Bridge Loans - The Home Loan Center

Short-term financing which is expected to be paid back relatively quickly, such as by a subsequent longer-term loan.

A bridge loan is often commonly referred to as a "swing" loan.

Bridge loans are often utilized when a borrower is selling one home and purchasing another home or having a home built. In the new home scenario a bridge loan is used if the two settlements are not on the same day, and the borrower needs the money for a down payment on the new home before the old home settles. For new construction a larger initial deposit may be required or larger periodic payments while the home is being built

To qualify for a bridge loan, the borrower normally must have a contract to sell the existing house.

Most borrowers can also go with a stated loan program to eliminate the bridge loan.

The bridge loan will hold the equity from your existing home until your current home sells. Bridge loans are common in construction loans & when people relocate.

Rarely used as much as they used to, bridge loans are for people who haven't sold their present property, but must close on a new property. The bridge loan becomes the source of their funds for the down payment.

How do you get the funds for a down payment to buy a home before
you sell your current home? One option you may have is to obtain a
bridge loan. A bridge loan "bridges" the gap in time between buying a
new home and selling your current home.

A bridge loan is typically a second mortgage. The amount you can
borrow is based on how much equity you have in your property. The
maximum amount you can borrow is typically 90% of your current
home value, minus your first mortgage balance.