Bridge Loan Calculator
Calculate interest-only payments and total cost on a bridge loan from amount, rate, and term.
Covers short-term real estate financing between sale and purchase.
A bridge loan is a short-term financing tool used to “bridge” the gap between buying a new property and selling your existing one. It provides temporary capital when timing doesn’t align — common in real estate transitions and business acquisitions.
Key formulas: Bridge Loan Amount = New Home Purchase Price − Down Payment − Expected Sale Proceeds Monthly Interest = Loan Amount × (Annual Rate ÷ 12) Total Interest Cost = Monthly Interest × Loan Term (months) Total Cost = Origination Fees + Total Interest + Other Closing Costs
What each variable means:
- Bridge Loan Amount — the shortfall between what you need and what you have available before your old home sells. Some lenders also offer bridge loans equal to the equity in the existing home.
- Annual Rate — bridge loans carry higher rates than conventional mortgages, typically 8–12% APR (2024 market). Rates are higher because of short duration and elevated risk.
- Origination Fee — typically 1.5–3% of the loan amount, paid upfront.
- Loan Term — usually 6–12 months maximum. Most bridge loans are interest-only during the term, with the full principal due at maturity.
When bridge loans make sense:
- You need to close on a new home before your old home sells.
- You are buying in a competitive market where contingency offers are rejected.
- Your business needs short-term capital pending a funding round or asset sale.
When they don’t:
- You cannot afford the interest payments if the sale takes longer than expected.
- Your existing home has little equity (bridge loans typically require 20%+ equity).
Worked example: New home price: $650,000. Down payment from savings: $100,000. Old home equity (expected): $280,000 (selling price $420,000, mortgage balance $140,000). You need: $650,000 − $100,000 − $280,000 = $270,000 bridge loan. Rate: 9.5% APR. Term: 9 months. Origination: 2%. Monthly interest = $270,000 × (0.095 ÷ 12) = $2,137.50/month Total interest = $2,137.50 × 9 = $19,238 Origination = $270,000 × 0.02 = $5,400 Total bridge loan cost = ~$24,638 — worth it to avoid losing the dream home, but not a trivial expense.