Two Fast Loans That Are Not the Same
Both bridge loans and hard money loans fund quickly, and both carry higher rates than a bank. That is where the similarity ends. The difference shows up in how lenders underwrite the deal and what they charge to close it.
A bridge lender looks at your business plan, your experience, and the property together. A hard money lender looks at the asset first and everything else second. That single distinction drives the rate, the points, and the leverage you can get.
How Bridge Loans Work
Commercial bridge loans are generally priced above bank debt on an interest only basis with terms that generally run 12 to 24 months. Leverage generally lands between 65% and 80% loan to value depending on the property and your track record. Most bridge lenders charge points at closing. Every deal is priced on its own merits. Actual pricing depends on the property, the plan, and the lender.
Bridge capital fits a property that needs time. Think acquisition and lease up, a light renovation, or a repositioning that gets the building to permanent loan condition. Lenders want a clear exit, usually a refinance or a sale, before they fund.
How Hard Money Loans Work
Hard money is asset based lending. Rates typically run above bridge pricing, plus points, with terms that generally run 6 to 18 months. Leverage is often lower, generally in the 60% to 70% range, because the lender is pricing for a fast foreclosure if the plan fails.
Speed is the trade. A hard money lender can close in days because the underwriting centers on the collateral, not a full financial workup. That helps when a deal is time sensitive or when a borrower cannot document income cleanly enough for a bridge lender.
Rate, Term, and Cost Comparison
Here is the side by side at a glance:
- Rate: both above bank debt, hard money generally above bridge
- Points: bridge generally 1 to 2, hard money generally 2 to 4
- Term: bridge generally 12 to 24 months, hard money generally 6 to 18 months
- Leverage: bridge generally 65 to 80% LTV, hard money generally 60 to 70% LTV
- Underwriting: bridge weighs borrower and plan, hard money weighs the asset
- Closing speed: bridge 10 to 21 days, hard money as fast as 3 to 7 days
When to Choose a Bridge Loan
Pick a bridge loan when you have a credible plan and time to run it. If the property will refinance into agency, SBA, or conventional debt in a year or two, the lower rate and extra leverage of a bridge loan usually save real money over hard money.
Borrowers with experience and reasonable documentation almost always come out ahead on a bridge loan. On a $2M loan, a two point rate difference is $40,000 a year, so the cheaper option matters when the hold runs longer.
When to Choose Hard Money
Reach for hard money when speed beats price. If you need to close in a week to win a distressed purchase at auction, or the property is too rough for a bridge lender to touch, hard money gets the deal done.
It also works when the borrower's file is messy. Complex tax returns, a recent credit event, or a short ownership history can stall a bridge request. Hard money looks past those issues as long as the collateral is strong and the exit is short.
How CapitalAx Structures Both
CapitalAx works with more than 350 lenders across the country, which means we can put bridge and hard money quotes side by side on the same deal. We price both, show you the real cost of each, and recommend the structure that fits your timeline and exit. With loan sizes typically running from $20K to $500M, we place short term debt on everything from a single storefront to a large multifamily repositioning.