Bridge loan
A short-term loan that covers the gap between buying a new home and selling the old one. Paid off when the old home sells. Rates and fees run higher than regular mortgages.
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Where this comes up: getting ready
Part 1 of 4
Why a seller cares
A bridge loan lets you buy the next home before this one sells, using this one's equity. It is short, expensive, and it is what some buyers use to make a non-contingent offer on your home.
Part 2 of 4
A simple example
You need $60,000 for a down payment on the next house before this one closes. A bridge loan against this home covers it and is repaid at closing.
| The situation | What the bridge loan does |
|---|---|
| You buy before you sell | Funds the down payment; repaid from your proceeds at closing |
| This home takes four months to sell | Four months of interest and fees on the bridge |
| A buyer uses one to buy your home | Their offer has no home-sale contingency, which is the point |
A bridge loan buys time with equity, and it costs by the month.
Part 3 of 4
What people get wrong
That a bridge loan replaces selling. It is repaid by the sale, so a home that does not sell turns the bridge into a problem.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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