Bridge HELOCs: Using Equity to Buy Your Next Home Before Selling

Navigating the real estate market is no small feat, especially when trying to buy a new home before selling your current one. That’s where a Bridge HELOC comes in—a financing strategy that helps homeowners use the equity in their current property to secure their next home. This guide breaks down how a Bridge HELOC works, its benefits, key considerations, and how to use it strategically.

What is a Bridge HELOC?

A Bridge HELOC (Home Equity Line of Credit) is a short-term financing option that allows homeowners to borrow against the equity in their existing home. It’s particularly useful in competitive housing markets where buying before selling is advantageous. Unlike a traditional bridge loan, a HELOC offers a revolving credit line, giving homeowners flexibility in how much they borrow and when.

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• Approval in 5 minutes. Funding in as few as 5 days
• Borrow $20K-$400K
• Consolidate debt or finance home projects
• Fastest way to turn home equity into cash
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How Does a Bridge HELOC Work?

Here’s a step-by-step overview:

1. Determine Your Available Equity
   Lenders typically allow you to borrow up to 80–85% of your home’s value, minus your existing mortgage balance.
   
2. Apply for the HELOC
   A lender evaluates your credit score, income, debt-to-income ratio, and home equity.
   
3. Draw Funds as Needed
   Once approved, you can use the funds toward a down payment or closing costs on your new home.
   
4. Repay Upon Sale
   When your current home sells, the HELOC is paid off with the proceeds.
   

Tip: Using a HELOC gives you more control over timing—helping you avoid rushed sales or contingent offers that may weaken your buying position.

Advantages of Using a Bridge HELOC

• Non-Contingent Offers
  Strengthen your negotiating power with offers that don’t rely on selling your current home.
  
• Avoid Moving Twice
  Move directly into your new home without temporary housing.
  
• Interest-Only Payments
  Most HELOCs require interest-only payments during the draw period, easing cash flow pressure.
  
• Flexibility
  Only pay interest on what you borrow, and use the credit line as needed.
  

Risks and Considerations

While bridge HELOCs offer significant advantages, they come with risks:

• Short-Term Debt Pressure
  You must repay the HELOC quickly, often within 6–12 months.
  
• Market Uncertainty
  If your home doesn’t sell as expected, you could be stuck with two payments.
  
• Variable Interest Rates
  HELOCs often have variable rates, meaning monthly payments can increase over time.
  

Talk to our lending specialists to explore if a Bridge HELOC is right for you. Contact us today!

Qualifications for a Bridge HELOC

To qualify, you generally need:

• Minimum 680 credit score
  
• Debt-to-income (DTI) ratio below 43%
  
• Sufficient home equity (typically 20%+)
  
• Stable income and employment history
  

Related: Learn how to calculate your home equity in our Home Equity 101 guide.

Alternative Options to Bridge HELOCs

If a HELOC doesn’t fit your situation, consider these alternatives:

• Bridge Loans
  Lump-sum financing for a shorter term, often with higher interest.
  
• Home Equity Loans
  Fixed-term, fixed-rate borrowing.
  
• Sale-Leaseback Agreements
  Sell your home and lease it back temporarily while shopping for a new one.
  

Wondering which route is best? Our mortgage advisors can walk you through tailored solutions. Schedule a free consultation.

FAQs About Bridge HELOCs

Read Next

• Home Equity Loans: A Guide to Using Your Home’s Value
  
• The Home Equity Loan Process: How Long Does it Take To Turn Your Home Equity into Cash
  

Final Thoughts

A Bridge HELOC can be a smart, flexible way to transition between homes without the stress of perfectly timing your sale and purchase. However, it requires careful planning and a solid understanding of your finances and market conditions. If you’re considering this path, speak with a mortgage advisor to evaluate your options.

Unlock Your Home Equity with Figure

• Approval in 5 minutes. Funding in as few as 5 days
• Borrow $20K-$400K
• Consolidate debt or finance home projects
• Fastest way to turn home equity into cash
• 100% online application

Check Rates