Characteristics of a bridge loan
In some ways, bridge loans are similar to mortgages. Borrowers usually need a credit score higher than 620, a debt-to-income ratio of less than 50%, a loan-to-value ratio of less than 80%, and home equity of at least 20%.
But unlike the typical mortgage loan that’s repaid over 15 or 30 years, bridge loans are meant to provide financing for a very short period of time -- usually between six months and three years.
On the bright side, being approved for a bridge loan is generally much less time-consuming than obtaining a traditional mortgage. Typically, a bridge loan can fund within three to 14 days, much faster than the average 43-day period for a home mortgage.
Borrowers will pay a bit more for the speed, however. Origination fees range from 1.5% to 3% of the total loan; mortgage origination fees are generally 0.5% to 1% of the total loan value.