How It Works
A bridge loan is short-term financing (typically 6–12 months) secured by your current home, used to provide cash for the down payment on your next home before your current home sells. It "bridges" the timing gap between buying and selling, so you can make a non-contingent offer on the new home, move at your own pace, and skip the stress of synchronizing two closings on the same day.
Bridge loans come in two main structures. The first is a stand-alone bridge that pays off when your old home sells — interest-only payments, balloon at sale. The second is a wrap-around structure where the bridge loan pays off both your existing mortgage and provides additional cash for the new down payment, then you make one combined payment until the old home sells. Some lenders also offer a HELOC-as-bridge, where a home equity line on your departing residence funds the new purchase.
Pricing is typically 1.5%–3% above standard mortgage rates, with origination fees of 1.5%–2%. The lender qualifies you on your ability to carry both housing payments if needed, though many bridge programs offer reduced documentation given the short term. Bridge loans are most common in fast-moving markets where sellers won't accept home-sale contingencies, or for move-up buyers who don't want to risk losing their dream home while waiting for their current home to sell.
Who Is This For?
- Move-up buyers in competitive markets where contingencies kill offers
- Homeowners who need their current home's equity for the new down payment
- Buyers relocating for work who can't time two closings perfectly
- Sellers wanting to vacate and stage their home for a stronger sale
- Buyers who found their dream home before listing their current one
Pros & Cons
Frequently Asked Questions
How long can I have a bridge loan?+
Most bridge loans run 6–12 months. Some lenders offer 12-month or 18-month terms with extension options. The expectation is that your current home sells and pays off the bridge within that window.
What happens if my old home doesn't sell?+
If your home doesn't sell within the bridge term, you typically have to refinance to a standard mortgage, pay off the balance, or sometimes negotiate an extension with the lender. This is why bridge loans require strong income or reserves to qualify.
How fast can a bridge loan close?+
Bridge loans often close in 2–3 weeks, much faster than traditional mortgages, since the underwriting is streamlined and based on the equity in your current home. This makes them ideal for time-sensitive move-up scenarios.
Are bridge loans expensive?+
Yes. Expect interest rates 1.5%–3% above standard mortgage rates and origination fees of 1.5%–2%. The premium reflects short-term nature, higher risk, and faster closing. The math works when the bridge saves you from losing a deal or accepting a low offer on your current home.