California Residential Bridge Loans

Fast Approval. Faster Funding.

213-474-7980

$150 Million+
Funded

Direct Lender
Not a broker

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What is a Residential Bridge Loan?

A residential bridge loan is a short-term loan designed to “bridge” the gap between buying a new home and selling your current one. It allows homeowners to use the equity in their existing property to finance the down payment or purchase of a new property.

Borrowers can move forward with a purchase without waiting for their current home to sell. Once the old property is sold, the proceeds are used to repay the bridge loan.

These loans are typically used by homeowners and real estate investors who require fast and flexible financing.

KEY HIGHLIGHTS

Collateral-based: Residential bridge loans are secured by an existing asset that has the borrower's real equity in it; most of the time, it’s real estate.
Purpose: Bridges the financing gaps between new property purchase and prior property sale.
Short-term Duration: Residential bridge loans usually have a term of 12 to 24 months.
Fast Closing: Funding can be completed in 5 to 7 days, unlike banks, which can take months.
Interest-only: Unlike a traditional bank loan, the borrower only pays the interest and eventually makes a balloon payment to pay off the loan balance.

How Residential Bridge Loans Work

Pre-Approval

Contact a residential bridge lender through Google, your business network, or by word of mouth from family & friends. The lender will ask various questions about your property and your financial situation. After a brief phone call, the lender can assess the viability of your loan and determine whether to proceed or not.

Valuing the Property

Residential bridge lenders typically assess property values using an appraisal company, a broker’s price opinion (BPO), or by using recent comparable sales in the area. Factors such as property condition, occupancy, and income of the property are also of importance.

Terms

Residential bridge loans are normally interest-only payments, often for less than two years. Shorter loan terms are favorable to bridge lenders because they help protect them against volatile market fluctuations. Built-in extensions are sometimes possible, depending on the lender, so be sure to ask.

Title & Escrow

Once the loan is approved, funds are sent to escrow, which then disburses the cash to the borrower or as specified in the agreement. The entire process moves quickly and can be completed in just a few days.

Common Exit Strategies

Residential bridge Lenders will ask how you plan to repay the loan before agreeing to the terms. Common exit strategies include refinancing into a bank loan, selling the property, or using other funds to pay off the loan. A compelling exit strategy will help complete the lending process.

Residential Bridge Loan Requirements & Documentation

Qualifying for a California Residential Bridge Loan is significantly faster and easier than obtaining a traditional bank loan.

Residential bridge loan lenders are primarily focused on the home's current market value and the borrower’s equity in the subject property.

There are only a few hard money bridge loan criteria, making the bridge loan application and funding procedure quick and uncomplicated.

Standard Requirements & Documentation:

Property Info: Appraisal, broker price opinion (BPO), or recent comparable home sales will be used to value your property
Loan-to-Value (LTV): A minimum of 25% LTV is usually required because bridge loan lenders want borrowers to have capital at risk
Proof of ID: Driver's license or passport
Debts: Overview of outstanding debts to understand the borrower’s financial strength
Purchase Contract: Proof the property is being purchased
Minimal Paperwork: Hard money bridge loan lenders are not highly concerned with a borrower’s credit score, employment history, or debt-to-income ratio.
Borrower’s Financial Strength: Residential bridge loan lenders want to ensure the borrower has the financial wherewithal to make regular loan payments while the bridge loan is in place.
Exit Strategy: Bridge lenders want to know how they will be repaid. Common strategies are to refinance into a traditional bank loan, sell the property, or use outside funds to make up the cash difference.

For more background on required documents, read Documents Required to Qualify.

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Pros and Cons of Residential Bridge Loans

In the busy California real estate market, hard money bridge loans can be a valuable tool for both homeowners and real estate investors who need to purchase a new property before selling their current one. However, before moving forward with this type of financing, it’s essential to consider the advantages and potential drawbacks.

Pros

Quick Access to Capital

Residential bridge loan lenders aren’t bound by the same strict regulations as banks.
This allows them to provide funding much faster — often within 5 to 7 days.
By comparison, traditional institutional lenders usually take 30 to 45 days.

Avoid Moving Twice

The homeowner can buy a new home before selling their current one.
They avoid the inconvenience of having to move twice.
Once the existing home is sold, the sale proceeds are used to pay off the bridge loan.

Make an Offer Without Contingencies

Instead of relying on contingencies, homebuyers can tap into the equity of their current home with a residential bridge loan.
This allows them to make stronger offers and move forward without waiting for their existing home to sell first.

Ideal Short-Term Financing Option

Big banks do not provide short-term financing because it requires a substantial amount of paperwork to complete, only to have the loan paid off in a matter of months.
Therefore, bridge loan lenders are a perfect resource for individuals who require quick financing for a short period.

Cons

Higher Costs

Higher interest rates (often 8% to 15%+)
Origination fees/points (commonly 2% to 5% of the loan amount)
Underwriting fee of $1k to $2k

Lenders Can Be Picky

Many lenders avoid certain types of deals, such as land, rural areas, and ground-up construction.
Many lenders require investors to have experience.
Lenders prefer borrowers to have skin in the game; therefore, borrowers need sufficient equity.
Low-equity properties equal a higher chance of being declined.

Other Risks

Short-term duration loans can lead to refinancing pressure if project delays occur.
Foreclosure risk if the borrower defaults, as lenders can act quickly.

Overall, if issues arise during your hard money loan, it’s best to communicate honestly and clearly with your lender to explore available solutions.

California Residential Bridge Loan Lenders

Crescent Lenders are top-rated California bridge loan lenders, providing residential bridge loans from San Diego to San Francisco and everywhere in between.

We have been funding residential bridge loans in and around California since 2011, and have funded more than $100 million in real estate projects to date.

If you are looking for a direct lender in California with decades of experience servicing residential and commercial bridge loans, don’t hesitate to give us a call!