A short-term loan that bridges the gap between buying a new home and selling your current one. Lets you use equity in your existing home for the new down payment.
A bridge loan solves a specific problem: you want to buy a new home but your money is tied up in the equity of your current home, and you can't or don't want to sell first. The bridge loan provides short-term financing — typically 6 to 12 months — to bridge the timing gap.
You borrow against your current home's equity (sometimes alongside the new mortgage), use that money for the new down payment, and repay the bridge when your current home sells.
Bridge loans are convenient but expensive: rates are typically 1–2 points higher than standard mortgages, plus origination fees. Use them when timing matters more than cost — e.g., to win a competitive purchase without a home-sale contingency.
Example
You're under contract on a $700K new home and need $140K down. Your current home (worth $500K, $200K mortgage balance) has $300K equity. A bridge loan lets you tap $140K of that equity for the new down payment, repaid when your old home sells.
Also known as
bridge financing, swing loan, gap loan