The Real Estate Encyclopedia
How Does a Bridge Loan Work?
Category - Home Ownership Questions - Building Your Home FAQ's
A Bridge Loan is a short-term loan spanning the period between the termination of one loan such as a construction loan and the beginning of another loan such as a mortgage loan. It could also be the loan between the purchase of a property and its improvement to make it qualify for a permanent loan. A bridge loan can also be used to cover the gap while converting apartments into condominiums.1

At times, a buyer is required to take out a bridge loan to fund the purchase of a new home, if the seller will not accept an offer, which is subject to the sale of the buyer’s home, or if the buyer needs to raise the down payment on a new home before selling his present home.

Home Ownership Questions - Building Your Home FAQ's
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