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Bridge Loan vs DSCR Loan

Q: Can I use a bridge loan first and refinance into DSCR later?

Yes, and that sequence is the whole point of running both. A bridge loan buys and stabilizes a property that does not yet qualify for long-term financing. Once it is rented and covering its payment, a DSCR loan refinances it at a long-term rate on a 30-year fixed or a 5, 7 or 10 year ARM. We fund both legs, so the exit is planned at the start rather than hoped for.

Q: What credit score does each one need?

DSCR carries a stated floor; bridge is judged on the deal. Our DSCR program starts at a 640 credit score, because it is long-term paper and credit affects both your rate and your leverage. A bridge loan underwrites the asset, the equity and your exit, so credit carries far less weight and weaker credit can often be offset with lower leverage. Neither one runs a personal income test.

Q: What is the smallest deal either program will do?

Our DSCR program starts at $100K. Below that the fixed costs of closing, title, appraisal and legal start to swamp the loan, which is true at every lender, not just here. Bridge deals are sized to the property and the exit rather than to a published floor, so if you have a small deal that makes sense, the useful move is to call it in rather than assume it is too small.

Q: When should I use a bridge loan instead of a DSCR loan?

Use a bridge loan when the property is not stabilized yet, mid-renovation, being leased up, or awaiting a partner buyout, so it cannot pass DSCR underwriting. Once it is finished and renting, refinance into a DSCR loan for the long-term rate.

Q: Can I roll a bridge loan into a DSCR loan?

Yes, that is the standard exit. The bridge loan carries the property through repositioning, and the DSCR refinance pays it off once the rent covers the long-term payment, often returning equity in the process.

Short-term capital to reposition, then long-term money to hold.

These are usually two steps in the same plan, not an either-or choice. A bridge loan is short-term, interest-only capital to acquire and reposition a property, through renovation, lease-up, or a partner buyout, before it can qualify for permanent financing. A DSCR loan is the long-term takeout once the property is stabilized and renting, qualified on its cash flow.

Bridge Loan

Reposition and stabilize

DSCR Loan

Long-term rental hold

Loan purpose

Reposition before permanent financing

Hold a stabilized rental

Typical term

Short-term, up to 24 to 36 months

30-year amortization

Qualifies on

The asset and the business plan

Property rent vs. payment

Payment type

Usually interest-only

Principal and interest

Rate

Higher, short-term risk

Lower, long-term and stabilized

Best for

Value-add, lease-up, cash-out

Stabilized, rented properties

Bottom line

Use a bridge loan to buy and stabilize a property that cannot qualify for permanent financing yet, then refinance into a DSCR loan once it is rented and cash-flowing. Bridge to reposition, DSCR to hold.

Rates and terms shown are typical figures, subject to underwriting and market conditions. Not a commitment to lend.

Common questions

Can I use a bridge loan first and refinance into DSCR later?

Yes, and that sequence is the whole point of running both. A bridge loan buys and stabilizes a property that does not yet qualify for long-term financing. Once it is rented and covering its payment, a DSCR loan refinances it at a long-term rate on a 30-year fixed or a 5, 7 or 10 year ARM. We fund both legs, so the exit is planned at the start rather than hoped for.

What credit score does each one need?

DSCR carries a stated floor; bridge is judged on the deal. Our DSCR program starts at a 640 credit score, because it is long-term paper and credit affects both your rate and your leverage. A bridge loan underwrites the asset, the equity and your exit, so credit carries far less weight and weaker credit can often be offset with lower leverage. Neither one runs a personal income test.

What is the smallest deal either program will do?

Our DSCR program starts at $100K. Below that the fixed costs of closing, title, appraisal and legal start to swamp the loan, which is true at every lender, not just here. Bridge deals are sized to the property and the exit rather than to a published floor, so if you have a small deal that makes sense, the useful move is to call it in rather than assume it is too small.

When should I use a bridge loan instead of a DSCR loan?

Use a bridge loan when the property is not stabilized yet, mid-renovation, being leased up, or awaiting a partner buyout, so it cannot pass DSCR underwriting. Once it is finished and renting, refinance into a DSCR loan for the long-term rate.

Can I roll a bridge loan into a DSCR loan?

Yes, that is the standard exit. The bridge loan carries the property through repositioning, and the DSCR refinance pays it off once the rent covers the long-term payment, often returning equity in the process.

Related comparisons

DSCR Loan vs Hard Money LoanLong-term rental financing versus short-term project capital.DSCR Loan vs Conventional LoanQualify on the property, or on your personal income.

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