Exit Strategy
Direct definition
A borrower's plan for paying off a short-term or interest-only loan when it comes due.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Common exit strategies include sale of the property, refinancing into a long-term loan, or paying off with a lump sum from another source.
Why it matters
Bridge, balloon, and construction lenders often want to see the exit before they'll approve the loan.
Where you may see it
- Loan application
- Underwriting conditions
- Business plan documentation
A real-world example
Your fix-and-flip exit strategy is to sell within 9 months and pay off the private money loan from sale proceeds.
Educational and illustrative only
A common misunderstanding
An exit strategy isn't just a formality — for short-term financing, lenders often want a credible plan before approving the loan.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026