{"id":9370,"date":"2026-05-29T23:01:00","date_gmt":"2026-05-30T06:01:00","guid":{"rendered":"https:\/\/www.flyhomes.com\/blog\/?p=9370"},"modified":"2026-06-01T09:46:51","modified_gmt":"2026-06-01T16:46:51","slug":"buying-your-next-home-with-a-short-term-loan","status":"publish","type":"post","link":"https:\/\/flyhomes.com\/blog\/buying-your-next-home-with-a-short-term-loan\/","title":{"rendered":"How to Use a Bridge Loan for a Home Purchase"},"content":{"rendered":"\n

Buying and selling a home rarely line up neatly. You may find yourself ready to buy your next home before your current one has sold, or you might need access to the equity tied up in your existing property to move forward.<\/p>\n\n\n\n

In these situations, you might consider a bridge loan. It\u2019s a financing option that can help address that timing and cash-flow gap, but it also comes with important trade-offs to understand before deciding if it fits your situation.<\/p>\n\n\n\n

In short: <\/strong>A bridge loan helps you use your current home equity to buy your next home before your current home sells.<\/p>\n\n\n\n

This guide breaks down how bridge loans work in practice, what to expect, and how they compare to other ways of using home equity when buying your next home.<\/p>\n\n\n\n

What is a bridge loan in real estate?<\/h2>\n\n\n\n

A bridge loan is a short-term loan that helps homeowners bridge the timing gap between buying a new home and selling their current one<\/a>.<\/p>\n\n\n\n

It\u2019s designed to solve a common challenge many homeowners face: Much of their money is tied up in their current home\u2019s equity. A bridge loan lets you access some of that value before the property is sold to help cover the down payment on your next home, but it also means taking on short-term debt before your current home sale is complete.<\/p>\n\n\n\n

Bridge loans are typically secured by your current home, so the amount you can borrow depends largely on how much equity you\u2019ve built up. Strong credit and stable income are also important factors in qualifying.<\/p>\n\n\n\n

To estimate how much equity you could use toward your next home, try the Flyhomes Buy Before You Sell calculator<\/a><\/p>\n\n\n\n

How does a bridge loan work when buying a home?<\/h2>\n\n\n\n

Bridge loan structures and qualification requirements can vary by lender, but in most cases, the process works roughly the same way:<\/p>\n\n\n

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\"\"<\/figure><\/div>\n\n\n
    \n
  1. Apply for a bridge loan<\/strong>
    <\/strong>A lender evaluates your current home\u2019s value, your remaining mortgage balance, how much equity you\u2019ve built up, and factors like your credit, income, and overall finances.<\/li>\n\n\n\n
  2. Access your home equity<\/strong>
    <\/strong>Once approved, you receive funds you can use  toward buying your next home.<\/li>\n\n\n\n
  3. Buy your next home<\/strong>
    <\/strong>You can use the bridge loan funds toward your down payment or other home-buying costs, allowing you to move forward before your current home is sold.<\/li>\n\n\n\n
  4. Sell your current home and repay the loan<\/strong>
    <\/strong>Once your original home sells, you use the proceeds to pay off the bridge loan.<\/li>\n<\/ol>\n\n\n\n

    Some bridge loans function as a second loan alongside your existing mortgage, while others temporarily replace your existing mortgage with a single larger loan. Either way, they can give you more flexibility by helping you buy a new home before selling your current one. That flexibility can also help you avoid a sale contingency, which may make your offer more competitive.<\/p>\n\n\n\n

    Bridge loan terms, rates, and costs: What to expect<\/h2>\n\n\n\n

    If you\u2019re considering a bridge loan, there are a few common characteristics and costs you should understand before applying. Terms can vary based on the lender, the borrower\u2019s financial profile, and the structure of the loan itself.<\/p>\n\n\n\n

    Qualification requirements<\/h3>\n\n\n\n

    You generally need strong credit, stable income, and enough equity in your current home to qualify. Many lenders prefer homeowners to have at least 20% equity in their property, along with a manageable debt-to-income ratio<\/a> (DTI).<\/p>\n\n\n\n

    Duration<\/h3>\n\n\n\n

    Bridge loans are designed to be temporary financing solutions. Most are intended to be repaid within six months to a year, though some lenders may offer longer terms.<\/p>\n\n\n\n

    Interest rates<\/h3>\n\n\n\n

    Interest rates on bridge loans are typically higher than those on traditional mortgages because the loans are short-term and carry more risk for lenders. Depending on the market and borrower profile, rates may be several percentage points above conventional mortgage rates.<\/p>\n\n\n\n

    Closing costs and fees<\/h3>\n\n\n\n

    Closing costs can also be more expensive than borrowers expect. Fees may range from roughly 1.5% to 3% of the loan amount and can include expenses like appraisals, origination fees, escrow costs, and underwriting fees.<\/p>\n\n\n\n

    Payment structure<\/h3>\n\n\n\n

    Some bridge loans require monthly payments during the loan term, while others defer payments until your current home is sold and the loan is repaid.<\/p>\n\n\n\n

    Borrowing limits<\/h3>\n\n\n\n

    Many lenders allow homeowners to borrow up to around 80% of their home\u2019s value, minus the remaining balance on their current mortgage.<\/p>\n\n\n\n

    Bridge loan example<\/h2>\n\n\n\n

    A simple example of how a bridge loan might work in practice:<\/p>\n\n\n\n

    Let\u2019s say your current home is worth $600,000, and you still owe $250,000 on your mortgage. A lender may allow you to borrow up to 80% of your home\u2019s value, less the remaining balance on your mortgage. So you could potentially access up to $230,000 through a bridge loan.<\/p>\n\n\n\n

    Here\u2019s the breakdown:<\/p>\n\n\n\n