# Bridge Loan Calculator Interest-only cost, origination points, effective annual rate, and the surplus left after the sale. --- - **Canonical URL:** https://dothecalculation.com/calculators/bridge-loan-calculator - **Category:** Real Estate & Property - **Publisher:** Do The Calculation (https://dothecalculation.com) - **Cost:** Free, no account or sign-up required - **Privacy:** Runs entirely in the browser; inputs are never sent to a server - **Methodology:** https://dothecalculation.com/methodology --- ## Bridge Loan Cost, Capacity, and Net Proceeds at Sale Price a bridge against the equity in an unsold home — the interest-only payment, the points, and the effective annual cost once fees are spread over a few months rather than years. - Maximum bridge available against a loan-to-value ceiling - Interest-only payment, origination fee, and total cost - Effective annual cost, which is well above the headline rate ## Quick Answer — How Much Does a Bridge Loan Cost? Bridge loans are **interest-only** on the drawn amount for a short term, usually **6 to 12 months**, with an **origination fee of 1% to 3%** paid up front. Because the fee is spread over months rather than years, the effective cost is well above the quoted rate. • **Maximum Bridge** = (Current Home Value × Max LTV%) − existing mortgage, if it stays in place • **Monthly Interest** = Bridge Amount × (Annual Rate ÷ 12) • **Total Cost** = Interest × Months + Origination Fee + Other Fees • **Effective Annual Cost** = Total Cost ÷ Bridge Amount × (12 ÷ Months) × 100 **Worked example:** a **$620,000** home with a **$285,000** mortgage staying in place, at an **80%** ceiling, gives **$211,000** of capacity. A **$150,000** bridge covers the 20% down payment on a **$750,000** purchase. At **10.5%** the interest-only payment is **$1,312.50** a month. Over **9 months** that is **$11,812.50**, plus a **2%** origination fee of **$3,000** and **$1,500** of other fees — **$16,312.50** total, or **10.88% of the loan**. Annualised, the effective cost is **14.5%**, four points above the headline rate. ## How to Use This Calculator: A $150,000 Bridge on a $620,000 Home Start with the departing home's value and its mortgage balance. The **loan-to-value ceiling applies to all debt against that property**, so if the existing mortgage stays in place the bridge is a second lien and capacity is the ceiling less the mortgage: **$496,000 − $285,000 = $211,000** here. If the bridge instead pays off the existing mortgage, the whole ceiling is available but the bridge has to be that much larger. Enter the new home's price and the down payment you need. **$150,000** covers 20% of a $750,000 purchase, comfortably inside the $211,000 available. Where capacity falls short, the calculator reports the shortfall — and a shortfall is a hard stop, not a negotiating position. The **interest-only payment of $1,312.50** is what you pay monthly while both properties are held. Note that this sits **on top of** the existing mortgage payment and the new home's mortgage payment: for those nine months you are carrying three housing obligations, which is the real cash-flow test of a bridge and the reason lenders underwrite the borrower carefully even when the equity is ample. The **effective annual cost of 14.5%** against a 10.5% headline is the number that gets underestimated. The origination fee and other charges are the same whether the bridge lasts three months or nine, so **a bridge repaid quickly is proportionally more expensive, and one that runs long accrues more interest**. There is no comfortable end of that trade — which is why a bridge should be sized to a specific, credible sale rather than a hopeful one. For an interest-only structure measured in years instead of months, the [interest-only mortgage calculator](/calculators/interest-only-mortgage-calculator) shows the same arithmetic on a longer horizon. ## A Second Example: A Bridge That Pays Off the Existing Mortgage The other common structure replaces the first mortgage rather than sitting behind it. Take a **$430,000** home with a **$190,000** mortgage, a **75%** ceiling, and a **$560,000** purchase needing **20%** down. Because the bridge pays off the existing mortgage, the full ceiling of **$322,500** is available and the bridge needs **$302,000** — **$112,000** for the down payment plus **$190,000** to retire the mortgage. That fits, with **$20,500** to spare. The cost is proportionally larger. At **11.5%** the interest-only payment is **$2,894.17** a month, totalling **$17,365** over **6 months**, plus a **$6,040** origination fee and **$1,200** of other fees — **$24,605**, or **8.15% of the loan**. Annualised that is **16.29%**, higher than the first example despite similar terms, purely because the fees are spread over six months instead of nine. The compensation is cash flow: the old mortgage payment disappears, so during the bridge period you carry the bridge interest and the new mortgage rather than three payments. When the home sells at **$430,000** with **7%** selling costs, net proceeds are **$399,900**, the bridge is repaid, and **$73,295** remains. **The surplus is what matters**: it is the buffer if the sale price disappoints, and if it is thin the bridge was sized too aggressively. ## When a Bridge Loan Is Worth It **The case for a bridge is timing, not price.** It is always more expensive than a conventional mortgage — that is not the comparison. The comparison is against the alternatives: a sale contingency that a seller in a competitive market will reject, moving twice with storage in between, or losing a property you wanted. If a bridge secures a house you would otherwise not get, $16,000 is a defensible price on a $750,000 purchase. If it merely saves you the inconvenience of a rental, it is not. **Investors use bridges differently.** For a flip or a BRRRR acquisition, a bridge or hard-money loan funds a purchase that conventional lenders will not touch — a property in poor condition, or a closing that has to happen in ten days. There the cost is a line item in the deal's underwriting, and the [house flipping calculator](/calculators/house-flipping-calculator) and the [BRRRR calculator](/calculators/brrrr-calculator) both need it entered as a holding cost. It is also the financing an end buyer typically uses on a wholesale contract, which is why the [maximum allowable offer calculator](/calculators/maximum-allowable-offer-calculator) leaves them a margin large enough to absorb it. **The risk is entirely on the sale.** A bridge assumes the departing home sells within the term at roughly the price you expect. If it does not, you face an extension fee, a higher rate, or a forced price reduction with the loan clock running. Bridge lenders generally underwrite the equity rather than the timeline, which means the timeline risk stays with you. **Consider the cheaper alternatives first.** A [HELOC](/calculators/home-equity-line-of-credit-heloc-calculator) opened *before* the home is listed is usually far cheaper than a bridge and can serve the same purpose, though most lenders will not open one on a property already on the market. A [second mortgage](/calculators/second-mortgage-calculator) can do the same at a lower rate if the timeline allows. Both need arranging in advance, which is the practical reason bridges get used: they are the option that remains once the offer is already on the table. ## Limitations This calculator assumes interest is paid monthly rather than accrued and settled at payoff, which some bridge lenders prefer — an accrued structure removes the monthly payment but increases the balance due at sale. It also assumes a single fixed rate with no extension, where extension fees and rate step-ups are common and are precisely what a delayed sale triggers. The costs shown are therefore a best case on the timeline you enter. The maximum bridge figure is a loan-to-value calculation on the value you supply. Lenders will use their own valuation, will underwrite your ability to carry all obligations simultaneously, and may apply tighter ceilings than the ones typically quoted. Capacity in this model is not an approval, and a bridge is one of the products where lender appetite varies most. Net sale proceeds assume the departing home sells at the value entered, with selling costs as a flat percentage. Both are estimates, and the whole structure depends on them: a sale 10% below expectation on a $430,000 home removes $43,000 from a surplus that may only be $73,295. Nothing here models capital gains treatment, prorated property taxes at closing, repairs demanded during the sale, or carrying costs on the departing property while it sits. This is a general educational tool, not lending advice — get written terms including extension provisions and consult a qualified professional. ## Related Calculators Check the cheaper alternatives first: a [HELOC](/calculators/home-equity-line-of-credit-heloc-calculator) or a [Second Mortgage Calculator](/calculators/second-mortgage-calculator) run before the home is listed usually beats a bridge on cost, though both need arranging in advance. The [Home Equity Calculator](/calculators/home-equity-calculator) shows the position the bridge is secured against. For investor use, the [House Flipping Calculator](/calculators/house-flipping-calculator) and the [BRRRR Calculator](/calculators/brrrr-calculator) need the bridge cost entered as a holding cost, and the [Maximum Allowable Offer Calculator](/calculators/maximum-allowable-offer-calculator) prices the acquisition it funds. The [Interest-Only Mortgage Calculator](/calculators/interest-only-mortgage-calculator) shows the same interest-only arithmetic over years rather than months. ## Frequently asked questions ### How much does a bridge loan cost? Interest-only payments plus an origination fee of roughly 1% to 3%. On a $150,000 bridge at 10.5% for nine months with a 2% fee and $1,500 of other costs, the total is $16,312.50 — 10.88% of the loan, or an effective 14.5% annualised. ### How is a bridge loan payment calculated? Bridge loans are interest-only, so the payment is the balance times the annual rate divided by twelve. A $150,000 bridge at 10.5% is $1,312.50 a month, with the principal repaid in full when the departing home sells. ### How much can I borrow on a bridge loan? Against a loan-to-value ceiling on the departing home, typically 75% to 80% including any mortgage that stays in place. A $620,000 home with a $285,000 mortgage at an 80% ceiling gives $211,000 of capacity; if the bridge instead pays off that mortgage, the full $496,000 ceiling applies. ### Why is the effective cost higher than the interest rate? Because the origination fee is the same whether the loan lasts three months or nine, so annualising it inflates the cost. A 10.5% bridge with a 2% fee over nine months costs an effective 14.5% a year; the same structure over six months costs more still. ### How long is a bridge loan term? Usually 6 to 12 months, often with an extension option at additional cost. The term should be set against a credible sale timeline rather than an optimistic one, because an extension fee plus continued interest is exactly what a slow sale produces. ### Do I make three housing payments during a bridge? If the existing mortgage stays in place, yes — the old mortgage, the bridge interest, and the new home's mortgage. A bridge that pays off the existing mortgage removes one of the three at the cost of a larger bridge, which is the main reason to choose that structure. ### Is a HELOC cheaper than a bridge loan? Usually, sometimes by several points, but timing gets in the way. Most lenders will not open a HELOC on a home already listed for sale, so it has to be arranged before the property goes on the market. That is the practical reason bridges get used at all. ### What happens if my house does not sell in time? You face an extension fee, a higher rate, or a price reduction with the loan clock running. Bridge lenders underwrite the equity rather than the timeline, which means the timeline risk stays with you — and it is why the surplus left after repayment matters more than the headline rate. ## Related concepts - **Effective Annual Cost** — Total cost annualised over the actual term. Front-loaded fees make short bridges disproportionately expensive. - **Bridge Capacity** — The loan-to-value ceiling on the departing home, less any mortgage that stays in place. A shortfall here is a hard stop. - **Surplus After Repayment** — What is left from the sale once selling costs, the bridge, and its fees are met. The buffer if the sale price disappoints. ## Related guides - [House Flipping Guide: How to Calculate ARV, 70% Rule, and Profit Margin](https://dothecalculation.com/blog/property/house-flipping-guide) — Underwrite house flips with professional precision. Learn how to calculate after-repair value (ARV), maximum allowable offer (MAO), repair contingency, and financing drag. - [Loan Payment Guide: Formula, Interest, and Total Cost](https://dothecalculation.com/blog/finance/loan-payment-guide) — Learn how fixed loan payments are calculated, why term length changes total interest, and how the DTC loan calculator matches amortization math. ## Related calculators - [Construction Loan Calculator](https://dothecalculation.com/calculators/construction-loan-calculator) — Interest on the drawn balance month by month, the interest reserve, and the permanent payment after conversion. - [HELOC Payment & Draw Calculator](https://dothecalculation.com/calculators/home-equity-line-of-credit-heloc-calculator) — Simulate variable-rate HELOC payments, including interest-only draw period payments and later principal-and-interest repayment schedules. - [Mortgage Discount Points Break-Even Calculator](https://dothecalculation.com/calculators/mortgage-points-break-even-calculator) — Calculate the break-even timeline and total interest savings from paying upfront mortgage discount points to buy down your interest rate. - [Property Management Fee Calculator](https://dothecalculation.com/calculators/property-management-fee-calculator) — Add leasing, renewal, markup and flat fees to the headline rate for the effective cost of management. - [Biweekly Mortgage Payment & Payoff Accelerator](https://dothecalculation.com/calculators/biweekly-mortgage-payoff-calculator) — Compare biweekly versus monthly mortgage payment schedules to calculate how much faster you pay off your loan and total interest saved. - [Cash-on-Cash Return Calculator](https://dothecalculation.com/calculators/cash-on-cash-return-calculator) — Annual pre-tax cash flow over cash invested, shown next to cap rate and debt service coverage ratio. --- _This calculator assumes interest is paid monthly rather than accrued to payoff, and a single fixed rate with no extension — where extension fees and rate step-ups are common and are exactly what a delayed sale triggers, so the costs shown are a best case on the timeline entered. The maximum bridge is a loan-to-value calculation on the value you supply, not an approval; lenders use their own valuation and underwrite your ability to carry all obligations at once. Net proceeds assume the departing home sells at the value entered with flat-percentage selling costs, and exclude capital gains treatment, prorated taxes, repairs demanded during the sale, and carrying costs. This is a general educational tool, not lending advice._ --- _Source: [Do The Calculation](https://dothecalculation.com/calculators/bridge-loan-calculator). Quote freely with attribution and a link to this page._