Bridge Loans vs Hard Money Loans: Which One Fits Your Deal?
Both fund fast and both cost more than a bank. The difference is how the lender underwrites the deal and what you pay to close it.
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 usually run 9 to 12% on an interest-only basis with terms of 12 to 24 months. Leverage lands between 65% and 80% loan-to-value depending on the property and your track record. Most bridge lenders charge 1 to 2 points at closing.
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 10 to 13% plus 2 to 4 points, with terms of 6 to 18 months. Leverage is often lower, 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: bridge 9 to 12%, hard money 10 to 13%
- Points: bridge 1 to 2, hard money 2 to 4
- Term: bridge 12 to 24 months, hard money 6 to 18 months
- Leverage: bridge 65 to 80% LTV, hard money 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, the gap between 10% and 12% 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 a loan range of $20K to $500M, we place short-term debt on everything from a single storefront to a large multifamily repositioning.
Frequently Asked Questions
Is a bridge loan cheaper than hard money?
Usually yes. Bridge loans tend to price 1 to 3 points lower and carry a lower interest rate because the lender underwrites the borrower and the business plan, not just the collateral. If you have reasonable experience and documentation, a bridge loan almost always costs less over a 12 to 24 month hold.
Which one closes faster?
Hard money is the speed leader and can close in 3 to 7 days because the underwriting focuses on the asset. Bridge loans are still fast at 10 to 21 days, far quicker than the 45 to 90 days a bank needs, but they require more borrower documentation up front.
Can I refinance a hard money loan into permanent debt?
Yes, and that is the most common exit. Borrowers use hard money to close quickly, complete the business plan, then refinance into a bank, agency, or SBA loan once the property qualifies. Plan the exit before you take the loan so the short term does not run out first.
What credit score do I need for each?
Bridge lenders often want to see a mid-600s score or better along with a track record. Hard money lenders can work with weaker credit because the property carries the risk, though a lower score usually means fewer points of leverage and a higher rate.