What is the difference between a construction loan and a bridge loan?

A construction loan funds building a structure from the ground up, disbursed in draws tied to construction milestones, with interest charged only on the amount drawn. A bridge loan funds a short-term gap on an existing property — an acquisition, reposition, or hold until sale or refinance — with interest usually charged on the full principal. Construction builds; bridge spans a gap.

Should I use a construction loan or a bridge loan?

Use a construction loan for ground-up builds or extensive remodels that need staged funding as work progresses. Use a bridge loan when the property already exists and you need fast, short-term capital to acquire or hold it until a defined exit. If you're pouring a foundation, it's a construction loan; if you're spanning time on a standing building, it's a bridge.

Which is cheaper, a construction loan or a bridge loan?

On a draw-heavy build, a construction loan is often cheaper in interest because you pay only on funds drawn as milestones are met, rather than on the full balance. Both price in a similar range at Jaken Finance Group (8.99%–13.5%), so the interest structure — draw-based vs full-principal — usually matters more than the headline rate for total carrying cost.

How long are construction loans vs bridge loans?

Construction loans typically run 12–18 months to match a build timeline, while bridge loans run 12–24 months but are often repaid sooner once the short-term exit event (sale or refinance) occurs. Construction terms are paced by the build; bridge terms are paced by the exit.

What documentation does each loan require?

A construction loan requires a detailed line-item budget, architectural plans, contractor bids, permits, and often environmental reports. A bridge loan needs an appraisal, title report, proof of a viable exit, and basic financials. Construction underwriting is heavier because the lender is funding a build that doesn't exist yet.

Blog

Construction Loan vs Bridge Loan: Which Fits Your Project?

Published July 23, 2026

By Jaken Finance Group · Principal, Jaken Finance Group

Construction loan vs bridge loan compared — draw schedules, terms, leverage, and whether to build ground-up or bridge an existing property in 2026.

Construction loan vs bridge loan comes down to building versus spanning a gap — a construction loan funds ground-up building through milestone draws, charging interest only on what’s drawn, while a bridge loan funds a short-term gap on an existing property with interest on the full principal. Both price similarly at Jaken Finance Group (8.99%–13.5%), so the deciding factor is what the project actually is: pouring a foundation, or holding a standing building until an exit.

Canonical reference: For rates, terms, and a three-product decision matrix, see DSCR vs Hard Money vs Conventional (2026).

Key stats at a glance

Both products’ rate: 8.99%–13.5% interest-only — Jaken Finance Group, 2026
Construction term: 12–18 months · Bridge term: 12–24 months
Construction leverage: up to 100% LTC on as-completed value
Bridge leverage: up to 90% toward purchase
Interest basis: construction = on amount drawn; bridge = on full principal
Construction close: 10–14 business days · Bridge close: 7–10 business days
Funding: construction = milestone draws; bridge = sized to a short-term gap

Complete comparison matrix

Factor	Construction loan	Bridge loan
What it funds	Ground-up build / major remodel	Short-term gap on existing property
Property state	Land or teardown	Standing structure
Typical rate	8.99%–13.5% IO	8.99%–13.5% IO
Interest charged on	Amount drawn	Full principal
Term	12–18 months	12–24 months
Leverage	Up to 100% LTC (as-completed)	Up to 90% purchase
Funding method	Milestone draw schedule	Lump sum to the gap
Draw stages	Many (foundation → finish)	Few or none
Underwriting	Plans, budget, bids, permits	Appraisal, title, exit proof
Close speed	10–14 business days	7–10 business days
Exit	Sale or DSCR refi	Refi, sale, or payoff event
Best use case	New construction, heavy remodel	Acquisition/hold on existing asset

Source: Jaken Finance Group loan parameters, 2026.

The interest-structure difference — dollar impact

A $400,000 project over 12 months at 11%:

Product	How interest accrues	Approx. 12-month interest
Construction (avg 55% drawn over the build)	On amount drawn	~$24,200
Bridge (full principal outstanding)	On full balance	~$44,000

Because a construction loan charges interest only on drawn funds, a phased build carries far less than a bridge holding the full balance. That’s why matching the product to the funding pattern — staged build vs one-time gap — drives real cost, not the rate alone.

Construction loan details

Built for building:

Funds ground-up construction or major remodels in milestone draws
Interest only on drawn amounts — lower interim carry on a phased build
Up to 100% LTC on as-completed value at Jaken
Heavier underwriting: plans, line-item budget, contractor bids, permits
12–18 month term paced to the build; 10–14 business day close

New to building? See ground-up construction loans with no experience, the essential guide to construction loans, and how it compares to a rehab in ground-up construction vs fix and flip.

Bridge loan details

Built for spanning a gap on an existing property:

Funds acquisition, reposition, or a short hold until sale or refinance
Interest on the full principal — sized to a defined gap
Up to 90% toward purchase at Jaken
Lighter underwriting: appraisal, title, exit proof
12–24 month term; 7–10 business day close

See bridge loans for real estate investors and bridge loans vs hard money loans.

Which should you choose?

Follow this decision path:

Are you building from the ground up or gut-remodeling?
- Yes → Construction loan — draw-based funding fits staged work.
- No → Continue.
Is there a standing structure you’re acquiring or holding?
- Yes → Bridge loan — spans the gap to your exit.
- No → Construction loan (land/teardown).
Does your capital need arrive in stages or all at once?
- In stages → Construction (interest only on draws).
- All at once → Bridge.
Do you have plans, permits, and bids ready?
- Yes → Construction is executable now.
- No → A bridge may fit the interim while you assemble the build package.
Holding as a rental after completion?
- Either exits into a DSCR loan once the property is finished and stabilized.

Side-by-side: what each optimizes

Priority	Construction loan	Bridge loan
Funding a ground-up build	✓	Not designed for it
Interest efficiency on phased spend	✓ Draw-based	Full principal
Speed to close	10–14 days	✓ 7–10 days
Acquisition leverage on existing asset	—	✓ Up to 90%
Underwriting simplicity	Heavier	✓ Lighter
Short-term hold to exit	—	✓

Sources

Jaken Finance Group funds both products at 8.99%–13.5% — new construction (up to 100% LTC on as-completed value, 12–18 months, 10–14 business day close) and bridge loans (up to 90% purchase, 12–24 months, 7–10 business day close) for non-owner-occupied investment property.

Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.

Construction Loan vs Bridge Loan: Which Fits Your Project? — next step (2026)

Match the product to the spend pattern: draw-based construction for a staged build, a bridge for a one-time gap on a standing asset — the interest structure decides the real cost.

Submit scenario · Pre-qualify · (833) 264-7776.

Frequently asked questions

What is the difference between a construction loan and a bridge loan?: A construction loan funds building a structure from the ground up, disbursed in draws tied to construction milestones, with interest charged only on the amount drawn. A bridge loan funds a short-term gap on an existing property — an acquisition, reposition, or hold until sale or refinance — with interest usually charged on the full principal. Construction builds; bridge spans a gap.
Should I use a construction loan or a bridge loan?: Use a construction loan for ground-up builds or extensive remodels that need staged funding as work progresses. Use a bridge loan when the property already exists and you need fast, short-term capital to acquire or hold it until a defined exit. If you're pouring a foundation, it's a construction loan; if you're spanning time on a standing building, it's a bridge.
Which is cheaper, a construction loan or a bridge loan?: On a draw-heavy build, a construction loan is often cheaper in interest because you pay only on funds drawn as milestones are met, rather than on the full balance. Both price in a similar range at Jaken Finance Group (8.99%–13.5%), so the interest structure — draw-based vs full-principal — usually matters more than the headline rate for total carrying cost.
How long are construction loans vs bridge loans?: Construction loans typically run 12–18 months to match a build timeline, while bridge loans run 12–24 months but are often repaid sooner once the short-term exit event (sale or refinance) occurs. Construction terms are paced by the build; bridge terms are paced by the exit.
What documentation does each loan require?: A construction loan requires a detailed line-item budget, architectural plans, contractor bids, permits, and often environmental reports. A bridge loan needs an appraisal, title report, proof of a viable exit, and basic financials. Construction underwriting is heavier because the lender is funding a build that doesn't exist yet.

Need financing for your next project?

Talk to a Jaken Finance Group lending specialist about hard money options tailored to your deal.

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Or call (833) 264-7776