When you’re trying to buy a home for the first time, you will probably hear about FHA loans and conventional loans. FHA first-time home-buyer loans are a great way to buy your first house, even if you don’t have perfect credit or enough money to furnish a large down payment (or any down payment at all in some cases).
Typically banks are skittish about loaning to people whom they perceive as posing a high risk—like first-time buyers in these situations. Nonetheless, even getting an FHA loan can be a challenge. The alternative to FHA loans are conventional loans.
A bridge loan, also known as a swing loan or a caveat loan, is a type of loan which is taken out for a short time frame and is used as a “bridge” to more substantial and permanent financing.
Bridge loans can be used on all types of projects and also on real estate purchases. A lot of people confuse bridge loans with hard money loans.
They do overlap, but they aren’t the same thing. Bridge loans are short-term hard money loans which are used for a specific purpose—allowing you to complete a purchase or another project while long term funding is still pending.