What Is a Bridge Loan, and Does It Make Sense When You're Buying Before You Sell?

A bridge loan is short-term financing that lets you borrow against the equity you already have in your current home to cover the down payment and closing costs on a new home before your old one sells. Most bridge loans run six months to a year, usually require at least 20% equity in your current home, and come with a setup fee of roughly 2% of the loan amount plus an interest rate noticeably higher than a regular mortgage. They solve a real timing problem for buyers who need to move before their sale closes, but that convenience costs real money, so it's worth understanding exactly how the math works before you sign up for one.

How Does a Bridge Loan Actually Work?

A bridge loan taps the equity in your current home so you can make a down payment on your next one without waiting for your sale to close. Some lenders require no monthly payments during the loan term and instead collect everything in a lump sum once your old home sells; others charge interest-only payments along the way. Most lenders also want proof that your current home is already listed for sale before they'll approve the loan, since the whole structure depends on that sale actually happening.

What Does a Bridge Loan Cost in 2026?

Expect a setup fee around 2% of the loan amount, so a $200,000 bridge loan runs roughly $4,000 in fees before you even get to interest. Rates from California bank lenders have been running in the high-7% to 8% range, with hard money lenders charging closer to 9.5% to 11%. For comparison, the conventional 30-year fixed mortgage rate climbed to 7.4% in early October 2026, its highest level since late 2023 — so a bridge loan on top of your new mortgage is genuinely expensive debt, not a minor add-on.

Do You Qualify for a Bridge Loan?

Lenders generally want to see at least 20% equity in your current home, and some ask for as much as 50% depending on the program; if you owe more than 80% of what your current home is worth, you likely won't qualify at all. Credit score requirements typically start around 650, and lenders will look at whether you can realistically carry your current mortgage, your new mortgage, and the bridge payment all at once — though if your old home is already in contract with a buyer who has final loan approval, some lenders will only count your new mortgage payment in that calculation.

What Are the Alternatives to a Bridge Loan?

A HELOC or a home equity loan against your current home is usually cheaper if you can get one in place before you list, since both tend to carry lower rates than a true bridge loan. A cash-out refinance is another option, though you generally can't take out two owner-occupied loans within the same year. Some buyers use an 80-10-10 piggyback loan to buy with just 10% down and avoid mortgage insurance, accepting that they'll carry three payments at once until the old home sells. A handful of buyers borrow against a 401(k) instead, though that comes with its own repayment timeline and can affect how much mortgage you qualify for.

Is a Bridge Loan Right for You in Los Angeles County?

A bridge loan tends to make the most sense when you've found the right home in a competitive neighborhood, you have solid equity built up, and you're confident your current home will sell within a few months. It makes less sense if your equity is thin, if carrying two or three payments at once would stretch your budget uncomfortably, or if your current home might take longer than expected to sell in today's market. Before committing, run the real numbers with your lender and talk to your agent about realistic timing for your sale — the fees and rate only make sense if the move itself is worth paying for.

Frequently Asked Questions

How long do I have to pay off a bridge loan? Most bridge loans run six months to a year, with the balance due when your current home sells. Some lenders offer extensions if your sale takes longer than expected, usually for an additional fee.

Can I get a bridge loan if my home isn't on the market yet? Most lenders require proof that your current home is actively listed for sale before approving a bridge loan, since the loan's repayment depends on that sale closing.

Is a HELOC cheaper than a bridge loan? Generally, yes, if you can set one up before you list your home — HELOCs typically carry lower rates than a dedicated bridge loan. The catch is you need to arrange it in advance, since lenders are less likely to approve a new HELOC once your home is already under contract.

What happens if my home doesn't sell before the bridge loan is due? You'll likely need to request an extension, refinance into longer-term financing, or, in some cases, risk default if the lender isn't willing to work with you. This is why most lenders and agents recommend pricing your home realistically and having a backup plan before taking on a bridge loan.

Updated for October 2026.