Updated October 26, 2026 · 6 minute read
Use a Bridge Loan When the Property Is in Transition
A bridge loan is interest only, usually 12 months or less, and sized on the property's value. It fits when:
- You need to close in days, not weeks
- The property is vacant, needs light work or is not leased yet
- You are buying before you sell another property
- You need cash out quickly to fund another deal
- The property will not appraise for its future value until work is done
Use a DSCR Loan When the Property Is Stabilized
Once the property is leased at market rent, a 30-year DSCR loan is almost always cheaper to hold. The rate is lower, the payment includes principal, and there is no maturity date forcing a refinance in a year. DSCR loans take 2 to 3 weeks to close because of the appraisal and lease review.
Using Both: The BRRRR Sequence
Buy with a bridge or fix and flip loan, renovate, lease the property, then refinance into a DSCR loan on the new appraised value. The refinance pays off the short-term loan and returns your capital for the next purchase. Lining up a DSCR program with no seasoning requirement before you buy keeps the refinance from waiting 6 to 12 months.
Compare on Total Cost
A bridge loan costs more per month but is short. A DSCR loan costs less per month but usually carries a prepayment penalty. If you might sell in the next year or two, a bridge loan with no prepayment penalty can be the cheaper path even at a higher rate.
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