Bridge Loan
Short-term financing against equity to buy before you sell.
How it works
A bridge loan is short-term financing that taps equity in your current home to fund the down payment on a new one before the old home sells. It carries higher rates and fees and is repaid quickly, usually within 6-12 months. It solves timing gaps when buying and selling do not line up.
Key things to know
- Combined loan-to-value usually caps near 85% (cash-out refinance at 80%).
- A second lien keeps your first mortgage; a cash-out refinance replaces it.
- Compare the rate type — fixed (home equity loan) vs variable (HELOC).
- Budget for closing costs (often lower or waived on HELOCs).
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Frequently Asked Questions
- What is the bridge loan?
- A bridge loan is short-term financing that taps equity in your current home to fund the down payment on a new one before the old home sells. It carries higher rates and fees and is repaid quickly, usually within 6-12 months. It solves timing gaps when buying and selling do not line up.
- Will it affect my first mortgage?
- Only a cash-out refinance replaces your first mortgage. A HELOC, home equity loan, or second mortgage sits behind it and leaves that rate alone.