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Buy Before You Sell With a Bridge Loan

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Benefits of a Bridge Loan

The bridge loan is ideal for homebuyers who can’t wait until their current home sells before purchasing their new home. The benefits include:

  • Short closing timelines, typically between 15 and 17 days
  • Lenient approval criteria relative to conventional loans
  • Provides additional funding by using equity in your existing home
  • Interest-only payments over a short term keep monthly obligations low

Bridge loans give you the power to land the home of your dreams without being tied to the sale of your current home.

How Does it Work?


Many different types of loans may be called bridge loans, so you’re not alone if you’re unclear on what this loan is or how it works.

Bridge loans are funded based on:

  1. Equity in your home (current value minus the existing mortgage balance)
  2. Value of the home you plan to purchase

These loans are commonly used to “bridge” the funding gap between the sale of your existing home and the purchase of your new home.

Qualifying for a Bridge Loan


As with any other loan, you’ll provide information about your assets, income, and liabilities. This will include a review of your credit history and documentation to confirm the equity you have in your existing home.

Once the lender reviews your information and issues an approval, you’ll receive a pre-qualification letter. This letter will detail the amount of funding you’re approved for, allowing you to show sellers you have financing lined up when you make offers.

Using (and Paying For) Your Bridge Loan

When you’ve closed on your new home, the bridge loan will be funded. You will bring in cash if there is a gap between the bridge loan amount and the purchase price.

While you wait for your old home to sell, you’ll make interest-only payments on the bridge loan. And once your home sells, you’ll use the money from that sale to pay down the bridge loan. If you have a remaining balance on the bridge loan, that amount can be refinanced into a conventional loan on your new home. 

Typically, bridge lenders determine your maximum loan amount based on 65% of the combined value of your old and new homes. 

We’re here to help. So if you’re not sure if this type of loan is right for you, call us at (888) 273-8734 or schedule a free consultation.


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