Direct Answer
A bridge loan lets you buy before you sell with 6-12 month terms at rates often 8%-11%. On a $200,000 bridge at 9%, interest-only payments run ~$1,500/month until your old home closes.
Use the Bridge Loan Calculator to model carry costs and payoff from sale proceeds.
Last verified on: June 28, 2026
Editorial note: This guide is for educational planning only — not legal, tax, lending, or medical advice. Verify figures with official sources and qualified professionals before making decisions.
Research method: Daily Calcs reviewed primary government, regulatory, and industry sources and modeled calculator scenarios on June 28, 2026.
Bridge Loan vs Sale Contingency
| Factor | Bridge loan | Sale contingency |
|---|---|---|
| Offer strength | Strong — non-contingent | Weaker in competitive markets |
| Monthly cost | High short-term interest | No bridge fee |
| Risk if home does not sell | Extension/refi needed | Contract escape hatch |
Carry Cost Example (3-month bridge)
| Item | Monthly |
|---|---|
| Bridge interest ($200k at 9%) | $1,500 |
| New home PITI (Principal, Interest, Taxes, and Insurance) | $2,400 |
| Old home costs (until sold) | $1,800 |
| Total double-carry | ~$5,700 |
When a Bridge Loan Beats a Sale Contingency
In competitive markets, sellers favor non-contingent offers. A bridge loan funds the new purchase before your old home closes — but you carry two properties temporarily.
Bridge rates run 1% to 3% above standard 30-year fixed rates because the lender holds higher short-term risk.
Worked Example: $500,000 New Home, $350,000 Equity in Old Home
| Item | Amount |
|---|---|
| Old home value | $450,000 |
| Old mortgage balance | $100,000 |
| Available equity | $350,000 |
| Bridge loan (80% of equity cap) | $200,000 |
| Down payment on new home (20%) | $100,000 from bridge + cash |
| Bridge rate | 9% interest-only |
| Monthly bridge interest | $1,500 |
3-month carry until old home sells:
| Cost | 3-month total |
|---|---|
| Bridge interest | $4,500 |
| Dual PITI + maintenance | ~$12,000+ |
| Total carry (est.) | ~$16,500 |
What to Do Next
- Price departing home realistically — overpricing is the main bridge failure mode.
- Model 3- and 6-month carry in the Bridge Loan Calculator.
- Compare to sale contingency in your market’s competitiveness.
- Confirm extension terms if old home does not sell on schedule.
- Have backup plan — HELOC, reserves, or price reduction strategy.
Bridge Loan Readiness Checklist
- 20%+ equity in departing home
- Credit 680+
- Listing agreement signed on old home
- 3–6 months reserves for dual carry
- Realistic sale price on old home
Common Mistakes With Bridge Financing
Overpricing the departing home to “test the market” while carrying bridge interest burns $1,500+ per month with no sale. Another error is bridging without 3 to 6 months dual-carry reserves if the market softens.
Assuming bridge approval equals long-term affordability on two properties — debt-to-income (DTI) ratio limits still apply.
Assumptions and Limitations
Bridge products vary widely — some are HELOC-based, others are institutional short-term first liens. Rates, extension fees, and prepayment penalties differ by lender.
Sale timing risk falls on the borrower. Extension options are not guaranteed and may cost additional fees and higher rates.
What This Means for Your Personal Numbers
Bridge loans make sense when you have plenty of equity and a realistic sale price for your current home. If your old house is overpriced, that $1,500+ monthly bridge interest burns cash fast while it sits. Price your departing home at today’s market value, not what you hope it’s worth. Keep 3 to 6 months of dual-carry reserves in the bank. And know your extension options before signing — if the sale slips, you don’t want to scramble for a Plan B at a higher rate.
Calculator Methodology
The Bridge Loan Calculator estimates interest-only payments, total bridge cost, and net proceeds after repaying the bridge from your sale.
Assumptions: Interest-only bridge; fixed rate; defined sale date.
Limitations: Extension fees and dual-mortgage qualification are lender-specific.
How to stress-test your result
Run a best case and worst case input side by side. Add 0.25% to rate or 10% to tax and insurance. If the result breaks your budget at the worst case, adjust your assumptions before committing.
Related Reading
- HELOC vs Cash-Out Refinance — alternative equity access
- Closing Costs Explained — origination fees
- Bridge Loan Calculator — carry cost model
Official and Supporting Sources
- Consumer Financial Protection Bureau (CFPB): Buying a home — simultaneous transactions
- Fannie Mae: Departing residence guidelines
Next Step
Model bridge interest and sale payoff with the Bridge Loan Calculator before making a non-contingent offer.
Frequently Asked Questions
What is a bridge loan in real estate?
A bridge loan is short-term financing that lets you buy a new home before selling your current one. The lender typically lends against equity in your departing home plus the new purchase, often up to 80% combined loan-to-value. Terms run 6 to 12 months with interest-only payments common. You repay the bridge when your old home sells and proceeds close.
How much does a bridge loan cost in 2026?
Bridge loan rates typically run 1% to 3% above standard 30-year fixed rates — often 8% to 11% in 2026. On a $200,000 bridge balance at 9%, interest-only payments are about $1,500 per month. Origination fees of 1% to 2% add $2,000 to $4,000 on $200,000. Budget double housing costs — bridge interest plus both properties' taxes and insurance until the sale closes.
Who qualifies for a bridge loan?
Lenders want significant equity in the departing home (often 20%+), strong credit (680+), and low debt-to-income (DTI) ratio on the combined properties. Some programs require a signed listing agreement on the old home before funding. Retirement assets and investment accounts may count as reserves. Not all lenders offer bridge products — credit unions and portfolio lenders are common sources.
Bridge loan vs home sale contingency: Which is better?
A sale contingency protects you if your home does not sell but makes offers less competitive — sellers prefer non-contingent buyers. A bridge loan funds the purchase without waiting, strengthening your offer in tight markets. Choose contingency if your market is slow and bridge costs outweigh risk; choose bridge when you need to win a bidding war and have equity to support short-term carry.
What happens if my home does not sell during the bridge term?
You must extend the bridge (if allowed), refinance into a longer-term product, or carry two mortgages if you have capacity. Extensions may cost fees and higher rates. Price the departing home realistically before bridging — overpricing is the main failure mode. Some lenders require a backup repayment plan from investments or a HELOC on the old home.
Bridge loan vs HELOC to fund a down payment: Which costs less?
A HELOC on the departing home funds only the down payment on the new home — you still need a first mortgage on the new property and must qualify for both payments. Bridge loans can cover more of the purchase but cost more in rate. HELOCs have lower upfront costs and variable rates; bridges are purpose-built for simultaneous buy-sell timing with defined payoff from sale proceeds.
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