Bridge Loans
Bridge Loans: A Temporary Solution for Homebuyers
Buying a new home before selling your current one can create a financial gap—and that’s where a bridge loan comes in.
What Is a Bridge Loan?
A bridge loan is a short-term loan that helps homeowners “bridge” the gap between buying a new property and selling their existing one. It provides the funds needed for a down payment or to close on the new home while you wait for your current home to sell.
When You Might Need a Bridge Loan
A bridge loan is useful if:
You’ve found your next home but your current home hasn’t sold yet.
You need to make a non-contingent offer in a competitive market.
You want to avoid moving twice or renting temporarily between homes.
This type of financing offers flexibility, but it’s meant to be temporary—usually lasting from a few months up to a year.
Who Qualifies for a Bridge Loan
Bridge loans are typically available to homeowners with:
Strong credit and solid income.
Sufficient equity in their current home (since it’s often used as collateral).
A clear plan to repay the loan once their existing home sells or long-term financing is secured.
The Cost of a Bridge Loan
Because these loans are short-term, lenders often charge upfront points or fees instead of relying on monthly interest payments. The lender doesn’t expect to collect interest for long, so these fees help cover their costs for originating and servicing the loan.
The Bottom Line
A bridge loan can be a powerful tool for buyers who need to move quickly, but it comes with added costs and short timelines. Working closely with an experienced mortgage professional can help you decide whether a bridge loan fits your buying and selling strategy.
