A bridge loan makes it possible to finance a new house before selling your current home. Bridge loans may give you an edge in a tight housing market, but they come with their own risks and restrictions.
Bridge loans at a glance:
- Can typically borrow up to 80% of the combined value of your current and new homes
- Typically come with six- to 12-month terms
- High interest rates and fees compared to conventional loans
- Best in areas where homes sell quickly
» MORE: Calculate your home’s value
What is a bridge loan?
A bridge loan can give you the cash for a down payment on your next home before selling your current one. With a bridge loan, you won’t have to make a contingent offer that depends on you selling your house before closing.
A bridge loan can buy you more time to sell your home if you find one you’d like to make an offer on first. It can also help you compete in a hot market where sellers might turn down a contingent offer.
How bridge loans work
A bridge loan is different from a typical mortgage because it isn’t a long-term financing solution. Instead, it’s a short-term loan that can help you quickly buy a new home without relying on the equity from your existing home to make the down payment. In exchange, you’ll pay a higher interest rate than you would on a traditional mortgage.
Bridge loans are generally used one of two ways: to pay off your current mortgage and make a down payment on your new house, or simply to make a down payment on the new house.
Both scenarios assume your old house sells, allowing you to pay off the bridge loan, plus interest, fairly quickly. If it doesn’t sell before the loan comes due, you may owe the full amount of the bridge loan on top of your new mortgage payment. This could lead to financial stress or even default.
Bridge loans usually have to be paid off within six months to one year. Requirements can vary by lender, but you’ll likely have an easier time qualifying if you have:
- A credit score of 700 or higher
- A debt-to-income ratio below 50%
- At least 20% equity in your home
- A solid employment history with stable income
You can typically borrow up to 80% of the value of both properties combined, though some lenders allow for more.
Bridge loan pros and cons
Pros
- You can make an offer on the house you want without a sale contingency.
- With a down payment of 20% or more for your next home, you won’t have to pay for private mortgage insurance (PMI).
Cons
- You'll pay high interest rates and APR for the bridge loan compared to a conventional mortgage.
- You may have to pay for an appraisal on your current home along with closing costs and fees, which can cost thousands.
- You may own two houses — with two mortgage payments — for a bit.
- Some lenders only offer bridge loans if you use them for your primary mortgage.
Examples of when to use a bridge loan
If you find yourself in one of these sticky situations, a bridge loan might keep things on track.
- Sellers in your area won’t accept contingent offers.
- You can’t afford a down payment without the proceeds from your current house.
- You’re confident your house will sell but prefer to secure a new home before listing it.
- Closing on your current house is scheduled after the closing date for your new house.
How to get a bridge loan
Like with any loan, you’ll want to compare offers and choose a reputable lender.
Among lenders surveyed by NerdWallet in 2026, these four specifically mentioned offering bridge loans:
Bridge loan alternatives
Bridge loans aren’t your only option for buying and selling at the same time. Here are some alternatives to consider depending on your plans:
Home equity line of credit (HELOC): This second mortgage lets you tap your home equity as a flexible line of credit. You’ll have a variable interest rate that could fluctuate over time, but it’ll likely be lower than what you’d get with a bridge loan. Your closing costs may be lower, too. You can’t get a HELOC on a home that’s for sale, though, so this option requires action in advance.
Home equity loan: This second mortgage is very similar to a HELOC. Two major differences are that you’ll get the funds as one lump sum and pay it back at a fixed rate.
80-10-10 loan: If you have some cash on hand and strong credit, this option gives you a first mortgage for 80% of your new home’s price and a second mortgage for 10% of the price. Then, you make a 10% down payment. This way, you can buy a home with 10% down without having to pay PMI.
Personal loan: These loans usually come with higher interest rates than home equity options. But because they don’t use your property as collateral, they don’t have to be paid off right away after your home sells.
NerdWallet writer Ashley Harrison contributed to this story.
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