Bridge Home Loans
What is a Bridge Home Loan?
A Bridge Home Loan, sometimes called a swing loan or interim loan, is a short-term financing option designed to help homeowners transition from their current property to a new one. It provides temporary funds that allow borrowers to make a non-contingent offer on a new home before selling their existing property.
Benefits of a Bridge Home Loan
- Provides immediate access to funds for a down payment
- Allows you to make an offer on a new home without waiting for your current home to sell
- Can prevent the need for temporary housing or multiple moves
- Flexible repayment options, including interest-only until your home sells
- Typically quicker to close than traditional long-term financing
Who Should Consider a Bridge Home Loan?
- Homeowners who have found their next home but have not yet sold their current one
- Buyers in competitive markets who need to make non-contingent offers
- Families who want to avoid the inconvenience of moving twice
- Borrowers with strong equity in their current home
Eligibility
- Good credit history (usually 620 or higher)
- Adequate equity in your current home (often 20% or more)
- Acceptable debt-to-income ratio, usually 45–50% or less
- Sufficient documented income to cover payments during the loan term
Is It Right for You?
If you’re in the process of selling a home while purchasing another, a bridge loan may provide the short-term flexibility needed to secure your new property without unnecessary stress or delays.
Key Requirements
- Minimum credit score of around 620 (higher preferred for better terms)
- Equity in the current property (20–30% or more depending on lender)
- Verification of income and debt-to-income ratio
- Exit strategy: plan to repay once the existing home sells or long-term financing is secured
Types of Bridge Loans
- Swing Loan – Covers the gap between selling your current home and buying a new one.
- Interim Financing Loan – Used when you’ve already found your new home but are still waiting for your old one to sell.
- Residential Bridge Loan – Uses your current home as collateral for short-term financing.
Who Should Consider Each Type
- Swing Loan: Ideal for homeowners who want flexibility while shopping for their next home.
- Interim Financing: Best for buyers under contract who need temporary funds before their current home closes.
- Residential Bridge Loan: Great for buyers with strong equity and the need to move quickly.
Documents Needed
- Recent mortgage statements
- Property information for both homes
- Income verification (W-2s, pay stubs, or bank statements)
- Tax returns (if applicable)
- Credit report authorization
Advantages Over Other Loan Types
- Faster access to cash compared to traditional mortgages
- Removes the need for a contingent offer, strengthening your buying power
- Short-term solution until permanent financing is arranged
Considerations
- Higher interest rates than traditional mortgages
- Short repayment terms (6–12 months typical)
- Origination and closing fees can add to costs
- Risk of carrying two mortgages if the current home doesn’t sell quickly
FAQ
Q: How long do I have to repay a bridge loan?
A: Most bridge loans have terms of 6–12 months.
Q: Can I make interest-only payments?
A: Many lenders offer interest-only payments until your existing home sells.
Q: Do I need equity in my current home?
A: Yes, typically at least 20–30% equity is required.
Q: Are bridge loans more expensive than traditional mortgages?
A: Yes, due to their short-term nature, interest rates and fees are usually higher.
Get started today!
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