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What A Lender Looks For In A Bridge Loan Borrower

Bridge loans are often taken out in order to buy another property while they wait for an existing property to sell. Bridge loans obviously don’t come without a risk, but they’re an excellent way to, as the name implies, bridge the gap between the transition of two or more properties. It’s one of the best strategies to use when approaching lenders for a larger commercial loan, but the criteria to apply for one can often be strict.

In this article, we’ll be talking about what a lender looks for when a borrower approaches them to apply for a bridge loan.

Net Worth

Net worth is one of the most important metrics in determining your eligibility for a bridge loan. In most cases, your loan amount will be equal to your net worth.

Previous Experience

Lenders that offer bridge loans are always looking for experienced individuals. You will likely be asked to demonstrate your previous projects, and this will have an impact on how much money you can borrow.

Cash Reserves

You may be asked to show proof of sufficient cash reserves in order to cover for contingencies. They may also hold back a certain amount of the loan proceeds as an interest rate reserve.


You’ll need to provide sufficient documentation in order to qualify for a bridge loan. This will include a credit report, tax returns and a resume. You’ll also be asked to provide an exit strategy, breakdown of the renovation costs on the property and an executive summary.

Short Loan Terms

Loan terms are often shorter for a bridge loan due to the conditions. Most lenders won’t offer a term longer than 3 years, so it’s important to present a short loan term when you’re applying.

High Loan Amounts

Lenders are usually more interested in larger sums of money. You’ll typically want to start at a minimum of $1,000,000.

Quality of Property

The quality of your property will play a factor in your eligibility for a bridge loan. Some lenders will also look at the DSCR (debt-service coverage ratio) of the completed property. Most lenders will require a ratio of 1.1 – 1.25.

Credit Score

While credit score doesn’t play a big part in commercial bridge loans, lenders do expect you to have a score of 650 or more. However, this isn’t so much for the bridge loan itself, but more for refinancing your bridge loan with permanent financing as an exit strategy.


Broadmark Realty Capital Inc. (NYSE: BRMK) is an internally managed real estate investment trust (“REIT”) offering short-term, first deed of trust loans secured by real estate to fund the acquisition, renovation, rehabilitation or development of residential or commercial properties. The company has originated over $2.2 billion in loans since its formation through a rigorous and responsive underwriting process. Have questions? Contact one our lending experts today.

How To Prepare For A Construction Bridge Loan

Construction bridge loans are a fantastic way to piece together two of your property investments. However, preparing for one can be a confusing and stressful time, especially with all of the other commitments you may have to your current property. To help you get ready for a construction bridge loan, we’ve prepared this simple list of tasks to complete before you apply.

Cash Reserve

Construction bridge loan lenders will typically require you to have sufficient cash reserves to cover certain contingencies. They may also require you to withhold a certain amount of your loan as an interest reserve rate.


You will be required to show a resume or portfolio of past properties that you have worked on. You have a much higher chance of being approved if your planned project is similar in nature to something you have worked on in the past. Your level of experience will have an impact on how much money you can borrow, the cost of originations and the amount of money you’ll be asked to hold in reserve. If you have no experience with the project you’re planning, then there’s virtually no chance of the loan being accepted.

Net Worth

Construction bridge loans typically don’t exceed the net worth of the borrower. When you apply for bridge financing, it’s important to provide financial statements to prove your net worth. The lender will use these documents to determine how much money they’re willing to offer you for a bridge loan. If several individuals are applying, then lenders will determine a collective net worth of all applicants.

Debt Service Coverage Ratio (DSCR)

An important qualifier for a bridge loan is your ability to handle the debt obligation, calculated using the debt service coverage ratio. The ratio measures the net operating income (NOI) of the property. This is calculated from the total gross income from rent, insurance, utilities, maintenance and so on. The NOI must be sufficient to cover the annual carrying costs for the financing. This is usually expressed in ratios such as 1.00, 1.25 and so on. Most lenders will require a ratio of 1.10 to 1.25.

Credit Score

Your credit score itself doesn’t play a huge part in your ability to take out a loan. Instead, it used to verify that refinancing your bridge loan with permanent financing is a viable exit strategy should you fail your project. It’s nowhere near as big of a factor as your net worth or DSCR, but it’s still a requirement to be accepted in the first place.


Interested in a construction bridge loan? Contact Broadmark today to learn about our array of bridge financing options.