The short answer
Buy next before selling current.
A bridge loan is short-term financing (6–12 months) that lets a rightsizing household buy the next home before selling the current one. Makes sense when you’ve identified a specific next home, timing can’t be synchronized, and current equity supports the bridge. Total interest cost is usually modest relative to the optionality it buys.
How a bridge loan works
Secured by existing home, new home, or both. Lump sum at closing on new home. Repaid from sale of existing. 6–12 month terms, rates 1–3 points above conventional.
When it makes sense
Specific next home identified. 30–40% equity remaining after draw. Expect to sell within 6 months.
When it doesn’t
Uncertain about next home. Stretched equity. Home with thin comp set or slow local market.
Key takeaways
- Solves the timing problem for households with a specific next home.
- 6–12 month terms; short hold = modest total interest.
- Need 30–40% equity remaining after draw.
- Shift-Certified lenders handle retirement-income underwriting.
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