Buying a new home while selling your current one isn’t always as seamless as it sounds. Maybe your dream home just hit the market, and you haven’t even listed yours yet. Or maybe you’re relocating quickly for work and can’t afford to wait.
In these cases, many homeowners consider a bridge loan — a short-term financing option that helps you “bridge” the gap between buying and selling.
At Promise Home Loans, we help borrowers navigate options like this every day. Here’s a breakdown of how bridge loans work, who they’re right for, and what to watch out for.
A bridge loan is a short-term loan that gives you immediate access to cash, typically to purchase a new home before selling your existing one.
It’s not a long-term mortgage. Instead, it’s designed to “carry” you for a few months while you transition between properties. Most bridge loans last 6 to 12 months, with the expectation that you’ll pay it off as soon as your current home sells.
You use your current home’s equity as collateral to secure a temporary loan. This loan gives you cash for the down payment or purchase of a new property. Once your old home sells, the bridge loan is paid off in full.
Let’s look at a real-life example:
The Martins live in Irvine, CA. Their home is listed for $900,000, with $500,000 left on their mortgage. They find a new home for $1.2 million — but it’s competitive, and contingent offers aren’t being accepted.
They take out a $300,000 bridge loan, secured against their current home. This allows them to:
Once their original home sells, they use the proceeds to pay off the bridge loan.
Bridge loans aren’t for everyone, but for the right borrower, they can be a strategic tool. Here are the biggest benefits:
In hot markets, sellers rarely accept offers that depend on your current home selling first. A bridge loan allows you to buy your next home without that clause.
Need to relocate quickly or start a new job in another city? A bridge loan gives you flexibility, so you’re not stuck in limbo waiting to sell.
If your home has appreciated and you have significant equity, a bridge loan lets you access that cash now — instead of waiting until closing.
That said, bridge loans come with trade-offs:
Bridge loans tend to have higher interest rates — often 1.5% to 3% above standard mortgage rates.
Expect closing costs, origination fees, and possibly an appraisal. These fees can total 2–5% of the loan amount.
If your current home doesn’t sell quickly, you may be stuck with two monthly payments — your new mortgage and the bridge loan.
While requirements vary by lender, here’s what you generally need:
A bridge loan makes the most sense if:
Bridge loans aren’t your only option. Here are three alternatives that may work better depending on your situation:
Tap into your current home’s equity with a flexible line of credit. Interest rates are typically lower than bridge loans, but it must be set up before your home is listed for sale.
A lump-sum loan using your home equity as collateral. It may offer better terms than a bridge loan but also takes longer to secure.
Buy your new home with 10% down, take out a second mortgage for another 10%, and avoid PMI. Once your home sells, use proceeds to pay off the second loan.
We’ve seen too many homeowners miss out on opportunities because they were stuck in financing limbo.
That’s why at Promise, we don’t just talk about “loan options” — we offer personalized strategies. Whether you’re upsizing, relocating, or trying to win a competitive offer, we’ll help you map out the smartest path.
No pressure. Just straight talk and smart solutions.
A bridge loan can give you speed, flexibility, and buying power — but it’s not without risk. It’s best for homeowners with strong equity, solid credit, and a clear plan to repay.
If you’re feeling stuck between selling and buying, a bridge loan might be the tool that unlocks your next move.
Let’s have a quick call.
We’ll help you compare bridge loans, HELOCs, or other strategies to fit your situation — and your long-term goals.
No sales pitch. Just smart advice.
Photo credit monkeybusinessimages
