When you’re exploring short-term real estate financing, two common options often come up: bridge loans and hard money loans. While both are used for quick financing and short-term needs, they serve different purposes. Whether you’re a real estate investor, a homebuyer waiting on a sale, or someone facing a tight closing timeline, knowing the difference can help you make the smartest choice for your situation. Here is everything you need to know.

Bridge vs. Hard Money Loans

What Is a Bridge Loan?

A bridge loan is used to “bridge the gap” between selling one property and buying another. It’s a popular option for homeowners who want to purchase a new home before their current home sells. Instead of waiting for the sale, a bridge loan gives them the funds they need to move forward.

Loan Features

• Usually short-term (6–12 months)
• Backed by your current home or real estate equity
• Requires good credit and income verification
• Offered by traditional lenders or banks
• Useful for avoiding contingent offers on new homes

What Is a Hard Money Loan?

A hard money loan is also a short-term loan, but it’s more commonly used for investment properties or fix-and-flip projects. Instead of focusing on the borrower’s credit, lenders look at the property’s value to determine loan approval.

Loan Features

• Terms range from 6–24 months
• Backed by the value of the property itself
• Funded by private lenders rather than banks
• Less emphasis on credit score or income
• Higher interest rates, but faster approval

Main Differences Between Bridge Loans and Hard Money Loans

While both are short-term lending options, here are the main ways they differ:

Purpose

Bridge loans are typically used by homeowners who need temporary financing to purchase a new home before selling their current one. They help “bridge” the financial gap between two real estate transactions. 

Hard money loans, however, are more often used by real estate investors or developers looking to quickly fund projects like fix-and-flips or property renovations.

Lenders

Bridge loans are usually issued by traditional banks or credit unions. These lenders require standard qualifications such as good credit and steady income. 

Hard money loans are funded by private lenders and are more flexible with borrower requirements, making them a popular choice for those who may not qualify for conventional financing.

Approval Criteria

With a bridge loan, approval is based on the borrower’s credit score, income, and the equity in their current property. 

In contrast, Hard money lenders focus primarily on the value of the property being purchased or renovated, placing less weight on the borrower’s credit or financial history.

Interest Rates

Bridge loans often come with lower interest rates since they’re backed by traditional institutions and borrowers with stronger credit profiles. 

Hard money loans usually carry higher interest rates due to the increased risk taken on by private lenders and the speed at which the funds are made available.

Speed

One of the main advantages of hard money loans is how quickly they can be secured, sometimes in just a few days. 

Bridge loans typically take longer to process due to the more thorough vetting required by banks, including appraisals and credit checks.

Contact Mass Hard Money

Choosing the right type of loan doesn’t have to be stressful. At Mass Hard Money, we are here to help guide you through the entire process, whether you’re buying a new home or investing in real estate. We’ll help you compare options, answer your questions, and connect you with the right lenders for your unique situation. Get in touch today to explore flexible financing solutions that work for you. Give us a call at (617) 892-9099.