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Bridge Loans: Unlock the House You're In to Buy the One You Want
A bridge loan turns the equity trapped in your current home into the down payment on your next one — months before the old house sells. It solves the classic move-up trap: you can't buy without selling, you can't sell without somewhere to go, and sale-contingent offers lose in competitive markets. Bridge financing makes you a non-contingent buyer today; the old house pays the loan off when it closes.
How it works, start to finish
- The lender values your current home and lends against its equity — commonly up to 70–80% of value minus what you still owe.
- You buy the new home using bridge funds for the down payment (or the whole purchase), writing an offer with no sale contingency.
- You sell the old house on your own timeline — moved out, staged, and without negotiating from desperation.
- Sale proceeds pay off the bridge, typically 6–12 months in. Many programs accrue interest to payoff, so you carry no double payment in between.
Qualification is refreshingly practical: bridge lenders care about the equity and the exit (a saleable house), not whether your debt-to-income can carry two mortgages forever. Self-employed and asset-qualified borrowers close bridges every week.
What it really costs
Rates run meaningfully above a 30-year mortgage, plus typically 1–2 points in fees. But price it in months, not years: on a $200,000 bridge held for six months, the all-in premium over "imaginary cheap money you can't actually get" is commonly a few thousand dollars. Compare that to what a sale-contingent offer costs you in a competitive market — or what selling first and renting between houses costs in moves, storage, and stress — and the bridge is often the cheapest option that actually works.
Bridge vs. the alternatives
- HELOC: cheaper — if it's opened before you list. Most banks won't open a line on a house that's for sale. Plan ahead and a HELOC can be your bridge; miss the window and the bridge loan exists for exactly this moment.
- Sale contingency: free, but in a multiple-offer situation it's often the difference between winning and losing the house.
- Buy-before-you-sell programs: convenient, but the built-in fees frequently exceed honest bridge pricing. Have a specialist run both numbers.
- For investors: bridge lending also covers acquisition-and-stabilize plays — buy, season the rent, then refinance into a DSCR loan.
Frequently asked questions
How fast can a bridge loan close?
Fast — two to three weeks is common, and some equity-focused programs move quicker. Speed is half the reason the product exists.
Do I make payments during the bridge?
Program-dependent: some are interest-only monthly, others accrue everything to payoff so you carry nothing while holding two homes.
What if my old house doesn't sell in time?
The honest risk. Bridges can often extend (for a fee), and pricing your old home realistically is the real safety valve — discuss the exit plan candidly with your specialist before you close.