What exit strategies do bridge lenders accept?
Bridge lenders accept 3 exits: a sale supported by comparable sales, a refinance into a permanent loan that you qualify for today, or stabilization, meaning renovation and lease-up that make a refinance possible within the term. Each exit has to be documented at application, and the lender sizes the loan and the term around it.
The three exits
| Exit | What the lender needs to see | Typical term |
|---|---|---|
| Sale | Comparable sales supporting the price, a listing plan, and a margin between the loan and the expected net proceeds | 6 to 12 months |
| Refinance | A permanent loan you qualify for now: projected rent covering the payment, credit, reserves, and seasoning met by maturity | 12 to 24 months |
| Stabilization then refinance | Scope, budget, and timeline for the work; projected rents supported by market data; a permanent loan that fits the stabilized numbers | 18 to 36 months |
Ranges vary by lender.
How lenders test the exit
Sale. The as-completed value comes from an appraisal, and the lender wants the loan to be no more than 65 to 75 percent of it. They also check days on market for the area and whether the price assumes a buyer type that exists in that market.
Refinance. The lender runs the permanent loan's underwriting in advance: what DSCR the projected rent produces at today's rates, whether your credit meets the permanent lender's minimum, whether seasoning will be met by the bridge maturity, and whether the permanent loan amount pays off the bridge. If the projected DSCR is 0.95, the exit is not real.
Stabilization. Everything above plus the plan: who does the work, how long it takes, what it costs, and whether the rent assumptions match comparable leases.
The most common failure
Borrowers plan the exit at maturity instead of at closing. Rates move, appraisers disagree, and rents come in lower than the projection. A bridge loan whose refinance only works if everything goes right is a loan that ends in an extension fee or a forced sale.
Building a resilient exit
- Get a pre-qualification for the permanent loan before the bridge closes.
- Assume the refinance rate is a half point higher than today's.
- Assume the appraisal comes in five percent under your number.
- Ask for a bridge term that is six months longer than the plan.
- Keep a second exit: if the refinance fails, can the property sell at a price that pays off the loan?
How CommFi handles it
Our lending desk prices the bridge loan and the permanent loan on the same application, so the exit is tested before the bridge closes. It funds direct when it fits, and when the exit needs a specific permanent lender, the desk searches a database of 7,000+ lenders and the ones that fit compete for it. Zero upfront fees.
Related reading
Related questions
- What is an exit strategy on a bridge loan?
- The way the loan gets paid off: a sale, a refinance into a permanent loan, or stabilization followed by a refinance. Lenders approve the loan on the exit.
- Do I need to prove my exit before the bridge loan closes?
- Yes. Lenders want comps for a sale or a permanent loan you qualify for today for a refinance.
- What if my exit is a refinance and rates go up?
- The permanent loan payment rises and the coverage ratio falls. Plan the exit at a rate a half point above today's to keep a cushion.
- Can a bridge loan have two exits?
- It should. A refinance as the primary exit with a sale as the backup is the structure lenders prefer.
- How long should the bridge term be relative to the exit?
- Six months longer than the plan. Extensions cost a quarter to a half point each, and a maturity default costs far more.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.