Updated July 21, 2026
Bridge-to-agency is a two-step financing strategy — close the acquisition fast with a short-term, interest-only bridge loan, execute the renovation or lease-up business plan, then refinance the stabilized asset into permanent Fannie Mae or Freddie Mac agency debt at a lower, longer-term rate.
Bridge loans in this strategy typically run 12–36 months at 65–80% LTV, priced off a floating benchmark rate; once the property is stabilized to agency underwriting standards, the borrower refinances into fixed-rate agency paper, locking in the value created by the business plan at a permanent, lower cost of capital.
This is the standard financing arc for LA's value-add buyer pool — acquire an under-managed or under-renovated building with bridge debt, execute the repositioning, then take out with agency debt once rents and occupancy are where they need to be. Sellers marketing a genuine value-add story should understand this is exactly the financing path their buyer pool is underwriting to.
From the Sterman LA Multifamily Glossary — defined the way a broker actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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