Multifamily Bridge Loans

Multifamily bridge loans are a financial tool used by commercial property owners to bridge the gap between the time they purchase a property and the time they secure long-term financing.

In this article, we’ll define multifamily bridge loans, explain how they work, evaluate their pros and cons, and explain when it’s a good idea to use a multifamily bridge loan.

Understanding Bridge Loans

Bridge loans are also referred to as bridge financing, interim financing, swing loans, or gap financing.

They’re a short-term financing tool that lets you borrow against your current asset. Bridge loans typically let you borrow money for up to 12-18 months.

Interest rates on bridge loans typically fall between 8.5% and 10.5%, which means they’re more costly than traditional forms of long-term financing.

Multifamily bridge loans are a specific type of bridge loan used to finance multifamily commercial real estate. These loans typically last between 3 months and 3 years. Most fall between the 12-24 month range.

Multifamily Bridge Loans: Use Cases

Multifamily commercial bridge loans are typically used to purchase a property immediately when you don’t have access to cash. 

You can also use a multifamily bridge loan to finance a rehabilitation or stabilization project. 

If you can’t access conventional multifamily long-term financing before the start of your project, a bridge loan might be a great option. 

Bridge loans work with most property types including multifamily, apartments, retail spaces, office complexes, and more.

Pros of Multifamily Bridge Loans

  • Quick closure

Multifamily bridge loans close quickly (within 30 days or less). They involve less paperwork and underwriting, so you’ll be able to access your capital faster than other financing options.

  • Collateral versus creditworthiness

Although creditworthiness matters, lenders tend to place more stock on collateral when making a multifamily bridge loan. This is because multifamily bridge loans are non-recourse loans.

  • Flexible repayment options

Multifamily bridge loans give you multiple repayment options: either repay your entire loan before or after securing your permanent financing.

If you repay your loan before securing your permanent financing, your payments will be structured in a way that lets you fully repay your loan over a certain time period.

However, if you repay your bridge loan after securing your permanent financing, then a portion of your long-term funding will go towards repaying your loan.

  • Non-recourse

Multifamily bridge loans are non-recourse loans, which means the lender can only seek repayment of the loan through the actual property.

As the borrower, you won’t be held personally liable for repaying the outstanding loan balance. If you can’t repay your loan, the lender will only be able to claim your property as collateral.

Cons of Multifamily Bridge Loans

Despite their benefits, multifamily bridge loans present a few disadvantages. These disadvantages are similar to the disadvantages of regular bridge loans.

  • Large payments

Multifamily bridge loans require you to repay your loan over a shorter period of time than a mortgage or other long-term financing.

  • Higher interest rates

Multifamily bridge loans tend to come with higher interest rates, as compared to long-term financing solutions.

In addition to your interest rate, you’ll need to pay legal and administrative fees, along with closing costs.

  • Less flexibility from lenders

Because multifamily bridge loans are short-term loans, lenders are likely to be less flexible when it comes to payments.

If you’re behind on your payments, be prepared for higher late fees and steeper penalties.

  • Rely on more permanent financing

Bridge loans rely on more permanent financing—they’re not a long-term financing solution. However, long-term financing might not always be available.

If the housing market collapses, you might not be able to find funding to complete your rehabilitation project or finalize the purchase. It’s important to keep this in mind before committing to a multifamily bridge loan.

Costs of Multifamily Bridge Loans

Multifamily bridge loans aren’t cheap.

Although they’re a great way to obtain temporary financing for your new property, remember that these loans usually cost more than a traditional mortgage.

Interest rates on bridge loans depend on i) your credit score and ii) the size of your loan.

Overall, interest rates on bridge loans range from 7% to 10.5%.

As mentioned above, interest rates on business bridge loans range even higher, typically from 15% to 24%.

In addition to your interest rate, you’ll need to pay legal and administrative fees, along with closing costs.
Closing costs and fees for multifamily bridge loans hover around 1.5-3% of the total loan amount.

These costs often include the following:

  • Loan origination fee
  • Appraisal fee
  • Administration fee
  • Escrow fee
  • Title policy costs
  • Notary fee


Before you commit to a multifamily bridge loan, remember to consider all the associated costs!

Sample Multifamily Bridge Loan Terms

  • Size: $1M+
  • Term: 6-36 months
  • Interest Rates: Typically in the teens, varies by credit rates and collateral
  • Amortization: Generally interest-only
  • Maximum LTV: Up to 75% of the cost, capped at 70% of the completed value

When to use a Multifamily Bridge Loan

Depending on your individual needs, multifamily bridge loans can be a great option.

They’re readily available, they close fast, and they can be a great way to finance the purchase of your commercial property.

Additionally, the loan size is based on the total cost of the project—not on income in place or as-is value.

However, before committing to a multifamily bridge loan, it’s important to explore your options.


How long does it take to get a multifamily bridge loan?
Multifamily bridge loans can be expedited in under 30 days, and they present more flexibility when it comes to structure and due diligence. Typically commercial loans often take up to 90 days or more.
Can you get a bridge loan with bad credit?
Not typically. Lenders tend to approve multifamily bridge loans only if the borrower can show strong and stable finances. If your financial situation isn’t ideal, or you’re stuck with a poor credit score below 650, you likely won’t qualify for a bridge loan.

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