Written and reviewed by Jack Gladden, Senior Loan Officer, NMLS #1470164
Updated · 5-minute read · How these guides are written
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Cash-backed offers in brief
- Cash-backed offer
- A partner buys the home you want with cash, then sells it to you once your mortgage closes. To the seller, it’s a cash offer.
- Buy before you sell
- Use your current home’s equity for the next down payment, so your offer doesn’t depend on selling first.
- Guaranteed sale
- Some programs promise to buy your old home at a price set up front if it doesn’t sell within a set period.
- What it costs
- Program fees of roughly 1% to 3% of the price or your home’s value, on top of normal closing costs.
- The alternative
- A fully underwritten pre-approval, a bridge loan or a HELOC can compete well for less.
- Where
- Homes in California, Arizona, Florida and Ohio, where a program operates.
Ways to buy before you sell.
Cash-backed offer
The partner buys with cash and you buy from them with your mortgage, often within weeks. Some programs have you rent from them until you close.
Best forWinning against cash buyers
Buy before you sell
The program lends against your current home’s equity, often up to 80–90% of its value combined with your mortgage, and may guarantee to buy it.
Best forMoving once, without a sale contingency
Bridge loan
A short-term loan, usually 6 to 12 months, against your current home. Some let you skip payments for the first few months.
Best forOwning the new home from day one
HELOC or two mortgages
Draw on a line of credit opened before you list, or carry both payments if your income supports them.
Best forLower cost, if you qualify for both
For bridge loans in more detail, see construction and bridge loans; for lines of credit, second mortgages and HELOCs.
How a cash-backed offer works.
Full approval first
You’re underwritten for the mortgage before shopping, and the program sets a price limit from that approval.
The partner offers cash
Your agent writes the offer in the partner’s name, with no financing or appraisal contingency, and it closes on a cash timeline.
You buy it from them
Your mortgage closes, usually within weeks, and the home transfers to you. In lease-back programs you rent until then.
Fees at closing
The program fee is paid at your purchase, along with normal closing costs.
Questions to ask any program
- What is the fee, and is it a share of the price or of your current home’s value?
- What happens if the appraisal comes in below the price?
- Do you rent from the partner before you own the home, and at what cost?
- If you have a guaranteed sale, what price is set, and when does it apply?
- What does it cost to cancel, and are there extra fees if closing is delayed?
Weighing a cash-backed offer?
Tell me the price range and your situation. I’ll compare the program fees with a strong pre-approval and show you what each really costs.
Using your current home’s equity.
- How much
- Programs typically lend up to 80–90% of your home’s value, less what you owe, for the next down payment.
- Two payments
- If your old home is under a guaranteed backup offer, many lenders can leave its payment out of your debt-to-income ratio. Otherwise you qualify carrying both.
- Guaranteed sale
- If the home doesn’t sell in a set period, often about six months, the program buys it at a price agreed up front. Compare that price with what it would likely sell for.
- Costs while you wait
- Some charge interest or a monthly fee until you sell; others defer payments for a few months.
Is it worth the fee?
A good fit if
- Homes in your range get several offers and cash often wins
- Most of your down payment is tied up in your current home
- You want to move once and avoid renting in between
- You can’t carry two mortgage payments on your income
Look elsewhere if
- Offers with financing are winning in your marketBetter: a fully underwritten pre-approval and a fast close
- You have the down payment in savingsBetter: a standard offer, with no program fee
- You can qualify with both paymentsBetter: a HELOC or a bridge loan, which usually cost less
The catch.
- Fees add up. Program fees come on top of normal closing costs, so compare the total, not just the rate.
- Price limits. Programs cap the price at your approval, so you can’t stretch above it.
- Guaranteed doesn’t mean full price. A backup offer may be well below market; it’s a floor, not the goal.
- Availability. Programs operate in some markets and price ranges, not everywhere.
- Seller and agent buy-in. Your agent has to work with the program’s process and paperwork.
How we get started.
Tell me the plan
Your current home, what you owe, the price range and your timing.
I compare the options
Cash-backed and buy-before-you-sell programs, bridge loans, HELOCs and a strong standard pre-approval, with the real cost of each.
Full approval
Underwritten before you shop, so your offer holds up.
Offer and close
I work with your agent and the program from offer to keys.
Cash-backed offers, answered plainly.
Are buy-before-you-sell programs worth it?
They can be when cash offers are winning and your down payment is tied up in your current home. If you have the cash or can carry both payments, a standard offer, a HELOC or a bridge loan usually costs less.
Is there a way to buy a house before you sell your house?
Yes: carry both mortgages if your income supports it, use a HELOC or bridge loan on your current home, or use a buy-before-you-sell program.
Can I get pre-approved before I sell my house?
Yes. The lender counts your current payment unless the home is under contract or covered by a program’s guaranteed offer, so I’ll show you both ways. See also: Bridge loan vs HELOC to buy before you sell.
What happens if you buy a house before your house sells?
You carry both homes until it sells, unless a program guarantees to buy it. A bridge loan or program can cover the down payment in the meantime.
Does it make sense to pay off a mortgage before selling a house?
Usually not. The mortgage is paid off from the sale at closing; paying it early just ties up cash you may need for the next home. See also: Home sale proceeds calculator.
What happens if I sell my house and don’t buy another one?
Nothing requires you to buy again. Under IRS rules, up to $250,000 of profit ($500,000 for most married couples filing jointly) is usually tax-free if you owned and lived in the home for two of the last five years. Check your situation with a tax professional. See also: Bridge loan vs HELOC to buy before you sell.
Is a cash-backed offer really a cash offer?
To the seller, yes: the partner pays cash with no financing contingency. You still get a mortgage, just after the partner has bought the home.
What is the 3-3-3 rule for buying a house?
A budgeting rule of thumb, not a lending rule, and versions vary: one common version is three months of savings in reserve, a price around three times your income, and planning to stay at least three years. Lenders use your debt-to-income ratio instead; the affordability calculator shows what that allows.
Construction & bridge
Conventional
Jumbo
Second mortgage & HELOC