A bridge loan is short-term, interest-only financing used to close on a new property before an existing one sells — no principal is paid down during the term.
How it works
Interest accrues monthly on the full loan amount for as long as it’s held, since no principal is repaid until the lump-sum payoff. Adding the origination fee gives the total cost of the bridge.
What this does not include
This doesn’t include extension fees if the existing property takes longer to sell than planned — bridge loans are typically priced for a specific short window, and going over it often triggers additional costs this calculator doesn’t model.
How to use this calculator
- Enter the loan amount, annual rate, and expected months held.
- Enter the origination fee percentage, if any.
A worked example
A $200,000 bridge loan at 9% annual rate, held 4 months, with a 2% origination fee: interest cost = $6,000, origination fee = $4,000, total cost = $10,000.
What the variables mean
| Variable | Meaning |
|---|---|
| Loan amount | Bridge loan principal |
| Annual rate | Interest rate, annualized |
| Months held | Expected duration of the loan |
| Origination fee % | Upfront fee charged as a percentage of the loan amount |
Edge cases worth knowing
Bridge loans are priced for short holding periods, so the origination fee often outweighs the interest cost. In the example above, the flat 2% origination fee ($4,000) is smaller than but comparable to just 4 months of interest ($6,000) — a much larger share than an origination fee typically represents on a long-term mortgage.
Zero months held makes the calculation meaningless, so the calculator declines to show a result for that input.
Frequently asked questions
Why is a bridge loan interest-only?
Because it’s meant to be short-lived — the full principal is expected to be repaid in one lump sum when the existing property sells, so there’s no amortization schedule to build.
Are bridge loan rates higher than a standard mortgage?
Typically yes, reflecting the short term and the lender’s risk if the existing property takes longer to sell than expected.
What happens if the property doesn’t sell in time?
Terms vary by lender — some bridge loans allow an extension (often at additional cost), while others may require refinancing into a different loan type.
