Investors hear both terms for what looks like the same product: a 12-month, interest-only loan to buy or refinance an investment property quickly. The overlap is real. The difference is less about the loan's structure than about who is lending and how much of the decision rests on the property alone.
Side by side
These are tendencies, not legal categories. Neither term has a fixed definition, and many lenders use both for the same program.
| Bridge loan | Hard money loan | |
|---|---|---|
| What the name describes | The purpose: bridging to a sale, a refinance or a stabilized rental | The source: private capital lent on the hard asset |
| Typical lender | Private credit funds, debt funds, specialist lenders and some banks | Individuals, small private funds and local lenders |
| Underwriting focus | The property, the exit and the sponsor's track record and liquidity | Mainly the property and the equity cushion |
| Term | Short-term, interest-only (Passy Capital: 12 months) | Short-term, interest-only, often shorter |
| Pricing | Varies with leverage and experience | Often at the higher end, with higher points |
| Purpose | Business-purpose, non-owner-occupied | Business-purpose, non-owner-occupied |
Where they really differ
- Depth of underwriting: a bridge lender asks for an exit plan and reviews your experience; a pure hard money lender may lend mostly on the equity in the property
- Cost: the lighter the review, the more the lender charges to cover the risk it did not examine
- Leverage: hard money is often lower relative to value, because the property is doing all the work
- Repeatability: a funded lender with a defined program can repeat the same terms on your next deal; an individual lender may not have the capital next time
What Passy Capital's bridge loans look like
Passy Capital arranges bridge loans for 1-4 unit and small multifamily investment property: up to 80% LTV on a purchase, 5 points lower on a cash-out, 12 months interest-only, typically 8% to 12%, no prepayment penalty, from $1M to $5M. The fee is 1% to 2% of the loan at closing, with no upfront fees. A term sheet comes back in 24 to 48 hours and a clean file closes in about two weeks. See bridge loans.
US and foreign investors borrow on the same terms; a foreign investor borrows through a US LLC with no US credit history.
How to compare two offers
If the plan includes heavy works, a fix and flip or renovation structure that funds the budget in draws usually fits better than a plain bridge; see LTC vs ARV. If the plan is to keep the property, the exit is a DSCR loan; see refinancing a bridge loan into DSCR.
- Put both on the same deal: same purchase price, same works, same timeline
- Compare total cost over the hold: interest plus points plus fees, not the rate alone
- Compare cash required at closing: leverage decides how much equity you bring
- Check extension terms and the prepayment rule; selling early should not cost extra
- Ask how draws are released on a renovation, and how fast
- Ask for the time to close in writing, and what would delay it
When a pure asset lender still makes sense
There are deals where the lighter, more expensive option is the right one: a property no conventional appraiser will value quickly, a title problem that needs cash before it can be cleared, or a purchase that must close in days. In those cases, borrow for as short a period as possible and plan the refinance into a cheaper structure from the first day.