Construction loans provide short-term financing for building or major renovations. They use staged draws, typically require higher down payments and documentation, and often convert to permanent mortgages with a one-time close option.
Construction-to-perm loans combine short-term construction financing with a permanent mortgage. They use draw schedules, interest-only payments during building, and can reference benchmarks like SOFR or the published prime rate. Key choices include single-close vs two-close and when to lock the permanent rate.
A commercial bridge loan is short-term financing used to cover timing gaps before permanent funding - useful for construction, acquisitions, or working capital needs, but typically costlier and riskier than standard loans.