) increases approval odds and pricing terms
• Experienced borrower: Past real estate investment experience is a plus.
• Attractive property criteria: Great location, solid condition, and desirable property type.
• Solid exit strategy: A clear plan to repay the lender, typically through a sale or refinancing
• Organized documents: ID, purchase contract, and basic financials
• Reasonable loan request: Not seeking excessive leverage like 80%–100% LTV and having a meaningful amount “skin in the game” when it comes to borrower equity

Lenders primarily focus on deal quality and exit strategy rather than personal income.

For a deeper dive, check out How to Qualify for a Bridge Loan.