Bridge Loans

Helping you buy your next home before you sell your current one.

What is a Bridge Loan?

A bridge loan is a short-term loan that uses the equity in your current home to help fund the down payment and closing costs on your new home. Once your existing home sells, the proceeds are used to pay off the bridge loan.

Bridge loans usually require interest-only payments and are loans that are meant to be paid back within a matter of months, rather than years. They are sometimes called “swing loans” or “gap financing” because they bridge the financial gap between the selling of one home and the buying of the next.

When a Bridge Loan Makes Sense

A bridge loan can be a strong tool in a competitive housing market when timing doesn’t line up perfectly. It can allow you to move quickly on a new home without waiting for your current home to close.

Situations in which a bridge loan would be a good fit include:

  • You want to write a stronger offer without a home-sale contingency.

  • You’ve found your perfect home but your current home hasn’t sold yet.

  • You have significant equity in your existing home and a reasonable expectation it will sell in the near term.



How a Bridge Loan Works

With a bridge loan, a lender considers the value of your current home and what you still owe on it, determining how much equity is available. You then borrow against that equity to cover some or all of the down payment on your new home.

Most bridge loans will mandate that your current home be listed for sale and will have a specific payoff deadline, often tied to the sale of that property. The bridge loan is then paid off from your sale proceeds, and you continue with your regular mortgage on the new home.

Potential Benefits of a Bridge Loan

  • Ability to buy before you sell, so you don’t miss out on a home you love.

  • Stronger purchase offers with reduced or no home-sale contingencies.

  • Access to equity that might otherwise be locked in your current home until closing.

This flexibility can help alleviate some of the stress associated with trying to coordinate two closings on the same day.

Important Considerations and Risks

Because they are short-term and more specialized, bridge loans may carry higher interest rates and fees than long-term mortgages. Depending on the structure of the loan, you might also face a period in which you have to make payments on your existing mortgage and the bridge loan.

There’s also market risk: if your current home takes longer to sell or sells for less than expected, your exit strategy may need to be adjusted. An experienced mortgage advisor can walk through different “what-if” scenarios so you understand the payment, timing, and risk profile before moving forward.

Is a Bridge Loan Right for You?

A bridge loan tends to work best for homeowners with solid equity, good credit, and a realistic plan for selling their current property. If your situation involves limited equity or a highly uncertain sale timeline, other tools such as a home equity loan, HELOC, or simply selling first may be better options.

Educated Mortgage can help review your home value, remaining mortgage balance, and purchase goals to see if a bridge loan fits your strategy. Together you can compare the costs, risks, and alternatives so you can move into your next home with confidence.

Questions about Bridge Loan?
Call us at 608-834-5000 for more information.