Real estate opportunities rarely wait. According to the Federal Reserve, commercial real estate loan growth slowed to just 1.6% in 2024, the lowest pace since 2012. That kind of slowdown leaves investors competing for fewer financing options, while deal timelines remain as aggressive as ever. Conventional funding often can’t keep up, creating a gap between the speed at which opportunities appear and the pace at which capital becomes available.
Bridge loans and HELOCs (Home Equity Line of Credit) have emerged as two popular options to close that gap, but each serves a distinct purpose, depending on your strategy, property type, and timeline.
Understanding their differences is crucial for making the right financing decision when timing is critical.
What Is a Bridge Loan?
A bridge loan is a short-term financing option that gives real estate investors speed and flexibility when timing is critical. Instead of waiting months for traditional financing to clear, investors can access capital quickly to close on opportunities, cover equity gaps, or reposition assets for long-term growth.
In commercial real estate, bridge loans are often used to:
- Acquire properties before permanent financing is arranged
- Renovate or stabilize income-producing assets for refinancing
- Move fast on distressed or off-market deals
- Fund expansion while unlocking trapped equity in another property
The defining feature is its temporary nature. A bridge loan isn’t meant to hold forever. It’s structured to provide you with the immediate capital needed to act decisively, then transition into permanent financing once the conditions align.
What Is a HELOC Loan?
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by the equity in a residential property. Unlike a lump-sum loan, a HELOC functions more like a credit card. You can draw funds as needed, repay, and borrow again during the draw period. This flexibility makes it attractive for borrowers who want ongoing access to capital rather than a one-time payout.
Some common uses of HELOC funds include:
- Covering renovation or improvement costs
- Managing ongoing property expenses
- Bridging small cash flow gaps
- Consolidating higher-interest debt
For commercial real estate investors, a HELOC can provide convenient liquidity for short-term needs. However, since it’s tied to personal property, repayment challenges could place your home at risk, a tradeoff worth weighing carefully against other financing solutions.
Major Differences between Bridge Loans and HELOCs
When comparing financing options, context matters just as much as cost. Investors and property owners weigh not only how quickly they can access funds, but also the repayment structure, the collateral involved, and how each option aligns with their broader financial strategy. Understanding these distinctions helps clarify which path best supports both immediate goals and long-term plans.
| Feature | Bridge Loan | HELOC |
| Purpose | Short-term financing for acquisitions, transitions, or urgent capital needs | Flexible, revolving credit line for ongoing expenses or improvements |
| Funding Speed | Often closes within weeks, sometimes days | Typically requires longer underwriting, several weeks to close |
| Collateral Use | Usually tied to the property being purchased or another owned property | Secured by the equity in an existing home or property |
| Flexibility of Draws | Lump-sum disbursement at closing | Borrow as needed, up to a credit limit |
| Loan Renewal Options | Rare; intended as temporary financing | Can be renewed or extended depending on lender policy |
| Exit Strategy | Can be repaid through sale, refinance, or permanent loan | No set “exit”. Balance can remain open until the term ends |
1. Length of the Term
One of the clearest differences between bridge loans and HELOCs lies in the duration of the financing.
Bridge loans are short-lived, often ranging from six months to three years. They’re built for situations where speed and flexibility matter more than duration.
HELOCs, on the other hand, provide much longer access to funds. Borrowers typically have a draw period of 5 to 10 years, followed by a repayment period that can stretch another 10 to 20 years. This makes a HELOC a revolving credit option for ongoing needs, while a bridge loan serves as a quick solution to cover an immediate gap.
2. Interest Rates
Rates are a crucial point of comparison between the two financing options. HELOCs typically come with variable rates that fluctuate in line with market conditions. This means your borrowing costs can fluctuate depending on broader economic factors such as the federal funds rate.
Bridge loans often carry higher rates than HELOCs. Lenders price them this way because the terms are short, and the risk of repayment hinges on securing permanent financing. For investors, this trade-off is less about rate stability and more about accessing fast capital when timing matters most.
3. Repayment Structure and Timing
Repayment on bridge loans and HELOCs follows very different timelines and patterns, and understanding these differences is essential when planning your exit strategy and cash flow.
A HELOC allows interest-only payments during the draw period, followed by a longer amortization schedule once repayment begins. This structure gives borrowers long-term flexibility, but it also extends the overall financial commitment. Because it functions as a revolving line of credit, you can borrow, repay, and borrow again within the set limit until the draw period ends.
Bridge loans, in contrast, operate on shorter timelines and require more precise execution. Depending on the lender and the structure, repayment may involve monthly interest-only payments, a balloon payment at maturity, or rolling directly into permanent financing once secured. These loans support conventional needs, which means repayment schedules are tailored around the investor’s exit plan, such as selling the property, refinancing, or securing long-term financing. Proper timing is critical, as delays can lead to unexpected cash flow pressure.
Bridge Loan vs. HELOC: When Does Each Option Work Best
The right choice often depends on how quickly you need funds and how you plan to use them.
Bridge Loan Scenarios
- Securing a commercial property that requires a fast closing.
- Covering the down payment on a new home before the old one sells.
- Financing a short-term value-add project while waiting on permanent funding.
HELOC Scenarios
- Renovating office or retail space in phases over time.
- Maintaining flexible funds for upgrades across rental properties.
- Accessing ongoing capital for business expenses without reapplying for new loans.
Bridge the Gap Between Opportunity and Funding With Bluestone
Choosing between a bridge loan and a HELOC depends on your timeline, your project goals, and how you plan to use the funds. At Bluestone Commercial Capital, we specialize in providing real estate investors and business owners with lending options that move as fast as your opportunities.
Here’s what we can offer:
- Bridge loans for rapid property acquisitions and time-sensitive deals
- Fix-and-flip financing tailored to short-term projects
- Flexible terms that align with your investment strategy
- A responsive team that understands the pace of real estate
Let’s talk about your next project. Contact Bluestone today for a tailored quote and discover financing that keeps you ahead of the curve.
FAQs
- Is a bridge loan better than a HELOC for real estate investors?
A bridge loan is usually better when you need fast, short-term capital to secure a property or close a deal. A HELOC is better for ongoing access to funds tied to your home equity. - How fast can you get approved for a bridge loan compared to a HELOC?
Bridge loans can often close in days or weeks, whereas HELOCs typically take several weeks due to more extensive underwriting requirements. - What are the risks of using a HELOC instead of a bridge loan?
HELOCs are secured by your personal residence, meaning repayment issues could put your home at risk. Bridge loans, although more expensive, typically require collateral to be tied to the investment property. - Do bridge loans have higher interest rates than HELOCs?
Yes. Bridge loans usually carry higher interest rates because they are short-term and higher risk. HELOCs often offer lower, variable rates that fluctuate with market conditions. - When should an investor choose a bridge loan over a HELOC?
Choose a bridge loan if speed and timing are critical, like buying before your property sells or seizing a distressed deal. A HELOC is more useful for phased renovations or ongoing expenses.