Bridge Loan Eligibility Requirements: Are You a Qualified Borrower?

Bridge loans serve a unique and specific purpose in the world of real estate investing: to bridge the gap between an immediate need for cash and the time it takes for the borrower to secure permanent financing.

This convenient, short-term solution is a key tool in an investor’s career, allowing them to make the fast decisions they need to secure their next property.

To unlock access to this valuable source of financing, investors must be able to meet the lender’s requirements.

Let’s take a look at the bridge loan eligibility requirements to determine whether you are a qualified borrower.

What is a bridge loan?

Bridge loans are designed to be short-term, and typically offer investors 12, 18, or 24-month terms.

This short period is meant to allow the borrower to acquire the property they desire and find a permanent source of financing, whether it be through the sale of another property or a different type of financing.

One of the defining features of a bridge loan is the closing speed. Park Place Finance is typically able to close on bridge loans in as fast as three to five days.

Closing speed is crucial in scenarios where investors need to act quickly, such as when acquiring a property at an auction or taking advantage of time-sensitive investment opportunities.

Bridge loans are most commonly available from hard money lenders, who can provide a more flexible approach to eligibility criteria that focuses on the value of the property.

What types of borrower scenarios are ideal for a bridge loan?

Bridge loans are helpful in various scenarios where other sources of financing are not practical or timely enough.

Let’s take a look at some of the most common hard money bridge loan examples.

Quick decisions

Opportunities that require a fast response, such as time-limited sales or distressed properties, are well-suited for bridge loans.

Investors can take advantage of these options without waiting for the longer approval and closing processes of other types of loans.

Then, they can secure a long-term loan once they have purchased the property with the bridge loan.

Auction purchases

Investors participating in property auctions often need immediate financing to secure the winning bid.

A bridge loan can provide the necessary funds quickly, giving the investor the freedom to participate in competitive auctions to find their next investment opportunity.

Cash offers

Cash offers have a major advantage in competitive real estate markets.

Investors who want to make a quick cash offer on a desirable property can use a bridge loan to secure the property before securing long-term financing.

Simultaneous buy-sell transactions

One of the most popular bridge loan scenarios is to purchase a new property while you wait to sell one of your current investments.

Investors can use a bridge loan to “bridge” the financing gap between the purchase and sale of the two properties. Once the sale is complete, the investor can repay the bridge loan with the profits.

Bridge loan eligibility requirements: How to qualify for a loan

If you think a bridge loan makes sense for your unique scenario, let’s discuss what you need to do to qualify.

While every lender will have different eligibility requirements, here is what you can expect from Park Place Finance:

• Eligible loan types: Purchase, refinance, and cash-out refinance (investment properties only)
• Term lengths: 12-24 months
• Minimum credit score: 660
• Loan amounts: $100,000 to $2,500,000
• Payment options: Monthly, interest-only, no prepayment penalty
• Loan to purchase (LTP): Up to 75%
• Refinance loan to value (LTV): Up to 75%
• Cash-out refinance LTV: Up to 65%
• Property types: Single-family, multi-family (5+ units), duplexes, triplexes, quadplexes, condominiums, and townhomes

We can close in three to five days to help you move quickly on your next investment property.

Documentation requirements

We underwrite primarily to the value of the property and do not require tax returns, income verification, or your debt ratio to qualify.

Here are the main items you’ll need to gather for us:

• Purchase contract (if applicable)
• The previous two bank statements
• Driver’s license
• Property insurance
• LLC/entity documents (if applicable)

How does a bridge loan differ from other types of hard money loans?

In addition to bridge loans, Park Place Finance offers the following loan products:

• Fix-and-flip loans
• DSCR loans
• Ground-up construction loans

Bridge loans are best suited for purchasing rent-ready homes.

If you’re looking to finance a property that needs renovations before being rent-ready or sold, our fix-and-flip loan may be better suited for your situation.

Fix-and-flip loans and construction loans are short-term solutions that allow you to purchase, renovate, or build your next property, respectively.

Renovations permitted with a bridge loan will vary depending on your lender. Park Place Finance, for example, does not allow for renovations with a bridge loan.

Once you have accomplished your purchase, renovation, or building with one of these loans, you can convert your loan to a long-term, fixed DSCR loan that is structured for rental properties.

What is the bridge loan application process?

Here are the general steps you can expect to take during the bridge loan process:

1. Reach out to Park Place Finance when you find your next property
2. Define your exit strategy
3. Lender will order appraisal and run credit report
4. Submit the required documentation
5. Close in 3-5 days

You will work with a dedicated Account Executive throughout the loan process, and even after the deal has been funded we can support you with your next property.

Are you a qualified borrower? Talk to Park Place Finance

Park Place Finance is here to be your investing partner. We pride ourselves on providing investors with a personalized, efficient lending experience.

We have over $1 billion in loans funded nationwide from 17 years in business, and we can’t wait to help you fund your next project!

If you’re ready to take the next steps, provide us with some information about your purchase or give us a call at (866) 407-1599 to speak with an Account Executive now.