If you currently own a home and are interested in building or purchasing a new one, you might want to consider getting a bridge loan before your current one sells so you can get started on your new construction.

In this article, we’ll answer some questions about bridge loans and new construction financing.

Types of Bridge Loans

There are two types of bridge loans: closed and open. They are different in several ways. A closed bridge loan is a term loan referring to financing with a fixed, predetermined, and planned repayment path.

Can I Use a Bridge Loan to Finance New Construction?

Both builder loans and bridge loans allow an investor to purchase land/property- but cannot be used to finance construction expenses. A new construction loan can be used to build a new structure, but a bridge loan allows investors to purchase land/property later on.

How Do Bridge Loans Work for Construction?

The funds from a bridge loan can be used to cover the mortgage as well as down payments, closing costs, and fees. The loans are usually short-term, with terms of no more than 6 months.

Criteria for a Bridge Loan

The first thing the lender will want to know is how much you need to borrow through your bridge loan. You must be willing to provide the collateral for the loan and to sell the property that you have so the lender can secure the loan.

Even if you’ve had difficulty qualifying for credit in the past, you may still be able to get a bridge loan. Your personal financial life and your chances of being approved differ from one lender to another. You will need to provide your property or another asset to prove that you are creditworthy.

What can Bridge Finance be Used For?

Bridge loans are typically used to fund commercial or residential real estate transactions, developments, auctions, and renovations.

Disadvantages of Bridge Loans

  • Bridge loans may take 18+ months to get approved or denied
  • Future payments may be risky
  • Credit cards/installment loans have higher interest than traditional credit  


If you are interested in learning more about bridge loans and how they can help you, contact Artis Commercial Capital today. We can help you find the financing you need to finance your new construction.