Bridge loan
A short-term loan that taps the equity in your current home to fund the down payment on a new one before the old home sells.
What does bridge loan mean?
A bridge loan solves the timing problem of buying before you sell. It is a short-term loan — usually a few months to a year — secured by your current home, giving you the cash to close on the next one. It is convenient but expensive, with higher rates and fees, and it assumes your old home sells reasonably quickly; a delay can leave you carrying both.
Frequently asked
How does a bridge loan work?
It is a short-term loan against your current home’s equity that funds the down payment on a new home before the old one sells. You repay it when the old home closes.
It is convenient but carries higher rates and fees, and assumes a reasonably quick sale.
Put it to use
Related terms
All glossary terms