Bridge Loans
Short-term capital between transactions.
Bridge loans give you the flexibility to act now and settle later — tapping the equity in a property you already own to fund your next purchase before the first one sells. A practical solution for timing gaps.
Key highlights
- Buy before you sell
- Tap existing equity quickly
- Short terms with flexible exits
- Interest-only payment options
- Fast underwriting and funding
- Move-up buyers between homes
- Investors who need speed on a deal
- Owners awaiting a sale or refinance
What is a bridge loan?
A bridge loan is a short-term financing option designed to help individuals and businesses bridge the gap between purchasing a new property and selling an existing one. Typically used in real-estate transactions, these loans let the borrower secure funds to close on a new property before their current one is sold.
Bridge loans are temporary — generally lasting from a few months up to one year depending on the lender's terms. They're also referred to as "interim loans" or "gap financing" because they provide the cash flow to move forward with a transaction while awaiting longer-term financing or the sale of an existing property.
How bridge loans work
Bridge loans provide short-term funds based on the equity of your current home or the property you intend to purchase — essentially bridging the financial gap between a sale and a new purchase. Here's a general breakdown:
- 01Loan approval
Lenders look for enough equity in your current home and a viable plan for repayment, and may also assess creditworthiness, debt-to-income ratio, and other financial details.
- 02Loan amount
Typically based on the equity of the home you're selling or the value of the property you're purchasing. Bridge loans can go up to about 80–90% of value.
- 03Repayment terms
Terms are short — usually 6–12 months — and carry higher rates than traditional mortgages. Many require a lump-sum repayment or balloon payment once the original property sells or long-term financing is secured.
- 04Open vs. closed
An open bridge loan has no specific repayment date and may be paid off early when the sale occurs. A closed bridge loan has a fixed schedule and is paid off once the current property is sold.
Types of bridge loans
Two main types, depending on your situation:
Fixed repayment schedule — ideal when you have a clear timeline for selling. Common in structured transactions and often with lower interest rates than open bridge loans.
More flexibility, no set repayment schedule. A fit when the timing of your sale is uncertain or you may need more time before repaying.
Advantages
- 01Quick access to funds
Bridge loans often process faster than traditional loans — useful when you need to act quickly on a new purchase.
- 02Flexibility in timing
Buy a new home without the pressure of having to sell first.
- 03Don't miss the opportunity
In competitive markets, a bridge loan makes you a more attractive buyer — your offer isn't contingent on selling your current home.
- 04Use your property equity
Tap the equity you've already built without relying on more expensive financing.
Risks to consider
- 01Higher interest rates
Bridge loans typically carry higher rates than traditional mortgages. Even over short periods, the cost can add up.
- 02Debt risk if the sale takes longer
If your current home doesn't sell as quickly as expected, you may end up carrying both the bridge loan and your existing mortgage.
- 03Property-value fluctuations
Borrowing is based on equity. If the market shifts and your home sells for less than expected, you could owe more than the home is worth.
- 04Short loan term
If you can't sell or secure long-term financing in time, you may need to extend or refinance the bridge loan — adding cost.
When a bridge loan makes sense
Bridge loans are ideal when:
- You've found your dream home — a bridge loan secures the purchase without waiting for your current home to sell.
- You're in a competitive market — being non-contingent makes you a stronger buyer.
- You need flexibility — breathing room to sell at the right price without rushing the process.
Educational guidance only. Loan terms, eligibility, and pricing are subject to lender underwriting, program guidelines, and approval.
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