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Bridge Loan Spread Calculator
Bridge loans are typically SOFR + spread with a rate floor. This calculator computes the current all-in rate, stress-tests debt service against an index shock, and shows the increase — the number every bridge borrower should run before closing.
Current all-in rate
8.80%
Rate after stress shock
9.80%
Current monthly payment
$73,333
Current annual debt service
$880,000
Stressed annual debt service
$980,000
Debt service increase at shock
$100,000
How the math works
Bridge loans are almost always floating over SOFR (or prime) plus a spread. Spread + index together = all-in rate, subject to a floor. Stress testing against a 100-200 bps index move is standard pre-close sanity check; if the stressed rate breaks DSCR, buy a rate cap.
Rate cap cost scales with strike and term. Lower cap = more expensive. Always budget cap purchase as part of closing costs on floating-rate deals.
How to Use
- Enter the benchmark index (SOFR or prime).
- Enter the lender spread in bps (typical 250-400 on bank bridge).
- Enter loan amount and rate floor.
- Enter amortization months (0 for interest-only, most common on bridge).
- Enter the stress shock and read current vs stressed debt service.
Frequently Asked Questions
Why floor?
Lenders want minimum yield even if rates crash. Floor rate protects lender economics and is standard on all SOFR-based loans. Floor is usually the rate at closing.
How to hedge?
Buy a rate cap at an index strike that keeps debt service coverage within comfort. Cap cost scales with strike — a 5% SOFR cap is much cheaper than a 3% cap.
Interest-only vs amortizing?
Most bridge is IO for 2-3 years. Amortizing bridge is rare — it crushes cash flow. Check the loan docs.
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