Bridge Loans vs. Permanent Financing – What’s Best for Your Property?

When you're investing in commercial real estate, one of the most important decisions you'll make is choosing the right type of financing. Two popular options are bridge loans and permanent financing—each serving a different purpose, with unique benefits and risks.

So, how do you know which one is right for your property?

In this article, we’ll compare bridge loans vs. permanent financing to help you decide which best fits your investment goals, timeline, and financial strategy.

What Is a Bridge Loan?

A bridge loan is a short-term, interest-only loan designed to “bridge” the gap between immediate financing needs and long-term financing solutions. It’s commonly used in real estate when an investor needs fast capital to:

• Purchase a property quickly

• Renovate or stabilize an asset

• Wait for permanent financing approval

• Refinance a maturing loan

Key Features of Bridge Loans:

• Short-term: Typically 6 to 36 months

• Interest-only payments

• Faster funding (often within weeks)

• Higher interest rates (usually 7%–12%)

• Flexible underwriting (often based on asset value)

👉 Best For: Value-add properties, distressed assets, or time-sensitive acquisitions where conventional loans aren’t an option.

What Is Permanent Financing?

Permanent financing is long-term commercial real estate debt used to finance stabilized properties with consistent income. This is the type of loan you’ll likely hold for many years, making it ideal for buy-and-hold strategies.

Key Features of Permanent Loans:

• Terms from 5 to 30 years

• Amortizing payments

• Lower interest rates (often 5%–8%)

• Stricter underwriting

• Requires stabilized income and occupancy

👉 Best For: Fully leased, cash-flowing properties like office buildings, retail centers, multifamily apartments, or owner-occupied commercial buildings.

Bridge Loans vs. Permanent Financing: Head-to-Head Comparison

Feature	Bridge Loan	Permanent Loan
Term	6–36 months	5–30 years
Interest Rate	7%–12% (higher)	5%–8% (lower)
Speed of Approval	Fast (1–3 weeks)	Slower (30–90 days)
Loan Type	Interest-only	Amortizing
Use Case	Acquisition, rehab, refinance	Long-term hold
Risk	Higher (short-term, balloon payment)	Lower (stable payments)
Underwriting	Asset-based	Income-based

When to Use a Bridge Loan

Consider a bridge loan if:

• You're buying a property at a steep discount that needs renovations.

• You need to act quickly to seize a time-sensitive deal.

• Your property doesn’t yet qualify for permanent financing due to low occupancy or unstable cash flow.

• You plan to refinance or sell within 1–2 years.

Example: You purchase a 30-unit multifamily property with 50% vacancy. A bridge loan gives you time to rehab units, lease up, and improve NOI—then refinance into a permanent loan later.

When to Use Permanent Financing

Choose permanent financing if:

• Your property is stabilized, leased, and generating reliable income.

• You're holding the asset long-term and want predictable monthly payments.

• You qualify for traditional underwriting requirements (DSCR, LTV, credit, etc.).

• You're refinancing from a bridge loan into something long-term and affordable.

Example: You’ve completed renovations on a retail center and have 95% tenant occupancy. You’re now eligible for a 10-year fixed-rate permanent loan.

Which Is Right for You?

Use a Bridge Loan If:

• You're flipping, repositioning, or stabilizing a property.

• You need speed and flexibility.

• You're confident you can refinance or sell before the term ends.

Use Permanent Financing If:

• You want to hold the property long-term.

• Your income and occupancy are strong.

• You're focused on lower costs and financial stability.

• 
  

Final Thoughts

Both bridge loans and permanent financing play critical roles in commercial real estate. The right choice depends on your property’s current condition, your investment timeline, and your exit strategy.

In many cases, investors use both: a bridge loan to acquire and improve, followed by permanent financing to lock in long-term value.

Need Help Choosing the Right Loan?

At Commercial Partners of Texas, we specialize in helping investors secure both short-term bridge loans and long-term commercial financing. Whether you're buying, renovating, or refinancing, we’ll help you structure the perfect loan for your needs.

📞 Call us today at [Your Number]🌐 Visit www.amerimort.com to get a free consultation.

SEO Keywords to Include:

• bridge loans vs permanent financing

• commercial bridge loan

• permanent commercial real estate loan

• short-term property loan

• value-add property financing

• real estate refinance options