How Much Cash Do You Need for a Hard-Money Bridge Loan?

Begin with the bridge and the repayment event

The cash model starts with the reason permanent financing is unavailable or unsuitable today. A bridge period may be needed to complete repairs, resolve title or documentation, lease vacant space, improve operating performance, season ownership or close before a longer-term lender can finish underwriting. Each reason produces a different schedule and a different set of cash uses.

State the bridge as one sentence with four facts:

1. the property condition or transaction constraint that exists at closing;
2. the work or evidence that must change;
3. the sale, refinance or other event expected to repay the loan; and
4. the date by which that repayment must occur.

For the example, an investor acquires a partially vacant mixed-use property for $1,200,000. The plan is to complete $75,000 of immediate repairs and leasing work, improve documented occupancy and refinance into longer-term debt within twelve months. The bridge loan is interest-only and has no construction holdback in this example, so the property-plan cash remains a borrower use.

The bridge loan amount is $660,000, equal to 55% loan-to-value using the $1,200,000 purchase price and supported current value:

$1,200,000 × 55% = $660,000

Faundare Capital's current bridge-program orientation identifies residential and commercial properties, loan sizes from $500,000 to $5 million, terms of 12 to 24 months and typical leverage of 50% to 60% LTV.4 Those ranges provide context, not approval or final proceeds. The lower of the supported value, cost basis, program limit and transaction-specific underwriting result may control.

Put the example's leverage and rate in market context

For preliminary screening, business-purpose private bridge loans are commonly discussed in a broad range of approximately 50% to 70% of current or as-is value. That is a market-orientation range, not a national average or an available amount. The binding limit may be lower, and a renovation facility may also apply purchase-cost, total-cost or after-repair-value constraints. Faundare Capital's current bridge-program orientation is narrower at 50% to 60% LTV, so the example's 55% LTV sits near the middle of that program range.

Recent transaction data place many private bridge coupons near 10%. The National Private Lenders Association's March 2026 sample market report found that nearly three-quarters of observed bridge loans carried rates from 9% to 12%, including 30% between 10% and 11%; median bridge points were 2.4%.5 The example's 11% annual interest rate is therefore a reasonable teaching input within that observed range. It is not a quote. Interest rate alone does not describe total financing cost: origination points, legal and appraisal charges, minimum-interest provisions, draw fees, extension fees, default interest and the actual payoff date can materially change the result.

Separate gross loan amount from net acquisition proceeds

The commitment is not the amount available to buy the property. The closing statement may deduct lender charges, prepaid interest, taxes, legal costs, title charges, escrows or other items from gross proceeds. A loan-funded reserve can also consume part of the commitment instead of increasing acquisition cash.

Begin with purchase equity:

Purchase equity = purchase price − loan proceeds applied to the purchase

The investor has not reduced total equity by paying the deposit. The deposit changes timing: $60,000 left the investor's account before closing, and $480,000 remains due at settlement.

The example assumes a lender fee equal to 2% of the $660,000 commitment, or $13,200, plus $18,000 of appraisal, environmental, title, legal, recording and settlement costs. Actual charges and payment timing depend on the property, jurisdiction and documents.

The closing wire is accurate only for the stated structure. If the lender nets additional items from proceeds, the investor supplies the same amount through a larger wire unless another permitted source replaces it.

Put property-plan cash outside the acquisition column

The business plan begins after settlement. The investor must identify every required use that the loan does not fund and every financed use that must be advanced before reimbursement.

The example sets aside $75,000 for repairs, tenant-ready work, leasing costs and professional expenses. It is treated as borrower-funded cash because the modeled bridge facility applies entirely to the acquisition. If a real commitment includes future advances, the model must identify eligible costs, draw conditions, inspection timing, retainage and the maximum amount the borrower may have paid before reimbursement.

Do not label the entire $75,000 “contingency.” Known work belongs in the base plan. A contingency is a separate allowance for defined uncertainty, and unrestricted liquidity is different again. Combining all three conceals whether the project is underbudgeted or simply has a timing exposure.

The property plan should also identify income expected during the bridge period. The example assumes current collections offset most operating expenses but leave $3,000 per month of net property carry for taxes, insurance, utilities, security, maintenance and vacancy. Twelve months therefore require $36,000.

Model interest from the balance and the payment structure

At 11% annual interest on a constant $660,000 funded balance, monthly interest is:

$660,000 × 11% ÷ 12 = $6,050

Twelve months of modeled interest equals $72,600. The amount changes if the funded balance, rate, day-count convention or payoff date changes.

The same $72,600 can affect cash at different dates under three structures:

The OCC explains that an interest reserve may be funded through the loan budget or by the borrower in a separate account and that its adequacy depends on the period through completion, lease-up, sale or occupancy.2 A reserve does not prove the property can support the debt and should not be counted both as acquisition proceeds and as available interest cash.

This example uses monthly borrower-paid interest. The $72,600 is therefore a planned cash outflow across the hold, not part of the $511,200 closing wire.

Include operating carry and exit costs through payoff

Interest is only one time-dependent cost. The capital schedule must continue through the date loan payoff funds are actually available.

For the twelve-month base case:

The $22,000 exit-cost estimate assumes a refinance. A sale model would instead include brokerage, transfer charges, legal costs, buyer credits and other disposition expenses. Only net proceeds after those costs and the complete bridge payoff are available to the investor.

The exit article develops the refinance and sale tests in detail. For this cash model, the central rule is narrower: do not end the forecast when the repair work finishes or the lease is signed. End it when the payoff arrives.

Retain liquidity after known uses

Known equity, costs and carry are expected to be spent. A liquidity reserve remains available for changes that the base schedule does not already include.

The example retains $66,000, equal to 10% of the modeled $660,000 loan. That amount is an investor planning assumption, not a universal lender requirement or a recommended percentage. Its adequacy depends on property condition, current income, repair certainty, insurance exposure, borrower resources and the reliability of the exit.

Do not count the same $66,000 as both a repair contingency and a maturity reserve. If $25,000 is assigned to probable physical work, only $41,000 remains for other uses. Restricted escrows, undrawn loan proceeds and funds committed to another property are not equivalent to unrestricted cash.

The complete base requirement is now visible:

The investor does not wire $842,800 on closing day. The figure measures all borrower cash already paid, scheduled to be spent or intentionally retained through the modeled exit.

Test lower proceeds before relying on the base case

The modeled loan is not final until value, title, property eligibility, borrower capacity and all approval conditions are resolved. A lower loan amount increases equity, although a percentage-based lender fee may decline slightly.

Assume supported value falls to $1,100,000 while the lender retains the 55% LTV constraint. Maximum proceeds become $605,000:

$1,100,000 × 55% = $605,000

Purchase equity rises from $540,000 to $595,000, a $55,000 increase. The modeled 2% fee falls by $1,100 because it is applied to the smaller commitment. Net of that fee change, the plan needs $53,900 more cash, bringing total controlled cash to $896,700 before any other change.

This is why an investor should not use “55% down” as shorthand. The loan is 55% of supported value, while the purchase equity depends on the relationship among value, price and actual proceeds.

Price the extension without assuming it will be granted

An extension test measures whether the property and borrower can carry the loan beyond the original exit date. It does not create a contractual right to more time.

Assume a three-month delay adds:

• $18,150 of interest: $660,000 × 11% × 3 ÷ 12;
• a $6,600 extension fee, assumed at 1% of principal; and
• $9,000 of additional net operating carry.

The delay therefore consumes $33,750 before any new repair, leasing or refinance cost. If the investor uses the $66,000 liquidity reserve, only $32,250 remains. The extension may also require updated value, financial information, insurance, title, taxes, payment history, principal reduction or other conditions.

Federal banking agencies warn that liberal extensions or renewals can mask credit weakness when a borrower cannot meet reasonable repayment terms.3 The investor's model should treat an extension as a conditional downside case and preserve another repayment path. A maturity date is not an automatic option to continue the loan.

Combine the changes that can occur together

Single-variable tests can understate bridge risk because value, work and time often move together. The following cases use the same base model:

The combined case requires $112,650 more than the base case. It does not assume the liquidity reserve is available twice. The $66,000 reserve is included once in total controlled cash and becomes the first source for unplanned uses; any downside beyond it requires additional verified capital.

Reconcile the model to the documents

Before the deposit becomes nonrefundable or the bridge closes, replace each teaching input with a current source:

1. Use the purchase agreement for price, deposit, credits, deadlines and closing allocations.
2. Use the appraisal and lender sizing worksheet for supported value and binding loan constraints.
3. Use the term sheet, approval and loan documents for gross commitment, net acquisition proceeds, interest basis, fees, reserves, extension conditions and recourse.
4. Use the settlement statement for the final wire and every cost paid outside closing.
5. Use signed scopes, leases, operating statements, tax records, insurance binders and vendor schedules for property-plan cash and monthly carry.
6. Use a refinance or sale schedule that reaches funded payoff before contractual maturity.
7. Verify that unrestricted funds remain after every known use and are available on the date required.

The bridge is financeable only when the investor can fund the entire transition, including a credible delay, without treating conditional proceeds, restricted reserves or an unapproved extension as cash. If the final proceeds, work scope or exit timing changes, revise the capital timeline before relying on the original closing wire.

An investor with a defined property, requested amount, timing and repayment plan can then review Faundare Capital's hard-money bridge program or submit the transaction for review. Program availability and final terms remain subject to complete underwriting and approval.