What You Need to Know

A bridge loan is a short-term loan (typically 6 to 12 months) that uses the equity in your current home as collateral, letting you buy a new property before your existing home sells. You carry two mortgages temporarily: your original mortgage plus the bridge loan, which you repay in full once your old home closes. Bridge loans typically require at least 20 percent equity in your current home, a debt-to-income ratio under 43 percent including both mortgages, and strong credit (usually 680 or higher).

How Bridge Loans Work in the US

A bridge loan covers the down payment and closing costs for your new home while your current property is still on the market. Most US lenders structure bridge loans in one of two ways: as a separate second lien on your existing home, or as a single loan that rolls your old mortgage balance and the new funds together.

According to the Consumer Financial Protection Bureau, borrowers must demonstrate the ability to carry both the existing mortgage and the new loan simultaneously, a requirement that often limits bridge loan approval to buyers with significant equity and stable income (CFPB, 2026). The loan is due in full when your current home sells, at which point the proceeds pay off the bridge loan and your original mortgage.

Interest rates on bridge loans typically run 2 to 3 percentage points higher than conventional mortgage rates as of July 2026, reflecting the short-term, higher-risk nature of the product. Many lenders charge an origination fee (1 to 2 percent of the loan amount) plus standard closing costs.

Costs and Qualification Requirements

Bridge loan costs stack up quickly. Beyond the higher interest rate, you pay closing costs on the bridge loan itself (appraisal, title search, lender fees), then closing costs again on your new home’s mortgage. Total upfront costs often reach 3 to 5 percent of the bridge loan amount.

Lenders evaluate your debt-to-income ratio using the combined payment burden: your current mortgage, the bridge loan payment, and the new home’s mortgage (or just the new mortgage if the bridge loan pays off the old one). As covered in foundational lending texts such as Principles of Finance, lenders require sufficient income to service all debts comfortably, which is why most bridge loan applicants need a DTI below 43 percent and documented reserves covering several months of payments.

Most US lenders cap bridge loans at 80 percent of your current home’s appraised value minus your existing mortgage balance. If your home is worth $400,000 and you owe $200,000, the maximum bridge loan is typically $120,000 (80 percent of $400,000 = $320,000, minus the $200,000 owed).

Read also: First-Time Home Buyer Guide to Getting a Mortgage in the United States

When a Bridge Loan Makes Sense

Bridge loans work best in competitive markets where waiting for your home to sell means losing the new property. They are common in high-demand metro areas where buyers need to act fast and where homes typically sell within 60 to 90 days.

Consider a bridge loan if you have substantial equity (at least 20 percent, ideally more), a strong credit profile, steady income that supports dual payments for several months, and a realistic listing price on your current home. Real estate professionals often recommend bridge loans when relocating for work on a tight deadline or when you have found a property that meets specific needs and competing offers are likely.

Skip the bridge loan if your current home has been on the market for months without offers, if carrying two mortgages would stretch your finances dangerously thin, or if the new property allows a longer closing timeline. In those cases, a home equity line of credit (HELOC), a contingent offer (making your purchase contingent on selling your current home), or simply renting temporarily may be safer and less expensive alternatives.

What to Do Next

If a bridge loan fits your situation, start by asking your current mortgage lender if they offer bridge financing (many do, and existing customers sometimes get better terms). Compare offers from at least two other lenders, focusing on the total cost (rate, fees, and closing costs combined) rather than rate alone. Get pre-approved for both the bridge loan and your new mortgage before making an offer, and work with a licensed real estate agent who understands contingent and non-contingent offers in your local market.

Have a realistic backup plan if your current home does not sell within the bridge loan term. Some lenders allow a one-time extension for an additional fee, but extension terms vary widely.

Disclaimer: This article provides general educational information about bridge loans in the United States and is not personalized financial, lending, or legal advice. Loan availability, rates, terms, and qualification requirements vary by lender, location, and individual financial situation. Rates and fees mentioned are as of July 2026 and change frequently. Carrying two mortgages simultaneously involves significant financial risk; consult a licensed mortgage loan officer or housing counselor approved by the U.S. Department of Housing and Urban Development (HUD) to evaluate whether a bridge loan is appropriate for your specific circumstances before proceeding.