Buying and Selling at the Same Time? How a Bridge Loan Can Help

Buying and selling homes at once? Stressful. You can:

• Sell first – and scramble for temporary housing, or

• Buy first – and carry two mortgages.

Neither is ideal. Enter: the bridge loan.

Why it matters: A bridge loan covers upfront costs for your new home while you wait to sell your old one. When your sale closes, you use the proceeds to pay off the bridge loan – and your old mortgage balance.

How it works

• Short-term financing (typically 6–12 months)

• Your current home = collateral

• Borrow up to 80% of your home’s value

• Use funds for your down payment, construction, closing costs, or even to pay off your existing mortgage

Some bridge loans require monthly or interest-only payments; others let you make one lump-sum payment at the end.

Example

Building a new home but need cash from your current one? A bridge loan lets you:

• Borrow against your current home

• Cover your down payment and costs

• Repay the loan once your old home sells

You stay housed – and keep your build on track.

How to qualify

Requirements vary by lender, but you’ll likely need:

• Good credit

• Low debt-to-income ratio

• 20%+ equity in your current home

Expect fees for: origination, appraisal, title, administrative fees, taxes, and interest. Not all lenders offer bridge loans – shop around and compare rates.

Pros and cons

Pros

• Avoid dual mortgage payments

• Stay in your current home while you buy or build

• No sale contingency in your new offer

• Faster approval than many loans

• Use for down payment and closing costs

Cons

• Higher interest rates

• Larger fees

• Requires strong credit and equity

• Your home is collateral

• Risk of overlap if your sale takes too long

Alternatives

Bridge loans aren’t the only move. You can also:

• Tap a home equity loan or HELOC

• Get a construction loan

• Sell with a lease-back, staying put temporarily as a renter

Bottom line: Buying and selling at once isn’t easy – but a bridge loan can make it smoother. It buys you time, flexibility, and peace of mind.

Ready to take the next step? Explore our buying and financing guides to learn more and follow us on Instagram and Facebook.