A Bridge Loan is a short-term loan that can be used temporarily until longer-term financing is obtained. Bridge loans are used to buy another home prior to selling a current home. They are also used to purchase homes at an auction where cash payment is required. A loan to finance a construction project can also be used as a bridge loan, with long-term financing obtained at completion of construction.

Because bridge loans are designed to be a short-term loan and because they usually represent a riskier lending situation to the lender, they typically have higher interest rates and fees.