A bridge loan to complete a 1031 exchange
Can a bridge loan help me close a 1031 exchange within the deadline?
A 1031 exchange runs on fixed deadlines set by the tax code, not by the lender — miss them and the exchange fails regardless of how good the replacement property is — so the entire value of a bridge loan here is speed, not price.
- Bridge loan A 1031 exchange runs on fixed identification and closing deadlines that do not move for a lender’s timeline, and a bridge loan’s entire value proposition is closing fast enough to hit them.
- A standard DSCR purchase loan on the same timeline expectations as a bridge loan Most DSCR purchase loans in this directory close in 14 to 30 days; a 1031 exchange identification and closing window can be considerably tighter, which is exactly the gap a bridge loan is built to close.
Lenders in the directory
No lender here publishes a rule for this
This is an underwriting judgment, not a published threshold. None of the 37 lenders in the directory states a policy on it, so there is no honest way to build a shortlist — and a list computed only from which products a lender writes would tell you nothing you could act on.
What matters here is how the file is presented rather than which lender receives it. The sections below cover that. When you are ready to approach lenders, the directory shows what each one does publish, with the date it was verified.
Why the deadline, not the rate, is the design constraint
A 1031 exchange requires identifying replacement property within 45 days of selling the relinquished property and closing within 180 days, both fixed by the tax code with essentially no flexibility. A bridge loan exists to close fast enough to hit that window when a long-term DSCR loan’s typical closing timeline would not — see close in ten days and close in five days for how fast this directory’s fastest lenders actually move.
The bridge loan is a temporary answer, not the final one
A 1031 exchange bridge loan is almost always intended to be refinanced into a permanent DSCR loan once the exchange closes and the pressure is off — the bridge buys the speed the exchange deadline demands, and the refinance afterward is where the long-term terms actually get set. Planning the refinance exit before closing the bridge, rather than after, avoids being surprised by what the permanent loan actually requires.
Qualified intermediary coordination adds a layer most purchases do not have
Because 1031 proceeds must pass through a qualified intermediary rather than directly to the buyer, the closing coordination on an exchange purchase has an extra party and an extra set of documents relative to a standard purchase — worth flagging to the lender early so the closing timeline accounts for it rather than discovering the extra step mid-transaction.
What to have ready
- 1031 identification notice showing the replacement property was properly identified within the 45-day window
- Qualified intermediary contact and exchange documentation
- Plan for the permanent refinance once the exchange closes
Questions
Why not just use a standard DSCR loan for the exchange purchase?
What happens after the bridge loan closes?
Does the qualified intermediary complicate the bridge closing?
Terms used on this page
- 1031 Exchange — A 1031 exchange lets an investor sell investment property and reinvest the proceeds into like-kind property while deferring capital gains tax, provided strict identification and closing deadlines are met.
- Hard Money Loan — A hard money loan is short-term real estate financing secured by the property and underwritten mainly on its value, typically from a private lender rather than a bank.