A bridge loan lets you use the equity in your current home before it sells. The lender’s combined loan-to-value limit sets how much.
How it works
Equity available = value × combined loan-to-value limit − what you owe
The limit applies to everything borrowed against the home together: your current mortgage plus the bridge loan. Add the next home’s price and your planned down payment to see how much of it the equity covers.
Keep in mind
- Bridge loans carry their own costs and usually a short term; the sale of the current home pays them off.
- Selling costs come out of the sale, so the equity you end up with is less than the value minus the balance.
Questions
How much can I borrow with a bridge loan?
Up to the lender’s combined limit on your current home, minus what you owe. At 80% on an $800,000 home with $300,000 owed, that is up to $340,000. See also: Construction & bridge loans.
What happens if my home doesn’t sell?
You carry both payments until it does, and the bridge loan comes due at the end of its term. Ask about extensions before you commit.
