Commercial Real Estate Bridge Loan: Rates, Terms, and Exit

A commercial real estate bridge loan is short-term, floating-rate, usually interest-only debt that carries a property through a transition until permanent financing can replace it. The transition might be a renovation, a lease-up, a fast closing, or an old loan coming due. The lender is underwriting two things: whether your exit will be there, and whether you can carry the property if the exit is late.

What is a commercial real estate bridge loan?

Two features separate a bridge loan from an ordinary mortgage. The first is future funding. The lender advances part of the loan at closing and holds back the rest for renovation, leasing costs, and reserves. Ready Capital’s bridge program, for example, lists “capital expenditures, interest and carry reserves” as future advances, funded “according to sponsor’s business plan.”

The second is the repayment source. A permanent loan’s payments come out of the property’s income, year after year. A bridge loan is repaid in one payment by the next loan or a sale, which is why the exit gets underwritten before anything else. Our guide to the types of commercial real estate loans shows where bridge debt sits among the other nine options.

Commercial real estate bridge loan rates and fees in November 2026

Bridge pricing is an index plus a spread. The index is SOFR, which the New York Fed published at 3.89% for November 6, 2026. On October 28 the Federal Reserve held its target range at 3.75% to 4.00%, with two members voting to raise it.

Few lenders publish a spread, so the ones that do are worth reading closely. Greystone’s small and medium multifamily bridge sheet quotes one-month Term SOFR plus 375 to 425 basis points. Using overnight SOFR of 3.89% as a stand-in for Term SOFR, that spread produces a bridge loan rate of about 7.64% to 8.14% in early November 2026.

Three national lenders had these terms posted as of November 9, 2026.

Sources for the table:

• Greystone Small & Medium Multifamily Bridge-to-Agency term sheet (copyright 2025)
• Ready Capital Commercial Bridge Loans program page
• Arbor Bridge Loans program page

Three costs sit outside the coupon.

Fees at both ends. On a $3,450,000 loan, a 1% origination fee is $34,500 and a 1% exit fee is another $34,500. Each 6-month extension at 0.50% adds $17,250. Greystone’s sheet says its exit fee can be partly or wholly waived when Greystone also makes the permanent loan, so ask every lender the same question.

The rate cap. Greystone requires the borrower to buy an interest rate cap. The price depends on the strike rate and the term, so ask for a quote during due diligence.

Minimum interest. Ready Capital’s terms read “minimum interest; no lockout,” and Greystone allows prepayment “with 6-12 month make-whole interest.” A plan that finishes in month 4 still pays for the months the lender was promised.

Who makes bridge loans, and why your bank often won’t

Bridge lending has moved toward debt funds and mortgage REITs. In CBRE’s Q3 2026 capital markets report, alternative lenders closed 48% of the non-agency loans CBRE placed, up from 37% a year earlier. Banks closed 26%, down from 31%. Those figures cover one brokerage’s loan book, so treat them as a direction.

Bank capital rules explain part of the shift. Under the FDIC’s capital rule at 12 CFR 324.2, some loans count as high volatility commercial real estate (HVCRE) exposures.

The definition covers a loan secured by real property that meets three tests. It finances or refinances the acquisition, development, or construction of real property. Its purpose is to acquire, develop, or improve that property into income-producing real estate. And repayment depends on future income, a sale, or a refinance.

The exemptions fit a stabilized building better than a transitional one. One applies when the property’s current cash flow already supports the debt under the bank’s permanent-loan criteria. Another applies when the loan is within supervisory loan-to-value limits and the borrower has contributed capital equal to 15% of the “as completed” appraised value. That capital has to go in before the bank advances funds, and it has to stay in the project.

An HVCRE exposure carries a 150% risk weight, against 100% for a standard corporate exposure. The same loan counts for half again as much in the bank’s risk-weighted assets. A half-vacant building with a renovation budget is the textbook case.

Banks have also been tightening. In the Federal Reserve’s October 2026 Senior Loan Officer Survey, 19.0% of banks reported tighter standards on construction and land development loans over the prior three months. Only 3.4% reported easing. On loans secured by nonfarm nonresidential property, 12.3% tightened and 3.5% eased.

Debt funds finance bridge loans in the securitization market, through collateralized loan obligations (CRE CLOs). Issuance passed $39 billion by October 23, 2026, according to Commercial Mortgage Alert data cited by Arbor, on pace for the highest annual volume in five years.

For a borrower, the practical result is a different document set. A fund’s bridge loan is usually non-recourse on paper, with a net worth test, a liquidity test, and guaranties standing behind it.

Bridge loan requirements: what the lender underwrites

A bridge lender reviews two files: the property’s exit and the guarantor.

The exit comes first

Greystone’s sheet says the bridge is “sized to Agency takeout parameters, min 1.20x / max 80% loan to stabilized value.” The lender works backward from the permanent loan that will pay it off.

Take a half-vacant flex building as an example:

• Cost: $4,000,000 purchase plus $600,000 of improvements and leasing costs, for $4,600,000 in total.
• Bridge loan: 75% of cost, or $3,450,000, interest-only at an illustrative 7.89% (SOFR of 3.89% plus an assumed 4.00% spread).
• Income: $210,000 of net operating income today and $400,000 once the building is leased.
• Takeout: a permanent loan with a 25-year amortization and a 1.25x debt-service-coverage requirement.

The takeout rate in the example is 6.85%. That is the 10-year Treasury yield of 4.88% on November 9, 2026, per the Treasury’s daily yield curve, plus 1.97 points. CBRE reported 197 basis points as its average commercial mortgage spread in Q3 2026.

The formula is short:

Supportable permanent loan = (stabilized NOI ÷ 1.25) ÷ annual loan constant

The loan constant for a 25-year loan is 8.37% at a 6.85% rate and 9.14% at 7.85%.

Read it row by row. If the plan lands and rates hold, the takeout pays off the bridge with room for the $34,500 exit fee and closing costs. A permanent rate one point higher leaves about $50,000 of room. If income comes in 15% short, you write a check of roughly $199,000 to close the refinance, even at today’s rate.

The rate risk in a bridge loan sits in the exit. The bridge coupon follows SOFR, and the takeout follows the 10-year Treasury. Treasury’s data shows the 10-year at 4.19% on January 2, 2026, 5.24% on October 1, and 4.88% on November 9. A one-point move inside a year is in the record, so test your exit a point above today’s quote.

You also have to carry the property through the bridge period. Interest on $3,450,000 at 7.89% is $272,205 a year, or $22,684 a month. Today’s $210,000 of income covers 0.77x of that.

Greystone requires an interest reserve when coverage is below 1.0x. The shortfall here is $62,205 a year, so an 18-month plan needs a reserve of about $93,000. If leasing slips past the reserve, the borrower has to fund the difference. An operating deficit guaranty makes that a personal obligation.

You can run your own numbers in the free DSCR calculator and compare payments in the commercial real estate loan calculator, with no signup. Lenders also check debt yield at the exit, and the bridge itself is governed by loan-to-cost.

Then the guarantor

Greystone’s sponsor requirements are two lines: “Guarantor with 1x loan amount net worth required,” and “10% of loan balance liquidity required.” On the example loan, that is $3,450,000 of net worth and $345,000 of liquid assets.

Borrowers tend to miss three things about those tests.

Liquidity is counted strictly. CPG Lending, a private bridge lender, publishes its method. It wants the two most recent months of bank or investment statements. Reserves on a purchase must be seasoned for three months, and retirement accounts count at half their market value.

Ask whether the 10% is measured before or after your equity goes into the deal. The example needs $1,150,000 of equity. If the test is post-closing, you need about $1,495,000 in verified cash to close.

Net worth may be measured without the property you are financing. Paul, Weiss attorneys described the practice in a New York Law Journal article. Lenders were requiring guarantors to have “meaningful net worth independent of the mortgaged property, together with ongoing net worth and liquidity covenants.”

“Ongoing” means the lender can ask for an updated statement during the loan, and a drop below the covenant is a default risk. Our loan covenants explainer covers how those tests work.

Non-recourse still comes with a guaranty. Greystone’s larger multifamily bridge sheet describes “standard carve-outs for environmental, bankruptcy, fraud and misapplication of funds.” It adds that partial recourse, an operating deficit guaranty, or a completion guaranty may be required on heavier transitions.

Smaller loans drop the non-recourse label entirely. CPG Lending makes every loan under $2 million “Full Recourse to warm body guarantor.” The personal guarantee explainer covers what each version means for you.

Every one of those guaranties belongs under contingent liabilities on your next personal financial statement. A lender who finds a completion guaranty you left off will start asking what else is missing.

The guarantor file is usually a personal financial statement for each guarantor, a schedule of real estate owned, and account statements that prove the liquid number. The property file starts with the rent roll and trailing income. Our commercial real estate investor page covers keeping the personal side current across several deals.

Extensions and the 2026 maturity wall

The Mortgage Bankers Association counted $875 billion of commercial mortgages maturing in 2026, which is 17% of the $5.0 trillion outstanding. Another $652 billion is scheduled for 2027.

The share is higher in two lender groups. MBA reports that 29% of the balance held by credit companies, in warehouse facilities, or by other lenders matures in 2026. For loans in CMBS, CLOs, or other asset-backed securities, the share is 25%.

The second kind of bridge borrower is an owner whose loan matured before the building could support a full refinance. That’s the $340,000 row in the table above. A bridge buys time to sign leases. The alternatives are paying the loan down at refinance or adding subordinate capital, which the capital stack guide explains.

Read the extension clause before you compare rates. “12 months plus two options” is a 12-month loan with two conditional rights to extend. The published fees are 0.25% or more at Ready Capital and 0.50% per 6-month extension at Greystone.

Ask which tests apply at each extension, then run them with the income you expect to have in month 12. Ask whether the rate cap has to be replaced. Greystone’s larger multifamily program requires a cap only “for the duration of the initial loan term.” Those terms are easiest to negotiate before you sign.

Bridge loan vs. permanent loan vs. construction loan

The three loans are easy to confuse because one project can use all of them in sequence.

A bridge loan funds an existing property in transition. A construction loan funds draws against a budget for a building that doesn’t exist yet. Both usually end in a permanent loan with the terms and amortization the stabilized income can support.

Bridge financing inside the SBA 504 program

If your business will occupy at least 51% of an existing building, the SBA 504 program has its own bridge rules.

Every 504 has a bridge built in. SOP 50 10 8.1 says 504 loans “provide permanent or take-out financing.” An interim lender, usually the bank making the first mortgage, covers “the period between SBA approval of the project and the debenture sale.” The debenture proceeds then repay it.

13 CFR 120.890 lets any source supply that interim loan, for every project cost except the borrower’s contribution, under four conditions. The money can’t come from an SBA program, and the terms must be acceptable to SBA. The source can’t be the borrower or an associate, and it must be qualified to monitor construction. Under 13 CFR 120.882, 504 proceeds can repay interim financing “including points, fees and interest.”

Before the debenture funds, the interim lender must certify that it knows of no unremedied substantial adverse change in the business. The SOP is blunt: “If the Interim Lender cannot certify as required, then the debenture cannot be funded.” A bad quarter between the interim closing and the debenture sale puts the takeout at risk.

A short bridge loan can be taken out by a 504. SOP 50 10 8.1 lists “Short-Term Debt (aka ‘Bridge Financing’)” among the eligible uses of 504 proceeds. The debt must have financed eligible project costs until longer-term financing could be obtained, “provided that the financing is for a term of 3 years or less.”

So an owner-user can close fast on a bridge loan and then apply for the 504. Bridge debt that falls outside that paragraph has to qualify under the 504 refinancing rules in 13 CFR 120.882(g). Those require a loan at least 6 months old, with 75% or more of it used for an eligible fixed asset. The business must have operated for 2 years, and the combined financing can’t exceed 90% of the property’s value.

Tell the Certified Development Company about the 504 plan before you sign the bridge note. Our posts on how the SBA 504 is structured and on owner-occupied commercial real estate loans cover the occupancy and equity rules.

When a commercial real estate bridge loan fits

1. You are buying a building that needs leasing or renovation. The finished plan supports a permanent loan that today’s income can’t.
2. Your current loan is maturing and the building falls short of a refinance. A bridge covers the gap while you sign leases.
3. The closing date is shorter than a permanent lender’s process. Check the minimum-interest terms first, because a fast payoff still carries a cost.
4. You are recapitalizing. Ready Capital lists “acquisition, refinance, and recapitalization” as its loan purposes.
5. You are an owner-user closing ahead of an SBA 504. Keep the bridge term at 3 years or less.

A bridge loan is the wrong tool in two cases. The first is a stabilized property that qualifies for permanent debt today. In the example, that would mean paying 7.89% floating plus fees when the illustrative permanent rate is 6.85% fixed.

The second is a plan that works only if rates fall. The exit table shows what a one-point miss does to the refinance.

Before you ask for a term sheet

Write the exit on one page. State the stabilized income, the type of takeout lender, a permanent rate one point above today’s, and the loan that produces. Compare it to the bridge balance plus the exit fee. The DSCR walkthrough shows the income adjustments lenders make.

Get the guarantor file current first. Date the personal financial statement inside the lender’s window. Make the schedule of real estate owned agree with it, and list every carve-out and completion guaranty as a contingent liability. Our guide on how often to update a personal financial statement covers timing.

Size the reserve for a late plan. Add 2 quarters to your leasing schedule and check that the interest reserve still covers the gap.

The commercial real estate archive has more on financing investment and owner-occupied property.