It is one of the most common dilemmas in real estate: you have found the home you want, but the down payment is tied up in the home you still own. Selling first means scrambling for somewhere to live; buying first means carrying two properties. Bridge financing is built for exactly this gap.
What a bridge loan does
A bridge loan is short-term financing that lets you tap the equity in your current home to fund the down payment — and sometimes the purchase — of the next one, before the first home sells. When the old home closes, the proceeds pay off the bridge. You are, in effect, borrowing against equity you have not yet liquidated.
How it is typically structured
Bridge loans are short-term by design — often a matter of months — and are usually interest-only during that window, which keeps the carrying cost manageable while you market the old home. Sizing depends on your equity, your overall financial picture, and the lender's program. Because bridge loans sit outside the conventional box, they fall into the Non-QM world, with terms and costs that reflect their short, specialized nature.
The real benefit
The benefit is leverage and timing. You can make a non-contingent offer on the new home — no "subject to selling my current house" clause that sellers dislike — and you avoid the logistical nightmare of moving twice or finding interim housing. In a competitive market, a clean offer can matter as much as the price.
The real risk
The risk is the one you have to respect: if the old home sells slowly or for less than expected, you are carrying two housing payments plus the bridge. Bridge financing rewards a realistic view of your current home's value and market time. Going in assuming a fast, top-dollar sale is where people get squeezed.
The alternatives
Bridge loans are not the only tool. A home-equity line of credit drawn before you list can fund a down payment more cheaply if you set it up in time. A contingent offer avoids debt entirely but is weaker in a hot market. And in some cases, a recast on the new loan after your old home sells can reset the payment. Rates, products, and program terms are illustrative and subject to change; this is not a commitment to lend, and not every applicant will qualify.
The Alliance take
We model the carry — what two payments plus the bridge actually cost per month, and how long your current home realistically takes to sell — before recommending this path. When the numbers work, bridge financing is powerful. When they are tight, we will say so.
Trying to buy before you sell? Reach out and we will run the scenario both ways.