What is the difference between a Bridge Loan and a Cash Buyer Program

Bridge loans allow people who want to buy their next home to access a portion of their home equity to use as down payment and/or closing cost. They have been around for quite a while and has been a great tool to help accommodate home purchases. 

Cash buyer programs are similar to bridge loans as it’s providing a temporary solution for people who want to buy their next home. One big difference with a cash buyer program is that the buyer does not have to have a departing residence. This also means that unlike a bridge loan, the buyer does not have to qualify with a bridge loan payment factoring into their debt-to-income ratios with their new home.

Bridge loans can come in various forms. Most commonly they are attached to the departing residence and have a deferred payment with interest accruing. Some may pay off the existing mortgage on the departing residence (kind of like a cash-out refi) and other programs are more like a silent second mortgage.

And let’s not forget that sellers most likely prefer a cash offer over one that is subject to financing. Not to mention the cash buyer program can close in less than half the time than a transaction that requires financing.

Both programs have their pros and cons. If you’re selling a home and would like to review your options, I‘m happy to help you!