If you’re buying a new home but haven’t sold your current one yet, timing can feel stressful—especially in competitive markets. A bridge loan can be a smart short-term solution that allows you to use the equity in your departing residence to purchase your next home before the sale is complete.
Bridge loans are designed to do exactly what the name implies: bridge the gap between buying and selling.
What Is a Bridge Loan?
A bridge loan is a temporary, short-term mortgage that uses the equity in your current home to help fund the purchase of a new primary residence. It gives you flexibility and leverage when the sale of your departing home and the purchase of your next home don’t line up perfectly. Using a bridge loan can help you present an offer on your next home without it having to be contingent on the sale of your current house.
Most bridge loans are intended to be paid off once your current home sells.
Read articles I’ve written about bridge loans and solutions when you have a “departing residence”.
How Bridge Loans Help Home Buyers
Bridge loans are especially helpful when:
- You want to buy before you sell
- You need funds for a down payment or closing costs
- You want to avoid making a contingent offer
- You’re relocating or upsizing and need flexibility
- You want to move once, not twice
In fast-moving real estate markets, removing a home-sale contingency can make your offer significantly stronger.
Common Bridge Loan Structures
Bridge loans can be structured in a few different ways, depending on your situation and equity:
1. Down Payment Bridge Loan
Uses equity from your current home to cover the down payment on your new home while you still have your existing mortgage. Many bridge loans are interest-only, helping keep monthly payments lower while you’re carrying two properties temporarily. Homebuyers typically need to qualify with all mortgage payments (even if the bridge loan has deferred payments).
2. Payoff + Purchase Bridge Loan (No payments due)
Pays off your current mortgage and provides funds toward the purchase of your next home—simplifying monthly obligations during the transition. Simple interest accrues and the bridge loan plus the accrued interest is paid off when the at the closing of the sale of the departing residence. This allows you to only have one mortgage payment due on your new home while you wait for your old home to close. Some lenders will qualify based on the new mortgage payment and not factor a payment for the bridge loan.
Key Benefits of Using a Bridge Loan
- Buy first, sell later
- Access your home equity without waiting
- Make non-contingent offers
- Avoid temporary housing or double moves
- Move on your timeline, not the market’s
For many homeowners, the convenience and strategic advantage outweigh the short-term cost.
Things to Consider
Bridge loans are powerful tools—but they’re not for everyone. Important factors include:
- Short loan terms (typically 6–12 months)
- Higher interest rates than traditional mortgages
- Qualification is based on credit, income, and equity
- Exit strategy is essential (sale of departing home)
I help clients carefully evaluate whether a bridge loan makes sense and ensure there’s a clear plan to repay it.
Bridge Loans vs. Other Options
Depending on your goals, alternatives may include:
- Home equity line of credit (HELOC)
- Cash-out refinance (before listing)
- Seller rent-back agreements
- Extended closings or contingent offers
Each option has pros and cons, and the right choice depends on timing, equity, and market conditions.
Bridge Loans in Washington State
Bridge loans are commonly used throughout Washington—especially in areas where homes sell quickly and competitive offers matter. They can be an excellent solution for homeowners moving within the state, relocating, or purchasing a replacement home while listing their current property.
Let’s See If a Bridge Loan Is Right for You
Every situation is unique. If you’re considering buying a new home while still owning your current one, I’m happy to walk you through:
- Your available equity
- Bridge loan options
- Costs and timelines
- Backup strategies
Reach out anytime to explore whether a bridge loan can help make your move smoother, more strategic, and less stressful. Let’s talk!
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