New investors assume conventional financing is always cheaper and better. It is usually cheaper. It is rarely better for investor properties, especially under time pressure. Here is the real comparison.
The Two Products
Conventional Investment Loan
- 30-year fixed or ARM, full doc underwriting
- Rate: 6.75–7.5%
- Max LTV: 75–80% on purchase
- Requires W-2 or tax returns, DTI-qualified
- Close in 30–45 days
- Max 10 financed properties via Fannie/Freddie
Hard Money / Bridge Loan
- Short-term (6–18 months)
- Rate: 9–11%
- Up to 85% LTC and 100% of rehab
- Asset-based, minimal income docs
- Close in 5–10 days
- No cap on number of properties
When Conventional Wins
- Move-in ready rental, long hold planned
- Strong W-2 borrower with clean tax returns
- Under 10 financed properties in your name
- No time pressure — 30–45 days is fine
- Property qualifies as-is (no major rehab)
When Hard Money Wins
- Auction or distressed deal requiring fast close
- Property needs rehab to qualify for conventional
- Self-employed with complex tax situation
- Already at 10-property conventional cap
- Closing in an LLC (conventional usually requires personal name)
- Competing against cash offers where speed matters
Rate Comparison on a Sample Deal
Property: $275K purchase, 6-month flip.
| Conventional | Bridge | |
|---|---|---|
| Rate | 7.0% | 9.75% |
| Loan amount | $206K (75% LTV) | $233K (85% LTC) |
| 6-month interest | $7,200 | $11,400 |
| Origination | $1,000 flat | $4,660 (2 pts) |
| Close time | 35 days | 7 days |
| Cash needed | $69K + rehab out of pocket | $42K (rehab funded in draws) |
Bridge costs more in pure interest and fees — but requires far less cash, closes fast, and funds the rehab. For most flips, the tradeoff is clearly in favor of bridge.
The Hybrid Play
Experienced investors use both. Buy with bridge for speed and leverage, then refinance into a 30-year fixed (conventional or DSCR) once stabilized. You get the best of both: fast acquisition + long-term cheap debt.
The Mental Model
Bridge/hard money is acquisition tooling. Conventional and DSCR are hold tooling. Use the right tool at the right phase.
Bottom Line
Conventional is cheaper; bridge is faster, more flexible, and funds rehab. Neither is universally better. Match the product to the deal.
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