A commercial bridge loan is short-term, interest-only financing that carries a property from where it is today to where permanent debt becomes available. The lender underwrites your business plan and projected stabilized value instead of in-place income, and the loan is repaid when the property stabilizes, sells, or refinances. It suits assets in transition rather than stable, cash-flowing ones.
What does the bridge market look like right now?
Short-term money is currently cheaper than long-term money, which is the pricing fact every CRE bridge loan borrower has to work with right now. SOFR, the index nearly every bridge loan floats over, printed 3.90% on September 28, 2026 per Federal Reserve Bank of St. Louis data, while the 10-year Treasury pricing the exit sat at 5.17% on September 25.
Rate tape as of September 29, 2026, each figure on its own observation date:
- SOFR: 3.90% (September 28, 2026)
- 30-day average SOFR: 3.73909% (September 29, 2026)
- 5-year Treasury: 4.98% (September 25, 2026)
- 10-year Treasury: 5.17% (September 25, 2026)
- Bank prime loan rate: 7.00% (September 25, 2026)
- Federal funds target range: 3.75% to 4.00% (September 29, 2026), after the September 16, 2026 FOMC statement raised it by 1/4 percentage point to 3-3/4 to 4 percent
Lender spreads and all-in coupons are not on this tape, and only a term sheet is a quote on your deal.
A bridge loan is priced off the front end of the curve and repaid with debt priced off the long end. One national bank's commercial real estate desk notes that bridge rates are linked to a floating index that moves more closely with the federal funds target rate than with longer-term rates, so the index under a bridge loan currently sits more than a point below the benchmark that prices the take-out. The spread stacked on top of each index is what decides which loan is actually cheaper.
The permanent market underneath that exit tightened in the second quarter. CBRE reported that commercial mortgage spreads narrowed 21 basis points to 204 bps while multifamily spreads fell 15 bps to 162 bps, with average mortgage rates settling at 5.7%, per the CRE Daily brief on the quarter. Leverage came down at the same time: commercial LTVs averaged 59.6% and multifamily LTVs 63.3%, down from 65.8% a year earlier, while debt service coverage improved to 1.43 and debt yields to 10.2%.
Read that combination as instruction about your exit rather than as an invitation. Lenders are competing on price rather than leverage, so the refinance that retires your bridge is likely to be priced well and sized conservatively. CBRE also put its Lending Momentum Index at 1.0, down from 1.3 a year earlier, with alternative lenders such as debt funds taking 38% of non-agency originations, up from 34%. The fuller read sits in our breakdown of the CBRE lending momentum data.
When should you use a bridge loan instead of permanent debt?
Use bridge financing when the property cannot yet satisfy a permanent lender's underwriting, or when the closing calendar will not wait for one. The test is narrow: if in-place net operating income supports your target leverage at permanent standards today, take permanent debt. If it does not, and there is a credible plan to get there, use a bridge.
- You need speed. A competitive acquisition can require a close well inside a bank or agency timeline. A national bank's agency lending team says it has closed bridge loans in under 30 days.
- The property isn't stabilized. Vacant, under renovation, or in lease-up, so no permanent lender will underwrite it yet.
- You're repositioning an asset. Value-add multifamily, retail conversion, office-to-residential. The lender is underwriting your business plan, not today's NOI.
- Existing debt is maturing. A maturing bridge or construction loan has to be retired before default while you finalize the next step.
- You need to recapture equity. Pulling cash out of a stabilized property to deploy on the next acquisition while a formal cash-out refinance is arranged.
How is a commercial bridge loan structured?
Nearly every commercial bridge loan shares the same skeleton: a floating rate over SOFR, interest-only payments, a short term, and an extension option priced as a fee. NerdWallet reports repayment terms running up to a maximum of three years, and lenders sizing loans at 65% to 80% of value or of cost.
Leverage, recourse, and origination cost are then negotiated deal by deal. The table below describes term-sheet structure, not market pricing data.
| Parameter | What a typical term sheet contains |
|---|---|
| Parameter Term | What a typical term sheet contains Short-term; repayment terms run up to a maximum of three years, per NerdWallet |
| Parameter Rate | What a typical term sheet contains Floating over SOFR; spread set by sponsor profile, asset type, leverage, and exit risk |
| Parameter Origination fee | What a typical term sheet contains Quote-specific; varies by sponsor experience, leverage, property type, and lender |
| Parameter LTV or LTC | What a typical term sheet contains 65% to 80% of the property's value, or of construction cost on a renovation, per NerdWallet |
| Parameter Amortization | What a typical term sheet contains Interest-only, which NerdWallet lists among the terms direct bridge lenders commonly offer |
| Parameter Recourse | What a typical term sheet contains Non-recourse on institutional deals; partial or full recourse for first-time sponsors |
| Parameter Extensions | What a typical term sheet contains Negotiated as an option for a fee; length, cost, and approval conditions are lender-specific |
| Parameter Prepayment | What a typical term sheet contains Often freely prepayable; NerdWallet notes direct bridge lenders commonly offer no prepayment penalties |
One national bank's agency lending desk points out that agency loans carry standardized terms while bridge loans can be tailored, including earn-out structures that reward completed value creation and future advances that fund capital improvements. Ask for those levers at term sheet, because they are far harder to add at closing.
How are bridge loans priced by property type?
Property type drives the spread more than any factor except sponsor quality, because it determines how confident the lender is in the exit. The relative ordering below stays stable across cycles even as absolute pricing moves with SOFR. Treat every row as directional, since only a term sheet is a quote.
| Property type | Relative pricing | Best use |
|---|---|---|
| Property type Multifamily | Relative pricing Usually tightest, when the agency exit is credible | Best use Value-add, lease-up |
| Property type Industrial | Relative pricing Often competitive for strong locations and clear leasing plans | Best use Last-mile, repositioning |
| Property type Self-storage | Relative pricing Driven by lease-up performance | Best use New facility lease-up |
| Property type Retail | Relative pricing Wider when tenant rollover or anchor risk is material | Best use Anchor replacement, re-tenanting |
| Property type Hotel | Relative pricing Highly dependent on flag, PIP, and operating history | Best use Flag change, PIP completion |
| Property type Office | Relative pricing Often widest, given sector uncertainty and conversion risk | Best use Conversion, major repositioning |
The multifamily row has support in the current data. CBRE's Q2 2026 figures put multifamily mortgage spreads at 162 bps against 204 bps for commercial loans generally, per the CRE Daily brief, which is the same ordering that shows up in bridge quotes.
How does sponsor experience change your bridge pricing?
Bridge lenders price the executor about as heavily as the asset, because the loan is repaid by a plan someone has to carry out. A sponsor with several clean exits and real liquidity sees tighter spreads, higher leverage, and lighter recourse than a first-time borrower. The posture below is directional, and live quotes should control your underwriting.
| Tier | Profile | Pricing posture | Recourse |
|---|---|---|---|
| Tier Institutional | Profile Multiple exits, institutional balance sheet, prior bridge history | Pricing posture Best available for the asset type | Recourse Often non-recourse |
| Tier Experienced | Profile Several clean exits, strong liquidity, credible plan | Pricing posture Competitive, lender-specific | Recourse Partial recourse possible |
| Tier Emerging | Profile Limited track record, or partnered with an experienced GP | Pricing posture Wider, with more structure | Recourse Partial or full recourse |
| Tier First-time or distressed | Profile No prior CRE bridge, or distressed collateral | Pricing posture Most conservative leverage and pricing | Recourse Often full recourse |
Bridge loan or permanent loan: which one fits your deal?
Answer one question and the choice is usually made for you: does the property's current net operating income support your target leverage at permanent underwriting standards? If it does, permanent debt is cheaper and longer. If it does not, a bridge buys the time to get there, and you pay for that time in rate, fees, and refinance risk.
| Factor | Bridge loan | Permanent loan |
|---|---|---|
| Factor Term | Bridge loan Months, interest-only | Permanent loan Years, amortizing |
| Factor Rate | Bridge loan Floating over SOFR | Permanent loan Fixed or floating; lowest from life companies and agencies |
| Factor Underwriting basis | Bridge loan Business plan, projected value, sponsor track record | Permanent loan In-place cash flow, occupancy, stabilized NOI |
| Factor Speed to close | Bridge loan Weeks | Permanent loan Months, with HUD and FHA longer still |
| Factor Leverage | Bridge loan Often sized against total project cost | Permanent loan Sized against stabilized value |
| Factor Prepayment | Bridge loan Open, or a modest exit fee | Permanent loan Yield maintenance or defeasance |
| Factor Best for | Bridge loan Transitional, value-add, distressed | Permanent loan Stabilized, income-producing assets |
If the property's current NOI supports the target leverage at permanent standards, use permanent debt. If it does not, use a bridge and underwrite the gap.
How does a bridge loan actually get repaid?
Every bridge loan needs a credible exit, and the lender underwrites that exit as carefully as it underwrites the acquisition itself. There are four realistic ways out, and a term sheet that does not point cleanly at one of them is not ready to sign. Choose the exit first, then reverse-engineer the bridge around it.
- Refinance into permanent debt. Once stabilized, the property qualifies for agency, CMBS, life company, or bank financing. This is the most common exit for buy-and-hold owners.
- Refinance into a DSCR loan. For smaller multifamily, a DSCR refinance is often the most accessible path to permanent debt, because it underwrites the property's rental income rather than personal returns.
- Sell the property. The classic value-add exit: renovate, stabilize, sell, and repay the bridge from proceeds.
- Repay from portfolio liquidity. Some sponsors retire bridge debt from portfolio-level cash flow or an LP capital call rather than a property-level refinance or sale.
The current data argues for underwriting that exit conservatively. Debt service coverage on new originations rose to 1.43 and debt yields to 10.2% in Q2 2026, per CBRE data reported by CRE Daily, so the stabilized property has to clear a higher bar at refinance than a thin pro forma tends to assume.
What is the bridge-to-DSCR stack?
The bridge-to-DSCR stack is a two-loan sequence: buy or renovate with short-term bridge debt, stabilize the asset, then refinance into a DSCR loan underwritten on the property's rental income instead of personal tax returns. It is the BRRRR pattern in commercial form, and it works because each loan does only the job it is good at.
- Acquire or renovate with a bridge loan sized against total project cost.
- Stabilize the asset: complete the work, lease it up, and season the rents.
- Refinance into a DSCR loan based on the property's own income.
The failure mode is the seam between the two loans. Underwrite the DSCR refinance against today's coverage standards rather than the standards that applied when you bought, and confirm the bridge is open to prepayment on the date you expect to be ready.
What are the biggest bridge loan risks, and how do you manage them?
The four risks that actually kill bridge deals are rate, extension, stabilization, and lender execution, and each has a specific mitigation you negotiate at term sheet rather than discover at maturity. None of them is exotic. All of them are much cheaper to solve before you close than after.
- Rate risk. Bridge debt floats over SOFR, which stood at 3.90% on September 28, 2026 per Federal Reserve Bank of St. Louis data, after the Federal Reserve raised its target range on September 16, 2026. Budget for an interest rate cap, since lenders frequently require one.
- Extension risk. Negotiate extension length, fee, and approval conditions up front, and confirm whether the fee is calculated on the outstanding balance or on the original loan amount.
- Stabilization risk. Build conservative lease-up timelines. If stabilization slips past maturity, the property may not clear permanent underwriting when you need it to.
- Lender execution risk. Bridge lenders differ widely in how reliably they fund draws and honor commitments. Alternative lenders took 38% of non-agency originations in Q2 2026, up from 34%, per CBRE data reported by CRE Daily, so diligence on the counterparty matters more than it used to.
How do you find the right bridge lender?
The bridge market is fragmented across banks, debt funds, and private capital, each with its own property-type appetite, size minimum, geographic footprint, and tolerance for loan-to-cost. Two lenders reading the same file can land on materially different answers about leverage, structure, and price, which is why a single quote tells you very little.
The practical move is to run one packaged file at several fitting lenders at once instead of calling them one at a time. YieldStack is a commercial mortgage brokerage. The program side of CRE bridge loans, from acquisition bridges to lease-up and refinance bridges, is laid out on our commercial bridge loan page.
How do you put lenders in competition for your deal?
You put lenders in competition for your deal by sending one complete file to several lenders whose programs fit it, in the same pricing window, rather than one at a time. YieldStack matches your deal against 20,000+ loan programs with Zero upfront; the broker fee is 0.50–1.00% of the loan amount, paid only at closing.
- Upfront cost: Zero upfront
- Broker fee: 0.50–1.00% of the loan amount, paid only at closing
- Loan programs matched: 20,000+
Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
How should you read the numbers in this guide?
Every market figure in this guide is dated and attributed, and none of it is a quote on your particular deal. SOFR, Treasury, prime rate and fed funds target levels are from the Federal Reserve Bank of St. Louis, and the September 16, 2026 rate decision is quoted from the Federal Reserve's statement.
The Q2 2026 spread and coverage figures are CBRE data reported by CRE Daily. Term and leverage ranges come from NerdWallet and vary by lender. The bridge-versus-agency observations attributed to a national bank come from that bank's published agency-lending guidance, listed in the sources below.
Nothing here is financial, legal, or investment advice. No rate, fee, or structure described in this guide is a commitment from any lender, and lenders make their own credit decisions on their own underwriting. Confirm live pricing with your lender or advisor before you commit it to an underwriting model.
The bottom line
A commercial bridge loan buys time to execute a business plan, and the price of that time is set by the spread stacked on top of a floating index rather than by the index alone. With SOFR at 3.90% on September 28, 2026 per St. Louis Fed data, the front end is the cheap part of the trade.
The 10-year Treasury that will price your take-out sat at 5.17% on September 25, 2026, and Q2 2026 originations cleared 1.43 debt service coverage per CBRE data reported by CRE Daily. Underwrite the exit against those standards, negotiate the extension before you need it, and make fitting lenders compete on one packaged file.