Bridge Financing: How To Buy Before You Sell (Without Going Broke)

You found the right home, your offer was accepted, and now your closing date is May 30. The buyer of your current home wants June 15. Now what?

Bridge financing is the answer. It’s a short-term loan that covers the gap between when you have to fund the new purchase and when you receive the proceeds from selling your old home. Most buyers in this situation don’t know it exists until I tell them.

The mechanic

Say your new home costs $1.2M and you’ve sold your current home for $900K (firm sale, no conditions). You have $300K equity in the old home, which becomes your down payment on the new one. The challenge: you can’t access that $300K until your old home closes — which is two weeks AFTER you need to fund the new purchase.

Bridge financing solves this. Your lender extends a short-term loan (typically 1–6 months) for the equity portion, secured against both properties. You close the new purchase on time. Two weeks later, when the old sale closes, the proceeds pay off the bridge.

What bridge financing requires

• A firm sale on your current home— conditions waived, deposit in. Most lenders will not bridge against an offer that still has financing or inspection conditions outstanding.
• Closing dates that don’t line up— bridge is for closing-date mismatches, not market timing speculation.
• A new mortgage approved with the same lenderon the new home — most bridges are arranged through your purchase-side mortgage lender as a tied product.

The cost

Bridge loans are short-term, so they’re priced at higher rates than mortgages but applied for short windows. Typical structure:

• Interest rate: prime + 2–4% (so roughly 6.5–8.5% in 2026)
• Setup fee: $300–$1,000 depending on lender
• Legal fees: usually $200–$500 added to your closing legal bill since the lawyer registers an interim charge

On a typical 30-day bridge of $500K, you’re looking at roughly $3,500–$5,000 all-in. Cheap insurance compared to the alternatives.

What bridging avoids

1. Conditional offers on the new home. If the new property is in a competitive market, “subject to sale of buyer’s home” offers get rejected. Bridge financing means you can offer unconditionally.
2. Fire-selling your old home. Without a bridge, you might be tempted to accept a low offer just to align closing dates — easily costing tens of thousands.
3. Living in temporary accommodation. Hotel + storage + double moves can quickly exceed bridge financing costs.

The catches

• Most lenders want firm sales. If your home is still on the market when you commit to buy, that’s a different (and riskier) product called blanket financing— far fewer lenders offer it, rates are higher, and approval is much tighter.
• Maximum duration is usually 90 daysat major banks, 120 days at some monolines. Beyond that, you’re into specialty lenders.
• Approval depends on the new mortgage being approved first. Bridges are bolt-on products to your main mortgage, not standalone loans. If your purchase mortgage runs into issues, the bridge can’t save the deal.

What I do for clients in this situation

When clients are buying and selling at the same time, I lock in the bridge availability during the mortgage pre-approval phase — before they even start house-hunting. That way, when they find the right new home, the bridge is already understood and pre-arranged. Closing-date flexibility goes from a blocker into a non-issue.

Selling and buying simultaneously? Tell me your situation and I’ll set up the bridge alongside the purchase mortgage so timing never becomes the problem.