Investor bridge loans, not consumer ones
In consumer lending, “bridge loan” can mean a homeowner borrowing against their current house to buy the next one before it sells. That's a different product under different rules, and this calculator doesn't model it.
This page covers the investor version: a short-term loan secured by investment or commercial property that carries a purchase until the borrower sells, leases up or moves to longer-term financing. The lender sizes it on the property as it stands today. There's no renovation budget to hold back, so the whole loan funds at closing.
Federal Truth in Lending rules (Regulation Z) exempt credit extended primarily for a business purpose (12 CFR 1026.3(a)). The CFPB's official interpretation deems credit to acquire, improve or maintain non-owner-occupied rental property to be business purpose (comment 3(a)-4); other loans depend on an analysis of their primary purpose. That's educational background, not legal advice; have counsel confirm how a specific loan is treated.
Sizing on as-is value with no rehab
With the rehab budget at zero, two of the usual limits change character:
- LTARV is off. With no renovation, there's no separate after-repair value to lend against, so the preset turns the limit off and leaves ARV blank.
- LTC becomes loan-to-purchase-price. Total project cost is purchase price plus rehab, so with no rehab the LTC cap is simply a percentage of the price (LTPP). The financed project cost is the price itself: the loan can never exceed what the property costs.
That leaves a two-way test between today's as-is value and today's price. In the example, the 70% As-Is LTV limit gives $945,000 and the 80% LTC limit gives $960,000, so As-Is LTV binds at $945,000. The property is valued $150,000 above its price, but the lower as-is percentage more than offsets that.
Some lenders measure LTV against the lesser of price and value, the definition federal banking guidelines use for loans to buy an existing property. To reproduce that, enter the same percentage for both limits. At 70% on each, this deal's loan drops to $840,000, with LTC binding because the price is the lower number.
Sizing the interest reserve
An interest reserve is part of the loan proceeds set aside at closing to pay interest as it comes due. The calculator takes the reserve as a dollar amount; it doesn't choose one for you. A simple way to size it is months of coverage times the monthly interest:
The example's $47,250.00 reserve is 6 months of interest on the $945,000 maximum loan: $945,000 × 10% ÷ 12 = $7,875.00 a month, × 6 = $47,250.00.
How many months to reserve is a lender decision tied to the business plan: how long a lease-up, sale or refinance should take, and how much of the 18-month term the lender wants covered without relying on the borrower's monthly payments. Here the reserve covers 6 of 18 months.
What the reserve does to cash to close
In this calculator's model, as in the app, the reserve comes out of the loan proceeds at closing. The loan amount doesn't change; the borrower simply receives less of it:
With no rehab, the acquisition advance is the whole $945,000 loan. Withholding the $47,250.00 reserve raises estimated cash to close from $265,950.00 to $313,200.00. In effect the borrower prepays 6 months of interest at closing and the lender holds it.
The reserve isn't added to gross lender revenue. Those payments are already part of the scheduled interest, so counting them again would overstate what the loan earns. The interest reserve guide covers how a reserve behaves under full-balance and funded-balance interest.
Minimum interest on a short hold
A bridge loan can pay off well before its 18-month maturity once the property sells or refinances. Minimum interest sets a floor: the lender earns at least a set number of months of interest whenever the loan repays. The example program has none. Enter 6 months in the calculator and the minimum interest charge reads $47,250.00: 6 × $7,875.00, shown on its own line and not added to the $141,750.00 of scheduled interest.
What a borrower owes at an early payoff depends on the note. LegalClarity (May 16, 2026) describes the premium as the guaranteed months of interest minus the interest already paid. By that method, a payoff after 4 months on this loan would leave $15,750.00 due ($47,250.00 − $31,500.00). That figure is our arithmetic; the calculator shows the minimum charge only and doesn't compute a payoff premium. The minimum interest guide compares it with an exit fee and a prepayment penalty.
Worked example: the default bridge loan
The calculator opens on a $1,200,000 purchase with an as-is value of $1,350,000 and no rehab. The example program allows 70% As-Is LTV and 80% LTC with LTARV off, and prices at 10% with 1 point and a $1,500 lender fee over 18 months, interest on the full balance, with a $47,250.00 interest reserve.
| Limit | Calculation | Cap |
|---|---|---|
| As-Is LTV (binding) | 70% × $1,350,000 | $945,000 |
| LTC (loan-to-purchase-price) | 80% × ($1,200,000 + $0) | $960,000 |
| LTARV | Turned off (no rehab) | Not used |
| Financed project cost | Purchase price, since there's no rehab | $1,200,000 |
| Loan (all funded at closing) | $945,000 |
|---|---|
| Actual As-Is LTV / actual LTC | 70% / 78.75% |
| Points (1% of $945,000) | $9,450.00 |
| Lender fee | $1,500.00 |
| Monthly interest | $7,875.00 |
| Scheduled interest, 18 months | $141,750.00 |
| Interest reserve withheld at closing | $47,250.00 |
| Net proceeds at closing | $886,800.00 |
| Estimated cash required at closing | $313,200.00 |
Cash to close is the $255,000 gap between price and loan, plus $9,450.00 in points, the $1,500.00 fee and the $47,250.00 reserve. Actual LTC equals loan-to-purchase-price here because the project cost is the price. Estimated gross lender revenue is $152,700.00: points, fee and scheduled interest, with the reserve not counted twice.
The interest basis barely matters on a loan like this. Switch to funded-balance interest with a Nov 2, 2026 closing and Actual/365, and total interest over the 547 days to maturity is $141,620.55, a difference of $129.45 from the monthly full-balance figure. With nothing held back, that gap comes from the day-count method alone.
When to use a different tool
- Interest reserves on hard money loans: sizing, effect on cash to close, and reserves under full versus funded interest.
- Hard money interest calculator: monthly payment, per diem and day count without the sizing inputs.
- Loan sizing calculator: As-Is LTV, LTC and LTARV side by side when the deal has a rehab budget.
- Fix and flip loan calculator: holdback and dated draws when part of the loan pays for renovation.
Questions
Is this calculator for a bridge loan to buy a new home before selling my current one?
No. It models short-term, business-purpose loans on investment property, sized on the property's as-is value and purchase price. Consumer bridge loans tied to selling a home work differently and can fall under consumer lending rules.
How much will a lender loan on an investor bridge loan?
The lower of the as-is value cap and the purchase-price cap the program allows, and never more than the price. In the example, 70% of the $1,350,000 as-is value is $945,000 and 80% of the $1,200,000 price is $960,000, so the loan is $945,000.
How do I calculate an interest reserve?
Multiply the monthly interest by the number of months you want covered. On the example $945,000 loan at 10%, monthly interest is $7,875.00, so 6 months is $47,250.00. Enter that dollar amount in the Interest reserve field.
Does an interest reserve increase the loan amount?
Not in this calculator. The reserve is withheld from the proceeds of the same loan, so the loan stays the same and the borrower's estimated cash at closing rises by the reserve amount.
Why is LTARV turned off?
With no renovation, there's no after-repair value separate from today's value. If the deal does include work, enter the rehab budget and ARV and turn LTARV back on, or use the fix and flip loan calculator.
Can I use this for a refinance bridge loan?
Not directly. The calculator and the app size purchase loans, and cash to close is figured from the purchase price. They don't model paying off an existing loan.
Does Dutch vs non-Dutch interest matter on a bridge loan?
Very little when nothing is held back, because the whole loan funds at closing and interest runs on all of it either way. The remaining difference comes from the day-count method.
Sources
- 12 CFR 1026.3, Exempt transactions (Regulation Z), Consumer Financial Protection Bureau
- Official interpretation of 12 CFR 1026.3, comment 3(a)-4, Consumer Financial Protection Bureau
- 12 CFR Part 34, Subpart D, Appendix A: Interagency Guidelines for Real Estate Lending Policies, via Cornell LII
- LegalClarity, minimum interest guarantees and lockout clauses in hard money loans (May 16, 2026)