Bridge Loan vs Fix and Flip Loan: Key Differences
By Infinity Lending ServicesUpdated March 4, 20266 min read
Quick Answer
Bridge loans and fix and flip loans are both short-term real estate financing options, but they serve different purposes. Fix and flip loans include rehab funding and are designed for renovation projects. Bridge loans provide quick financing between transactions without necessarily including renovation components.
Table of Contents
What Is a Bridge Loan?
A bridge loan is short-term financing that bridges the gap between two transactions. Common uses include:
- Buying a new property before selling an existing one
- Acquiring a property quickly at auction or from a motivated seller
- Refinancing out of a maturing loan while arranging permanent financing
- Purchasing a stabilized investment property with a quick close
Bridge loans typically focus on the property's current value rather than a future renovated value.
What Is a Fix and Flip Loan?
A fix and flip loan is specifically designed for purchasing and renovating investment properties. Key features include:
- Rehab budget financing with draw schedules
- ARV-based loan sizing
- Inspection-based fund releases
- Scope of work review and approval
- Short-term structure (6-18 months)
Side-by-Side Comparison
| Feature | Bridge Loan | Fix and Flip Loan |
|---|---|---|
| Primary purpose | Quick acquisition | Purchase and renovation |
| Rehab funding | Sometimes included | Always included |
| Loan sizing basis | Current value (LTV) | After repair value (ARV) |
| Draw schedule | Rarely | Standard |
| Inspections | Minimal | Required for draws |
| Typical term | 6-12 months | 6-18 months |
| Rate range | 8-12% | 9-13% |
| Scope of work required | No | Yes |
When to Use a Bridge Loan
- You need to close quickly on a property that requires minimal or no renovation
- You are buying before selling your current property
- The property is stabilized and you need time to arrange permanent financing
- You are acquiring a property at auction with a tight closing deadline
When to Use a Fix and Flip Loan
- The property requires significant renovation
- You need financing for both purchase and rehab costs
- Your exit strategy involves selling the renovated property
- You need a structured draw process for rehab fund disbursement
- The loan should be sized based on the property's future value after renovation
Choosing the Right Product
The decision comes down to whether your project involves significant renovation:
- No renovation needed: Bridge loan
- Light renovation: Either product may work
- Heavy renovation: Fix and flip loan
- Unknown scope: Start with a fix and flip loan for maximum flexibility
Related Reading
Key Takeaways
- ✓Fix and flip loans include rehab funding; bridge loans may not
- ✓Bridge loans are best for quick acquisitions between transactions
- ✓Fix and flip loans are designed specifically for renovation projects
- ✓Choose based on whether your project involves significant renovation