Exactly what a $400,000 bridge costs — including the APR.
No monthly payments does not mean there is nothing to pay. The cost of this loan is charged as points and fees, and under federal Truth in Lending rules those are finance charges. Here is the whole picture in one table.
$400,000 bridge · 6-month term (the maximum) · interest-only, no monthly payments
| Loan amount | $400,000 |
| Term | 6 months (program maximum) |
| Structure | Interest-only · no monthly payments |
| Interest, charged up front as points (4.00% of loan amount) | $16,000 |
| Points deducted at funding — net proceeds to escrow (amount financed) | $384,000 |
| Required monthly payment during the term | $0 |
| Principal paid during the term | $0 |
| Balloon payoff due at sale or month 6, whichever is first | $400,000 |
| Total finance charge | $16,000 |
| Annual Percentage Rate (APR) | 8.19% |
APR computed by the actuarial method on a single $400,000 payment six months after funding against $384,000 advanced. Third-party closing costs (title, escrow, recording, appraisal) are additional and itemized on your Loan Estimate; some of them are also finance charges and would raise the disclosed APR modestly.
Points and fees — including interest collected up front as points — are finance charges under federal Truth in Lending rules. The Annual Percentage Rate (APR) reflects the cost of credit including these charges, even though there is no monthly payment.
Why the APR is 8.19% with no monthly payment
You receive $384,000 and repay $400,000 six months later. That $16,000 is the loan's interest — collected up front as points instead of in monthly payments. Annualized over half a year it is about 8% a year, and the APR states that cost the same way whether the charge is labeled interest or points.
Payoff timing changes the effective APR
| If your home sells and the bridge pays off in… | Effective APR |
|---|---|
| Month 3 | 16.44% |
| Month 6 (full term) | 8.19% |
Same $16,000 fee spread over fewer months is a higher annualized rate. Whether any portion of the points is refundable on early payoff depends on the program.
How to read your own numbers.
Bigger loan, same points
Points are a percentage, so a $600,000 bridge at the same 4.00% costs $24,000 and the APR stays about the same. What changes is whether your equity supports the larger amount.
Six months is the ceiling
The term is capped at six months, so the 8.19% figure is the lowest APR this fee structure produces — an earlier payoff only moves it up, as the table above shows. If your home has not sold by month six, the balloon is due; the listing plan has to respect that from day one.
Compare to the alternative honestly
A traditional interest-only bridge at $3,200 a month for six months is about $19,200 in interest, against this example's $16,000 in points — and it is the payment that breaks DTI. The no-payment structure is not always the cheaper option, and the gap is often narrower than people expect; what it reliably changes is how the loan is treated in qualifying.
Every figure on this page is illustrative and subject to change without notice. Your actual terms, points, fees, and APR are disclosed on a Loan Estimate after application. Not a commitment to lend.
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