Closing dates don’t always line up and this situation can create a lot of stress for Buyers. Bridge financing is one of the most effective tools your lender has to give you flexibility and peace of mind. Bridge financing is a short-term loan that helps buyers access the equity in their current home before it officially closes. This allows you to move ahead confidently with your purchase—even if your sale doesn’t close until days or weeks later.

For example: If your new home closes two weeks before the sale of your current home, a bridge loan lets you cover the down payment and closing costs without scrambling for cash or delaying your offer.

How It Works

1. You purchase a new home with a set closing date.

2. Your current home is sold, but closing is later.

3. Your lender arranges a short-term loan to cover the needed down payment funds.

4. When your existing home officially closes, the bridge loan is automatically paid off.

What Lenders Require

To qualify, lenders want to see:

• A firm sale on the current property (signed agreement of purchase & sale)

• Enough equity in the property being sold

• Good credit and stable finances

Some lenders will consider bridge loans without a firm sale, but rates and fees are dramatically higher, so it’s best to avoid this where possible.

Typical Costs

Since bridge financing is short-term, the total cost is usually manageable:

• Interest Rate: Usually Prime + 2% to Prime + 5%

• Admin Fee: Often a few hundred dollars

• Interest Charged Daily (because the loan is short-term)

A helpful rule of thumb: Every $10,000 borrowed costs roughly $2.04 per day.

For many buyers, paying a few hundred dollars is worth the peace of mind.

Why Bridge Financing Helps

• Stronger offers: clients can go firm without worrying about timing.

• More flexibility: They can move in early or take time to prep their existing home for sale.

• Reduced stress: No more scrambling to line up two closings perfectly.

What Clients Should Be Aware Of

Bridge loans come with:

• Higher interest than a standard mortgage

• Limited lender availability

• Financial risk if their sale is delayed or falls through

That’s why early planning is key.

Alternatives to Bridge Financing

Buyers can also consider:

• Negotiating a different closing date

• Using a HELOC

• Leveraging personal savings or a line of credit