What a commercial bridge loan does
A commercial bridge loan is short-term financing on income-producing or transitional commercial real estate, such as multifamily, office, retail, industrial or mixed-use property. Investors use it to close quickly, fund a value-add plan or lease-up, or carry a property until it qualifies for permanent financing such as a bank, agency or CMBS loan.
Terms usually run about 12 to 24 months, sometimes with extension options. Most bridge loans are interest-only, so the full principal is repaid at the end from a sale or a refinance.
Rates, points and how much you can borrow
US commercial bridge loans are quoted as an annual rate. With Year (nominal) selected, the monthly rate is the annual rate divided by 12, so 11% a year is 0.9167% a month. Lenders also charge origination points: one point is 1% of the loan, commonly 1 to 3 points, paid at closing.
Lenders size the loan as a share of value. Many commercial bridge lenders cap the loan at around 65% to 75% of the as-is value, and some also apply a limit on the stabilized value after the business plan is complete, lending the lower of the two. At a 75% limit, a $1,000,000 loan needs a property worth at least $1,333,333.33.
Interest-only payments and the interest reserve
With Paid monthly selected, each month's interest is the loan times the monthly rate, and you repay only the principal at the end. Lenders often hold part of the loan as an interest reserve to cover these payments while the property is being repositioned; the total interest result is the reserve you would need for the whole term.
Some lenders let interest accrue and collect it at payoff instead. Choose Deferred simple for simple interest paid at the end, or Monthly compound if unpaid interest is added to the balance each month.
Worked example: $1,000,000 for 18 months
An investor borrows $1,000,000 at 11% a year for 18 months, interest-only and paid monthly, with 2 origination points paid at closing. Monthly interest is $1,000,000 × 0.11 ÷ 12 = $9,166.67, so 18 months of interest totals $165,000. The 2 points cost $20,000, making the total cost of financing $185,000, and the payoff at the end is the $1,000,000 principal.
If the loan is repaid after 12 months instead, interest falls to $110,000 and the total cost to $130,000, because points are usually charged in full at closing however long the loan runs.
Plan the takeout before you close
A bridge loan depends on its exit. If you plan to refinance, check the debt service coverage and loan-to-value that a permanent lender will require once the bridge matures. If you plan to sell, allow for the time a commercial sale can take. Extensions usually cost extra fees and interest.
This calculator estimates the cost of a quote. It does not assess eligibility, appraise the property, or include prepayment penalties, extension fees or exit fees unless you enter them.
To estimate payments on the permanent loan after the bridge, use the commercial mortgage calculator .
For a short-term loan to buy a new home before selling your current one, use the US swing loan calculator .
Use the right country page
This page stays in US dollars and uses US terms: an annual rate, origination points and an interest reserve. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK commercial bridging loan calculator, which uses a monthly rate and an arrangement fee. The inputs reset and amounts are not converted.
Inputs for the commercial bridge loan calculator
Amount you need
The loan proceeds you need. If interest is retained or a fee is deducted, the calculator works out the larger gross loan.
Quoted interest rate
The note rate on your term sheet, not the APR. US commercial bridge loans are usually quoted per year.
Rate quoted per
Year (nominal) divides the annual rate by 12. Choose Month for a monthly rate or Year (effective) for an effective annual rate.
Term
The number of months you expect to keep the loan, in whole months.
How interest is paid
Paid monthly (often from an interest reserve), deferred simple, monthly compound, or retained up front.
Origination fee (points)
One point is 1% of the loan, paid at closing. Many lenders charge 1 to 3 points.
Exit fee
A percentage some lenders charge at payoff. Enter zero if your term sheet has none.
Percentage fees based on
Whether the percentages apply to the proceeds you receive or to the larger gross loan.
Origination fee payment
Paid separately at closing, or deducted from the loan, which increases the gross loan.
Other quoted costs
Appraisal, environmental, legal, title and broker costs you pay separately.
CALCULATOR QUESTIONS
US commercial bridge loan calculator questions
How is interest on a commercial bridge loan calculated?
Most are interest-only: each month you pay the loan times the annual rate divided by 12. Over the term, that is the loan times the annual rate times the number of months divided by 12.
What are origination points?
A one-time fee at closing. One point is 1% of the loan, so 2 points on $1,000,000 is $20,000.
How much can I borrow on a commercial bridge loan?
Many lenders cap the loan at around 65% to 75% of the as-is value, and some also limit it against the stabilized value. Your term sheet sets the actual limit.
Do I need an interest reserve?
Many lenders require one when the property does not yet produce enough income. Choose Paid monthly and use the Interest result to size it for the full term.
What happens when I change country?
The United Kingdom option opens the separate UK commercial bridging loan page, in pounds, with its own defaults and terms. Your inputs are reset rather than converted.