Bridge Loans

How Does a Bridge Loan Work?

• You borrow money using your current home as collateral (something valuable that backs up your loan).
• The lender provides the funds, often paying off your existing mortgage while giving you extra cash for the down payment on your new home.
• Many lenders offer no monthly payments on the bridge loan, instead requiring a balloon payment when the loan term ends.
• Once you sell your home, you use the money from the sale to pay off the bridge loan.

What Are the Requirements?

Each lender has different rules, called overlay requirements, which are extra conditions to qualify. Some common ones include:

✅ A credit score of at least 660-700 (some lenders may allow lower)

✅ Proof that you can afford both your current mortgage and the bridge loan for a short time

✅ Equity in your home – Many lenders require at least 20-30% equity, with some allowing up to 75% Loan-to-Value (LTV)

✅ A clear exit plan, meaning a solid plan to sell your home quickly

✅ Some lenders may require you to list your current home for sale before approving the loan

✅ Bridge financing is often only available when used with financing on your new home purchase

Special Bridge Loan Benefits

✔️ No Monthly Payments Required – Many bridge loan programs don’t require monthly payments, making it easier to manage finances during the transition.

✔️ Pays Off Your Existing Mortgage – Some lenders structure bridge loans to pay off your current home loan while also providing cash for the down payment on your new home.

✔️ Higher Loan Amounts – Loan amounts can go as high as $2,000,000, depending on eligibility.

✔️ Flexible Terms – For primary residences and second homes, the loan is usually due in 12 months, while for investment properties, the term may be 6 months.

✔️ Competitive Advantage in a Hot Market – With bridge financing, you can make a non-contingent offer, meaning you don’t have to wait for your home to sell before buying a new one.

Tips & Pointers for Using a Bridge Loan



🔹 Have a clear selling plan – Bridge loans are short-term, so you’ll need to sell your home quickly.

🔹 Understand the costs – While bridge loans provide flexibility, they often come with higher interest rates than traditional loans.

🔹 Know the loan terms – Make sure you understand when the balloon payment is due and how it fits into your financial plan.

🔹 Consider alternatives – If you don’t qualify, a home equity loan or HELOC might be a better choice.

🔹 Work with a pro – The right mortgage expert can help you find the best deal and avoid surprises.

Why Work With a Mortgage Broker?

A mortgage broker is like a shopping assistant for loans. Instead of going to just one bank, they search through many lenders to find the best bridge loan for you. Here’s why working with a broker is a smart choice:

✅ More loan options – Brokers have access to multiple lenders, meaning better chances of finding a great deal.

✅ Save money – Brokers can help you find lower fees and better interest rates.

✅ Expert guidance – They explain everything in simple terms and handle the paperwork for you.

✅ Faster approvals – Brokers work quickly to get you approved so you don’t miss out on your new home.

✅ Access to special programs – Some lenders only offer bridge financing through brokers, so you could get exclusive loan options you wouldn’t find on your own.

Final Thoughts

A bridge loan can be a great solution if you need to buy a new home before selling your current one. With features like no monthly payments and the ability to pay off your existing mortgage, it can give you the flexibility you need in a fast-moving housing market.

But like any loan, it’s important to understand the costs and requirements. Working with a trusted mortgage broker can make the process easier, faster, and more affordable.

Thinking about a bridge loan? Let’s chat! I’d love to help you find the best option for your situation.