Bridge loan
A short-term loan that covers the gap between buying a new home and selling the old one. Paid off when the old home sells. Rates and fees run higher than regular mortgages.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
A bridge loan lets you buy the next home before this one sells, using this one's equity. It is short, expensive, and it is what some buyers use to make a non-contingent offer on your home.
Part 2 of 4
A simple example
You need $60,000 for a down payment on the next house before this one closes. A bridge loan against this home covers it and is repaid at closing.
| The situation | What the bridge loan does |
|---|---|
| You buy before you sell | Funds the down payment; repaid from your proceeds at closing |
| This home takes four months to sell | Four months of interest and fees on the bridge |
| A buyer uses one to buy your home | Their offer has no home-sale contingency, which is the point |
A bridge loan buys time with equity, and it costs by the month.
Part 3 of 4
What people get wrong
That a bridge loan replaces selling. It is repaid by the sale, so a home that does not sell turns the bridge into a problem.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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