A bridge loan is a short-term financing option that helps homeowners transition between two properties. It provides temporary funds to cover the down payment or full purchase price of a new home while you wait for your current home to sell. Once your existing home is sold, the proceeds are used to pay off the bridge loan.

Bridge loans are typically used by homeowners in competitive real estate markets where quick action is needed to secure a new home.

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Bridge Loan Requirements

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Bridge loans are short-term loans, and while they don’t have the same strict requirements as long-term mortgages, lenders will still assess your financial profile. Common requirements include:

• Equity in Your Current Home: Lenders typically require that you have at least 20% equity in your current home to qualify for a bridge loan.

• Credit Score: A minimum credit score of 620 or higher is usually required, though stronger credit will result in better terms.

• Repayment Plan: You must have a clear strategy for repaying the loan, which usually involves selling your existing home quickly or refinancing into a long-term mortgage once the sale is complete.

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Bridge Loan Benefits

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• Quick Access to Funds: Bridge loans provide fast financing, allowing you to act quickly on purchasing a new home without waiting to sell your current property.

• No Monthly Payments: Some bridge loans don’t require monthly payments during the loan term, instead rolling the interest into the final payoff amount.

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The Bottom Line on Bridge Loans

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A bridge loan is a great solution if you need temporary funds to purchase a new home before selling your current one. If you’re in need of short-term financing to close the gap, contact us today to explore your options.