[Last updated July 1, 2025]
As you consider senior living options for yourself or your loved one, you might run into financial issues while waiting for a permanent funding source, especially if you need to move quickly to receive the care you need. Families can secure quick short-term financing by getting a bridge loan to help cover costs, allowing for a faster move into a care facility. Here, we go over the details of bridge loans, including what they are, common uses, and how they work.
What is a bridge loan?
A bridge loan is a short-term loan that provides quick access to money until a more permanent funding source becomes available. These loans “bridge” the gap between needing funding and obtaining it from a more permanent source, such as while waiting for a home to sell.
Bridge loans are short-term financial solutions, typically lasting between six and 12 months. The purpose of this time frame is to provide families with breathing room while they wait for a home to sell, a long-term care insurance policy to pay out, or government benefits like Medicaid or VA Aid and Attendance to be approved. The short duration reflects the temporary nature of the financial gap they are meant to cover. Interest rates may be higher than those of traditional loans.
When to use a bridge loan
Often, homeowners use bridge loans to buy a new home before selling their current one. Once they sell their previous residence, they use the profit to pay back the loan. Businesses also use bridge loans to cover funding gaps.
People also often use bridge loans when an older adult needs to move into a senior living facility but lacks the upfront funds to do so. The loan can offset immediate costs until another funding source is available, allowing the older adult to move in quickly to receive the care they need without any delay. The cushion can relieve stress during this transition period.
How do bridge loans work?
The application and approval process for bridge loans is often much faster than traditional bank loans, sometimes taking just a few days. According to Rocket Mortgage, “The borrower’s current home is typically used as a form of collateral when taking out a bridge loan.” Interest rates, repayment terms, and duration all may vary based on the lender, the amount, and the borrower’s creditworthiness. Repayment is typically due in six to 12 months.
How to qualify
To qualify for a bridge loan, you’ll need to prove your income, assets, credit score, and overall ability to repay the loan within a short time frame. Different lenders will have different requirements in these areas. They will verify the borrower’s income through W2s, tax returns, and pay stubs and ensure their debt-to-income ratio does not exceed their limits. Most borrowers need a high credit score to qualify for a bridge loan.
Families may apply individually or as co-borrowers with multiple members, which can strengthen the application. Because timing is often critical in senior care situations, some lenders specialize in elder care financing and offer quick decisions, often within 24 to 72 hours.
Pros and cons
Securing a bridge loan can offer flexibility to a family or individual needing immediate financial support for senior living or care. However, there can be some downsides. Let’s take a look at the pros and cons of bridge loans.
Pros
- Provide financial stability and flexibility while waiting for permanent funding to be available.
- Quicker application and approval process than for traditional loans.
- Provide immediate access to cash (sometimes within 24 hours).
- Allow the family to avoid rushing to sell the home while under pressure.
Cons
- Higher interest rates than traditional loans.
- Short repayment schedule.
- May require collateral.
- Risk of accumulation of more debt if there is a delay in the permanent funding source.
How much does a bridge loan cost?
The average cost of a bridge loan depends on several factors, the most obvious being the amount of the loan. Depending on your specific senior care needs, you can receive a loan for $5,000 to $500,000.
There are also closing fees associated with bridge loans. According to LendingTree, “Bridge loan closing costs and fees can run from 1% to 3% of the loan amount. For example, if you get a $200,000 bridge loan, you could pay between $2,000 and $6,000 in closing costs and fees.”
Interest rates can vary depending on the current prime rate, the amount you borrow, and your personal credit score. On average, “bridge loan rates typically range from 6% to 12%, and can vary depending on your loan-to-value (LTV) ratio, loan amount and credit score.”
The ElderLife Bridge Loan
For those looking for financial support while transitioning a loved one to senior living, the ElderLife Bridge Loan can offer immediate relief while you wait for other funds to become accessible. ElderLife can provide $5,000 to $500,000 in as little as 24 hours. Contact ElderLife Financial Services to learn if a bridge loan is right for you and your family.
This information is for educational purposes and is not legal, financial, tax, or investment advice. It should not be substituted for information from professionals authorized to practice in your area. You should always consult a suitably qualified professional regarding your specific situation.
