What drives bridge loan pricing
Five factors drive bridge loan pricing: (1) asset class and submarket fundamentals, (2) leverage point (LTV / LTC), (3) sponsor track record and balance sheet, (4) business plan complexity and timeline, and (5) lender type (debt fund vs. balance-sheet bank vs. life company).
The asset itself is the most important variable. Stabilized or near-stabilized multifamily in primary markets prices tightest, often SOFR + 250 to SOFR + 350. Heavy value-add multifamily or repositioning office in secondary markets prices wider, often SOFR + 450 to SOFR + 600. Specialty asset classes (hospitality, self-storage, land bridge) carry their own pricing curves.
How current pay compares to all-in cost
All-in cost of a bridge loan includes more than the coupon. Origination fees (1-2 points), exit fees (0-1 point), legal fees, interest reserve, and minimum interest periods all add to the effective cost. A 7% coupon with 1.5% origination, 1% exit, and a 12-month minimum interest period can have an effective annualized cost of 9.5%+ depending on the actual hold period.
Sponsors should compare bridge term sheets on all-in cost across the projected hold, not on headline coupon. A 50 bps coupon premium can be worth it if it comes with shorter minimum interest, lower origination, and more flexible prepayment terms.
Frequently asked questions
- What's a typical bridge loan rate in 2026?
- All-in coupons for institutional commercial bridge loans in 2026 typically range from approximately 7% to 11%, depending on asset class, leverage, sponsor, and business plan. Stabilized multifamily prices at the low end of the range; heavy value-add or specialty product prices at the high end.
- How does SOFR affect bridge loan rates?
- Most bridge loans are floating-rate, priced as a spread over SOFR. As SOFR moves, the coupon moves with it. Sponsors can hedge with SOFR caps (typically required by the lender) to limit upside risk.
- Are bridge loan rates negotiable?
- Yes. Spread, origination fees, exit fees, minimum interest periods, and extension fees are all negotiable. The leverage point and asset profile drive the starting point, but the final term sheet typically reflects a meaningful negotiation.
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