Financing Comparison
Bridge Loan vs DSCR Loan
Understanding when to use bridge financing versus long-term DSCR loans for investment properties.
Two Different Tools for Different Strategies
Bridge loans and DSCR loans serve different purposes in a real estate investor's toolkit. Understanding when to use each is critical to executing your strategy effectively.
Bridge Loans
Short-term financing designed for quick acquisition, renovation, and value-add strategies.
- • 12-24 month terms
- • Close in 7-14 days
- • Renovation funding included
- • Higher interest rates (9-12%)
- • LTV up to 90%
- • Interest-only payments
DSCR Loans
Long-term financing for stabilized rental properties with permanent financing structure.
- • 30-year fixed terms
- • Close in 21-30 days
- • For stabilized rentals
- • Lower rates (mid 6% range)
- • LTV up to 80%
- • P&I or interest-only options
When to Use Bridge Loans
- • Property needs significant renovation
- • Time-sensitive acquisition requiring fast close
- • Fix-and-flip or fix-and-rent strategy
- • Property not currently generating rental income
- • Need construction/renovation funding
- • Plan to sell or refinance within 12-24 months
When to Use DSCR Loans
- • Property is turnkey or recently renovated
- • Currently generating rental income or will immediately
- • Long-term hold strategy (5+ years)
- • Want stable, predictable financing
- • Building a rental portfolio
- • Refinancing a stabilized property
The Hybrid Strategy
Many investors use both loan types in sequence: start with a bridge loan for acquisition and renovation, then refinance into a DSCR loan once the property is stabilized and generating rental income. This approach combines the speed and flexibility of bridge financing with the long-term stability of DSCR loans.
Example Timeline
Month 0: Close on bridge loan, fast closing
Months 1-4: Complete renovations
Month 5: Tenant placed, income stabilized
Month 6: Refinance into DSCR loan
Long-term: Hold property with permanent financing
Need Help Choosing the Right Loan Type?
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