A bridge loan is short-term, interest-only financing, typically 12 months. It funds an acquisition where the property isn't yet stabilized: vacant, under-rented, mid-renovation, or just newly purchased. Because the loan is short, something else has to repay it at the end of the term. That is the exit, and it is the first thing a bridge lender asks about.
The two exits
- Sale: the work is finished, the property is sold, and the proceeds repay the bridge. This is the usual exit on a fix and flip.
- Refinance with a long-term lender: the property is leased at market rent, and a long-term rental loan from another lender repays the bridge. This is the exit when you plan to hold.
What the bridge lender looks at on the exit
Bridge lenders care about three things: the asset, the exit, and the sponsor. On the exit, the question is simple: at the end of the term, will the property sell for enough, or will its leased value support a refinance large enough to repay the balance?
- For a sale: comparable sales that support the after-repair value, and a renovation budget and schedule that fit inside the term
- For a refinance: rents the market actually supports, and a leased value high enough for a long-term lender to repay the bridge balance
- A fallback: if the refinance comes up short, can the property be sold instead?
- The sponsor's track record on similar projects and similar exits
What a long-term lender typically checks at refinance
- Current leases in place (not pro forma), lenders increasingly want 90 days of seasoning
- Property condition acceptable (no active capex projects, no major deferred maintenance)
- Title clean, entity in good standing, insurance in place
- Sufficient seasoning on title if refi is cash-out and value differs significantly from purchase price
Timing the exit to avoid bridge maturity stress
Bridge loans default to extensions, but you don't want to need them. Start the exit 60–90 days before bridge maturity. If your bridge matures in month 12, act in month 9. For a sale, put the property on the market. For a refinance, lock the rent roll, prepare the seasoning history, and check the numbers with the long-term lender.
If you wait until month 11, you're racing against maturity and any hiccup, appraisal coming in low, market rent shifting, lender program changes, can push you into a default-rate situation or force a 6-month extension at higher rates.
When the refinance doesn't work
Two scenarios: the leased property does not support a large enough loan (rents lower than projected, expenses higher), or the property type doesn't fit the long-term lender's program (many long-term rental programs cap at 4 units; 5+ unit multifamily needs a different permanent product, typically agency or balance-sheet bank).
The fix for the first is either more rehab to push rents, longer bridge to wait for market rents to catch up, or a sale instead of refi. The fix for the second is going to permanent multifamily debt (agency, bank, or debt fund permanent) instead.