Bridge Loans
Short-term financing to bridge the gap between buying your new home and selling your current one
GET PRE-APPROVEDWhat is a Bridge Loan?
A bridge loan is a short-term financing solution that helps homeowners purchase a new property before selling their current home. This type of loan "bridges" the gap between the purchase of a new home and the sale of an existing one, providing the funds needed for a down payment and closing costs on the new property.
Bridge loans typically last 6 to 12 months and are secured by your current home. Once your existing home sells, you use the proceeds to pay off the bridge loan. This allows you to make a strong, non-contingent offer on your new home without waiting for your current property to sell.
Why Choose a Bridge Loan?
Buy Before You Sell
Purchase your new home without waiting for your current home to sell, avoiding temporary housing.
Competitive Offers
Make non-contingent offers that are more attractive to sellers in competitive markets.
Flexible Timing
Move on your schedule without the pressure of coordinating two closings on the same day.
Access Equity
Tap into your current home's equity for down payment and closing costs on your new home.
No Double Payments
Many bridge loans offer interest-only payments or deferred payments until your home sells.
Avoid Contingencies
Eliminate home sale contingencies that can make your offer less competitive.
How Bridge Loans Work
Apply for Bridge Loan
Get pre-approved for a bridge loan based on your current home's equity and your ability to carry both mortgages temporarily.
Purchase New Home
Use bridge loan funds for down payment and closing costs. Make a strong, non-contingent offer on your dream home.
Sell Current Home
List and sell your existing home without the pressure of coordinating closings. Take time to prepare and market properly.
Pay Off Bridge Loan
When your current home sells, use the proceeds to pay off the bridge loan. Your permanent mortgage on the new home remains.
Bridge Loan Requirements
Equity Requirements
- Typically need 20-30% equity in current home
- Combined loan-to-value (CLTV) usually capped at 80%
- Current home must be in good condition
Financial Qualifications
- Credit score typically 680 or higher
- Ability to qualify for both mortgages simultaneously
- Sufficient cash reserves (6-12 months)
Loan Terms
- Loan term: 6 to 12 months
- Interest rates typically higher than traditional mortgages
- Interest-only or deferred payment options available
Documentation
- Current home appraisal
- Purchase contract for new home
- Income verification and asset documentation
Breakdown of Bridge Loan Costs: Rates, Fees & Charges
Interest Rates
Bridge loan interest rates are typically 2-3% higher than conventional mortgage rates due to the short-term nature and higher risk. Rates vary based on your credit score, loan-to-value ratio, and lender.
Current Range: 8.5% - 11.5% APR
Origination Fees
Lenders typically charge 1-2% of the loan amount as an origination fee. Some lenders may also charge processing fees, underwriting fees, and administrative costs.
Typical Range: 1.5% - 3% of loan amount
Closing Costs
Like traditional mortgages, bridge loans require closing costs including appraisal, title insurance, and recording fees. These costs are typically lower than conventional loans due to the shorter term.
Typical Range: $2,000 - $5,000
Alternatives to Bridge Loans
Home Sale Contingency
Make your new home purchase contingent on selling your current home. Less expensive but may make your offer less competitive.
Best for: Buyers in less competitive markets
Home Equity Line of Credit (HELOC)
Tap your current home's equity for down payment funds. Lower rates than bridge loans but requires carrying two mortgages.
Best for: Borrowers with significant equity
80-10-10 Piggyback Loan
Use a second mortgage for down payment on new home. Requires qualifying for two loans simultaneously.
Best for: Strong credit borrowers
Rent Back Agreement
Sell your current home first and rent it back from the buyer until you close on your new home.
Best for: Flexible buyers and cooperative sellers
Ready to Explore Bridge Loan Options?
Contact us today to discuss whether a bridge loan is right for your situation. Our team has access to 260+ lenders to find you the best terms and rates.