Reviewed by the Editorial Team · Updated July 10, 2026 · 6 min read
A bridge loan is short-term financing that lets you buy a new home before selling your current one, tapping the departing home's equity for the new down payment — typically repaid within 6-12 months when the old home sells.
Key takeaways
A bridge loan is short-term financing that lets a buyer purchase a new home before selling their current one, tapping its equity for the down payment.
It typically carries a higher rate and added fees compared with a standard mortgage, and it's usually repaid within 6-12 months.
Borrowers juggle two mortgage payments at once until the old home sells, adding real financial risk if the sale is delayed.
It suits buyers who must close on a new purchase before their current home sale finalizes, removing the need for a sale-contingent offer.
Term
Typically 6-12 months
Funds
Taps equity in your current home
Key cost
Higher rate plus fees than a standard mortgage
Best for
Buyers who must close before selling
How a bridge loan works
A bridge loan uses the equity in your current home to fund the down payment on a new one, closing before the old home sells. Some structures pay off your existing mortgage and roll everything into one new loan; others sit as a second lien alongside it.
Sized on equity: loan amount tied to what you've built up in the departing home
Short term: usually 6-12 months, matched to an expected sale
Repaid at sale: proceeds from the old home pay off the bridge loan
Some lenders allow interest-only payments during the bridge period
Because it's temporary financing, a bridge loan is priced and underwritten differently from a standard purchase mortgage.
A bridge loan example: buying before you sell
Say a homeowner has substantial equity in a current home and wants to buy a new one before listing it. A bridge loan draws on that equity now, letting them close on the new home without a sale contingency, then pays itself off once the old home sells.
Bridge loan funds the down payment on the new home
Homeowner carries both payments during the overlap
Sale proceeds from the old home retire the bridge loan
Term typically runs 6-12 months
The cost of carrying two homes
Bridge loans charge a higher rate than a standard mortgage, plus origination fees, since the lender is taking on a short, higher-risk loan.
TWO MORTGAGES
Until the old home sells, you may be carrying two mortgage payments at once — budget for that overlap, not just the bridge loan's own cost.
If the old home takes longer to sell than planned, extension fees and mounting interest can turn a bridge loan expensive fast.
Who a bridge loan fits
A bridge loan fits buyers in a competitive market who need to make a strong, non-contingent offer on a new home before their current one is under contract.
Buyers whose down payment is tied up in their current home's equity
Sellers confident their current home will sell within a few months
Buyers who can qualify for two payments temporarily if the sale is slow
Anyone who needs a non-contingent offer to compete in a tight market
Skip it if your current home is hard to price or sell quickly — the risk of carrying two mortgages outweighs the convenience. Run the numbers on a mortgage calculator before committing to the overlap.
Bridge Loans: pros and cons
Pros
Lets you buy before your current home sells
Taps existing home equity quickly
Removes the need for a sale-contingent offer
Short term, often repaid in 6-12 months
Cons
Two mortgage payments at once
Higher interest rate than a standard mortgage
Closing costs and fees on two loans
Risk if the old home doesn't sell on time
Requirements at a glance
Sufficient equity in your current home to fund the bridge
Strong credit and income to qualify for two payments temporarily
A realistic, documented plan to sell the current home
Term typically 6-12 months, matched to the expected sale timeline
Higher rate and fees than a standard purchase mortgage
It's short-term financing that lets you buy a new home before your current one sells, using its equity for the new down payment.
It's repaid when the old home sells, typically within 6-12 months, and costs more than a standard mortgage in exchange for that flexibility.
How does a bridge loan work?
It taps the equity in your current home to fund a down payment on a new one, closing before the old home is under contract. Some structures roll your existing mortgage into the new loan; others add it as a second lien. Proceeds from the sale pay it off.
What are bridge loan rates?
Bridge loan rates run higher than a standard purchase mortgage, plus origination fees, since lenders are taking on a short, higher-risk loan. The exact premium depends on your equity, credit, and how confident the lender is in your sale timeline.
Is it a good idea to get a bridge loan?
It's a good idea mainly when your current home is likely to sell quickly and carrying two payments for a few months won't strain your budget.
Bridge loans solve a timing problem, not an affordability one, so they work best in fast-moving markets where you have substantial equity built up.
Is it difficult to qualify for a bridge loan?
Qualifying is stricter than for a typical purchase loan: lenders generally want strong credit, low combined debt-to-income across both mortgage payments, and significant equity — often 20% or more — in the departing home, which usually needs to already be listed for sale.
How much do you put down on a bridge loan?
There's no fixed down payment; instead, lenders size the loan against equity already built up in your current home, typically capping the combined loan-to-value across both properties around 70-80%. The more equity you have, the more bridge financing you can access.
Is a bridge loan or a HELOC better for buying before you sell?
html">HELOC is usually cheaper and more flexible if you have time to open one before listing your home, with lower closing costs and interest-only payments.
A bridge loan closes faster and doesn't depend on a HELOC already being in place — better when timing is tight.
This guide is general information, not a lending decision. Program rules and dollar limits change — verify current figures with a licensed lender and confirm licensing at NMLS Consumer Access. See all loan types.
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