Background and when buyers use it

Bridge-to-buy financing (often called a bridge loan) fills the timing gap between buying and selling a home. Sellers in fast-moving markets use it to make noncontingent offers—giving them negotiating leverage—while homeowners who haven’t sold avoid being forced into temporary housing or contingency-dependent bids.

How a bridge-to-buy loan is structured

  • Collateral and underwriting: Lenders usually secure the loan with your existing home, the new home, or both. Approval looks at credit, income, and combined loan-to-value (CLTV).
  • Loan size and use: Some bridge loans fund only the down payment; others cover most or all of the purchase price. Lenders cap exposure based on the expected sale proceeds of your current home.
  • Term and repayment: Typical terms run 6–12 months. Repayment usually comes from proceeds at the sale of your old home, a refinance into a permanent mortgage, or another short-term loan.

Eligibility and who benefits most

  • Homeowners with equity who expect a quick sale.
  • Buyers in competitive seller’s markets who want to avoid sale contingencies.
  • Investors or buyers who need fast closing power to secure favorable deals.

Costs, risks, and what to watch for

  • Higher cost of credit: Bridge loans commonly carry higher interest rates and upfront fees than standard mortgages. Factor in interest, origination fees, and any appraisal or closing costs.
  • Dual-payment risk: If your old home takes longer to sell, you may face overlapping mortgage payments, taxes, insurance, and maintenance costs.
  • Appraisal and market risk: If the sale price of your current home comes in below expectations, your exit plan may require last-minute refinancing or bringing cash to close.

Exit strategies lenders expect

  1. Sale of current home (most common). 2. Refinance into a permanent mortgage on the new home. 3. Convert to a home equity line of credit (HELOC) or longer-term loan if permitted by the lender.

Practical tips from practice

In my experience advising buyers, the single most important step is documenting a realistic exit plan before accepting a bridge loan. Lenders will want a market-based timeline and proof you can cover payments if the sale slips. Also:

  • Get written timelines from your agent for listing, marketing, and closing assumptions.
  • Run stress tests: assume a 60–90 day delay in sale and confirm you can carry both properties for that period.
  • Compare alternatives: a HELOC, temporary rental, or negotiating a longer closing on the sale can be cheaper in some cases. See our guide on when to use a bridge loan vs a line of credit for a side-by-side comparison: When to Use a Bridge Loan vs Line of Credit.

Common misconceptions

  • Bridge loans are not the same as conventional mortgages. They are short term, often interest-only, and designed for speed rather than long-term affordability.
  • They’re not free leverage—fees, appraisal costs, and higher rates can offset the benefit of avoiding a contingency.

Short real-world example

A family found a competitively priced home that required a 30-day close. Their buyer’s agent advised a noncontingent offer backed by bridge financing. After qualifying for a bridge loan sized to cover the down payment and three months of carrying costs, they closed on the new home; the sale of their existing home closed 45 days later, and the bridge loan was repaid from proceeds.

Frequently asked questions (brief)

  • How long do bridge loans last? Typically 6–12 months, sometimes shorter or longer depending on lender flexibility.
  • Are bridge loans regulated? Yes—consumer protections and disclosure rules apply. For general guidance see the Consumer Financial Protection Bureau and mortgage resources at consumerfinance.gov.
  • What if my home doesn’t sell in time? You’ll need to have contingency plans: refinance the bridge into a longer-term loan, negotiate a loan extension, or bring additional cash to cover payments.

Related FinHelp resources

Authoritative sources and further reading

  • Consumer Financial Protection Bureau (general mortgage and short-term loan guidance)
  • National Association of Realtors (market timing and contingency considerations)

Professional disclaimer

This article is educational and does not constitute personalized financial, legal, or tax advice. Consult a licensed mortgage professional or financial advisor about your specific circumstances before using bridge-to-buy financing.