What a Bridge Loan Really Costs

Bridge loans are short-term financing that covers the gap between buying your next home and selling your current one. Most charge interest only — you make small monthly payments while you own both properties, then repay the full principal when your old home sells. That makes the monthly carry low, but the real cost is the combination of interest over the bridge term plus origination fees that typically run 1–2% of the loan. Because rates on bridge financing run well above primary mortgage rates, the loan is meant to be held for months, not years. If your current home sells more slowly than planned, the interest keeps compounding against you — which is why most lenders expect a concrete sale timeline before approving one.