Bridge Loan for Home Purchase 2026: Complete Guide to Short-Term Financing
Need to buy before you sell? Learn how bridge loans work, current rates (8.5-12%), costs, requirements, and alternatives to bridge the gap between homes.
🌉 Bridge Loan 2026 Quick Facts
- ✓Interest Rates: 8.5-12% APR
- ✓Loan Term: 6-12 months
- ✓Max LTV: 80% combined
- ✓Min Equity: 20% in current home
- ✓Credit Score: 680+ (700+ preferred)
- ✓Closing Time: 2-3 weeks
- ✓Closing Costs: 1.5-3%
- ✓Best For: Hot markets, quick moves
📋 Table of Contents
What is a Bridge Loan?
A bridge loan is short-term financing that helps you buy a new home before selling your current one. It "bridges" the gap between the two transactions by using your current home's equity as collateral.
Bridge loans are ideal when you find your dream home but haven't sold your current property yet. They allow you to make a non-contingent offer, which is much more competitive in hot markets.
💡 When to Use a Bridge Loan:
- • You found your dream home but haven't sold yet
- • You're in a competitive market where contingent offers lose
- • You need to move quickly for a job or family reasons
- • You have significant equity in your current home (20%+)
How Bridge Loans Work
Step 1: Apply for Bridge Loan
Apply with a lender who offers bridge financing. You'll need to provide info on both your current home (value, mortgage balance) and the new home you want to buy.
Step 2: Get Approved Based on Equity
Lenders calculate your available equity and approve a loan amount (typically up to 80% of combined home values minus existing mortgages).
Step 3: Use Funds for Down Payment
Use the bridge loan proceeds for your new home's down payment and closing costs. This allows you to make a non-contingent offer.
Step 4: Carry Both Mortgages Temporarily
For a few months, you'll pay your old mortgage, new mortgage, AND bridge loan interest. This is the most expensive phase.
Step 5: Sell Old Home & Pay Off Bridge Loan
When your old home sells, use the proceeds to pay off the bridge loan in full. Any remaining equity is yours to keep.
Bridge Loan Costs Breakdown
| Cost Type | Typical Range | Example ($500K Loan) |
|---|---|---|
| Interest Rate | 8.5-12% APR | $500K loan × 10% ÷ 12 = $4,167/month |
| Origination Fee | 1-2% of loan | $500K × 1.5% = $7,500 |
| Appraisal Fee | $500-750 | $600 (both properties) |
| Title Insurance | $1,000-2,000 | $1,500 |
| Closing Costs | 1.5-3% total | $500K × 2% = $10,000 |
| Administration Fee | $500-1,000 | $750 |
⚠️ Total Cost Warning:
A $500K bridge loan held for 6 months could cost $15,000-$25,000 in interest and fees. Make sure the benefits outweigh the costs before proceeding.
Real-World Bridge Loan Example
Scenario: The Johnson Family
Current Situation
- Current Home Value: $500,000
- Current Mortgage: $200,000
- Available Equity: $300,000
- New Home Price: $600,000
Bridge Loan Details
- Bridge Loan Amount: $150,000
- Interest Rate: 10%
- Monthly Interest: $1,250
- Closing Costs: $4,500
Total Cost if Sold in 6 Months
Interest: $1,250 × 6 = $7,500
Closing Costs: $4,500
Total: $12,000
Worth it? If a non-contingent offer helped them win in a competitive market, potentially yes. If they could have sold first, probably not.
Top Bridge Loan Lenders 2026
| Lender | Rate | Max LTV | Term | Best For |
|---|---|---|---|---|
| PNC Bank | Prime + 2% | 80% | 12 months | Existing PNC customers |
| US Bank | 8.5-10% | 80% | 6-12 months | Strong credit borrowers |
| Kiavi | 9-11% | 75% | 12-24 months | Real estate investors |
| Lima One | 9.5-12% | 75% | 12 months | Fix and flip |
| Local Credit Unions | 8-10% | 80% | 6-12 months | Members with relationships |
Compare Bridge Loan Options
Get quotes from multiple lenders to find the best rate for your situation.
Compare Bridge Loan Rates →Bridge Loan Alternatives
| Feature | Bridge Loan | HELOC | Contingent Offer | Cash-Out Refi |
|---|---|---|---|---|
| Interest Rate | 8.5-12% | 8-9% | N/A | 7-7.5% |
| Loan Term | 6-12 months | 10-20 years | N/A | 15-30 years |
| Approval Time | 2-3 weeks | 2-4 weeks | Instant | 30-45 days |
| Closing Costs | 1.5-3% | 0-2% | $0 | 2-5% |
| Risk Level | High | Medium | Low | Low |
| Best For | Hot markets | Planned moves | Slow markets | Long timeline |
Pros and Cons of Bridge Loans
✅ Pros
- ✓Make non-contingent offers
- ✓Win in competitive markets
- ✓Avoid moving twice
- ✓Fast approval (2-3 weeks)
- ✓Flexible use of funds
- ✓Interest may be tax deductible
❌ Cons
- ✗High interest rates (8.5-12%)
- ✗Expensive closing costs
- ✗Risk if home doesn't sell
- ✗Carrying 3 payments temporarily
- ✗Requires significant equity
- ✗Not all lenders offer them
Frequently Asked Questions
Need to Buy Before You Sell?
Compare bridge loan rates and alternatives to find the best solution for your situation.
Meet David
Refinance & Rate Specialist
David Rodriguez is a seasoned refinancing expert with over 10 years of experience in mortgage rate analysis and market trend forecasting. As a Certified Rate Lock Specialist, he has saved homeowners millions in interest payments through strategic refinancing timing. His expertise in Federal Reserve policy impact and mortgage-backed securities makes him a go-to expert for rate predictions and refinancing strategies.
EXPERTISE:
KEY ACHIEVEMENT:
Saved clients $50M+ in interest payments