Bridge Financing: Buying Before Your Sale Closes

Why the timing gap happens

It's common for a buyer's new home to close before their existing home's sale closes, whether by a few days or a few weeks — closing dates are negotiated independently for each transaction and rarely line up perfectly by coincidence. That gap creates a real problem: you may need your equity from the home you haven't sold yet to fund the down payment on the home you're about to close on.

How bridge financing actually works

A bridge loan is a short-term loan, usually arranged through the same lender handling your new mortgage, that advances you funds against the equity in your current, unsold home — funds you'll use toward your new purchase's down payment. It's automatically repaid the moment your existing home's sale actually closes and those proceeds land, which is why lenders generally require a firm, unconditional sale agreement on your current home before approving one; a merely listed home isn't enough.

What it costs

Because it's short-term, the total dollar cost is often manageable even though the annualized rate looks high — but it's a real cost that needs to be part of your closing budget, not an afterthought. See what your new mortgage payment looks like on the mortgage payment calculator before layering a bridge loan on top.

When you might not need one

If you can arrange your closing dates to align — either by negotiating a longer closing on your purchase or a rent-back arrangement after your sale closes — you can sometimes avoid needing bridge financing altogether. It's worth raising this possibility with your realtor early in the process, since it's much easier to negotiate matching dates upfront than to arrange bridge financing under time pressure later.

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