Bridge Loan Rates & Fees

Bridge loan rates and fees price differently from conforming mortgages because the loan is short, asset-based, and built to close on a borrower’s timeline rather than a bank’s calendar. The headline interest rate is only part of the cost; origination points, broker compensation, processing, draw fees on rehab-style bridges, prepaid interest, and third-party title and escrow costs all stack on top of the note rate to produce the borrower’s actual cost of capital.

This article walks through how bridge loan rates are quoted in California in 2026, what each fee on a typical term sheet pays for, the benchmark indices that bridge pricing references, what a reasonable all-in cost looks like, and how to compare two bridge loan term sheets line by line. It closes with the questions California borrowers ask most often about bridge loan rates and fees.

How Bridge Loan Rates Are Quoted

Bridge loan rates in California currently sit in the high single digits to low double digits, depending on borrower strength, loan-to-value, lien position, property type, and the lender’s source of capital. Most quotes are stated as a fixed interest-only rate for the full term of the loan, with no rate reset. A loan written at 10.5% interest-only for twelve months pays the lender 0.875% of the loan balance every month and pays off the full principal at maturity.

Bridge loan pricing usually quotes as a spread above a benchmark such as the bank prime loan rate, published weekly by the Federal Reserve H.15 Selected Interest Rates release. The spread reflects the loan’s short duration, asset-based underwriting, and the fact that the lender is being paid for speed and flexibility on top of the underlying cost of capital.

Why Bridge Loans Cost More Than Bank Mortgages

Compared to the weekly thirty-year fixed rate in the Freddie Mac Primary Mortgage Market Survey, bridge loans typically run several points higher because the loan is short-dated and the lender is being paid for closing speed and asset risk. A conforming mortgage amortizes over thirty years, is sold into the secondary market, and underwrites to the borrower’s full income and credit profile; a bridge loan does none of that.

Bridge loans are short by design. The Consumer Financial Protection Bureau defines a temporary or bridge loan as one with a term of twelve months or less under Regulation Z, which is why the borrower pays for the asset risk and speed rather than amortizing over decades. The loan is built to be replaced, not held.

Origination Points and Broker Fees

Origination points are the lender’s compensation for putting the loan together. One point equals one percent of the loan amount, charged at closing out of loan proceeds. California bridge loans commonly carry one to three points. If a broker arranged the loan, the broker’s compensation is disclosed separately, usually as an additional one to three points or as a flat fee. Total origination plus broker compensation is the figure the borrower should benchmark across competing term sheets.

Broker-arranged loans in California are governed by the California Department of Real Estate’s broker disclosure framework, which requires the broker to disclose compensation in writing before the loan funds. Reading the broker disclosure carefully and asking about anything that does not line up with the term sheet is how a borrower catches a quietly stacked fee structure.

Processing, Underwriting, and Appraisal

Processing and underwriting fees cover the lender’s internal work to collect documents, run background checks, order the appraisal, and prepare the loan package. They are usually flat-dollar fees, commonly running from a few hundred dollars to roughly $1,500. The appraisal is almost always paid directly by the borrower, separate from loan proceeds; a typical single-family residential appraisal in California runs $500 to $900, more for larger or rural properties.

For a complete walk-through of every line item that can show up on a private real estate loan term sheet, see the related post on Common Fees in Private Real Estate Loans. The fee stack varies somewhat from lender to lender, but the categories are consistent.

Title, Escrow, and Recording

Title insurance, escrow, and county recording are third-party costs that apply on any California real estate loan, private or bank. A California title insurance policy on a typical single-family bridge loan runs in the hundreds to low thousands of dollars depending on loan amount and policy type. Escrow handles the closing mechanics; the county recording fee is the cost of recording the deed of trust against the property.

These costs are not negotiable with the lender because they go to outside parties, but the borrower may have a choice of escrow and title providers. On a refinance, the borrower sometimes gets credit for an existing owner’s title policy that the new lender can re-issue. Asking is worth doing.

Prepaid Interest and Reserves

Most bridge loans charge prepaid interest from the closing date to the end of the closing month, collected out of loan proceeds at funding. On a loan closing on the 18th, that is typically thirteen or fourteen days of interest. Some lenders also collect a small interest reserve at closing, especially on rehab-style bridges, sized to cover several months of payments. The reserve reduces the cash actually available to fund the deal but protects against a missed payment during construction.

The structure matters when comparing two term sheets that look similar on rate but differ on cash-to-close. A loan with a higher rate and no prepaid reserve can produce more usable cash at funding than a lower-rate loan that takes six months of reserve out of proceeds.

Extension Fees and Default-Rate Interest

Bridge loans run on short timelines. When a project or sale runs longer than the original term and the borrower needs more time, the lender charges an extension fee, often half a point to one point per quarter of extension. Some loans build a single extension option into the original term; others require renegotiation at the borrower’s expense.

Default-rate interest is a separate category. Most California bridge loans carry a default rate of five to ten percentage points above the note rate, triggered by a missed payment or by passing the maturity date without payoff. Default rate is not a fee structure the borrower should plan around; it exists to make late payment expensive enough that nobody plans for it.

What a Reasonable All-In Cost Looks Like

Adding up a typical California bridge loan, the all-in cost at closing usually runs roughly three to six percent of the loan amount in fees and points, on top of the interest rate. On a $500,000 twelve-month bridge loan at 10.5% with two origination points, $1,000 in processing fees, $750 in appraisal, $1,800 in title and escrow, $300 in recording, and fifteen days of prepaid interest, the borrower pays approximately $14,200 in closing costs plus interest payments of about $4,375 per month while the loan is outstanding.

That math is the right starting point for any borrower deciding whether the bridge loan is worth doing. The headline interest rate is necessary information; the all-in cost is the only number that actually answers the question.

How to Compare Bridge Loan Term Sheets

Two bridge loan term sheets can quote the same headline rate and still produce materially different all-in costs. The fair comparison is the total of origination plus broker compensation, plus processing and underwriting, plus the lender’s required reserves, plus any prepay or exit fees, plus extension terms if the deal could plausibly run long. Setting all of that side by side in a single spreadsheet, with the note rate included, is the only honest way to compare.

It is also worth asking each lender how they would treat a delayed exit. A lender that quotes a slightly higher rate but offers a built-in three-month extension may be cheaper in practice than a lender that quotes a lower rate but charges a full point for an extension the borrower is likely to need.

Bridge loan rates and fees questions

What is the current interest rate on a bridge loan in California?

In 2026, most California bridge loans price in the high single digits to low double digits depending on borrower strength and loan-to-value. Owner-occupied bridge loans tend to price slightly lower than non-owner-occupied investment bridge loans.

How much are closing costs on a bridge loan?

All-in closing costs typically run three to six percent of the loan amount, including origination points, broker compensation, processing, appraisal, title, escrow, recording, and prepaid interest.

Are bridge loan rates fixed or variable?

Most California bridge loans carry a fixed interest-only rate for the full term of the loan. Variable-rate bridge loans exist but are less common.

Are bridge loan fees tax-deductible?

Interest and points may be deductible depending on the loan’s purpose and the borrower’s tax situation. Bridge loans used for business or investment purposes generally have different tax treatment than loans used to acquire a personal residence. A tax professional should review the specific deal.

Can I negotiate bridge loan rates and fees?

Origination points and broker compensation are usually negotiable on stronger deals or repeat-borrower relationships. Third-party costs are not negotiable with the lender because they go to outside providers. Competing term sheets give the borrower the most leverage.

IMPORTANT NOTE

This article is for general informational purposes only and should not be considered financial, tax, or legal advice. Loan structures, fee schedules, interest rates, and regulations vary by lender and by state. Before entering into a bridge loan or any financing arrangement, you should consult a qualified financial advisor, attorney, and licensed mortgage or lending professional to review your specific situation and objectives.