Bridge Loans Explained: Buying Before Selling in California

In a fast-moving real estate market, timing can make all the difference. Many California homeowners find their dream home before their current property sells, leaving them wondering, “How can I buy now without waiting for my sale to close?” That’s where a bridge loans come in. It’s a short-term financing solution that helps you buy a home before selling your old one, giving you the flexibility to move forward without missing an opportunity.

What Is a Bridge Loan?

A bridge loan is a temporary loan that “bridges” the gap between buying a new home and selling your existing one. It provides funds for your new home’s down payment or full purchase price while your current property is still on the market.

Once your existing home sells, you use the sale proceeds to pay off the bridge loan.

Bridge loans are designed for short-term use, typically lasting six months to one year, making them ideal for homeowners who have built equity in their current property but need quick access to funds before that equity is liquid.

How a Bridge Loan Works

Here’s how the process generally unfolds:

You apply for a bridge loan using the equity in your current home as collateral.
Your lender approves the loan based on your equity, credit, and income.
Funds are disbursed so you can make a down payment or buy your new home outright.
You list and sell your old home, ideally within the bridge loan term.
Proceeds from the sale are then used to pay off the bridge loan and any remaining balance.

In simple terms: a bridge loan helps you move forward first and sell later.

Benefits of a Bridge Loan in California

Bridge loans offer several key advantages for homeowners in California’s competitive housing market:

1. Buy Without Contingencies

In California, sellers often favor buyers who don’t have “sale contingencies.” A bridge loan allows you to buy a home before selling your old one, making your offer stronger and more appealing.

2. Access Home Equity Immediately

Instead of waiting for your sale to close, you can tap into the equity you’ve built to fund your next purchase.

3. Avoid Temporary Housing or Storage Costs

Without a bridge loan, many homeowners have to move into rentals between transactions. A bridge loan allows for a seamless transition from your old home to your new one.

4. Reduce Stress and Rushed Sales

With extra time to sell your old property, you can wait for the right offer, rather than settling under pressure.

When a Bridge Loan Makes Sense

A bridge loan isn’t for everyone, but it’s a perfect fit in certain situations:

You’ve found your next home but haven’t sold your current one yet.
You have significant equity (typically at least 20–30%) in your current property.
You want to avoid making contingent offers that weaken your buying position.
You need quick, flexible financing to stay competitive in California’s fast-paced real estate market.

Example:
Imagine a homeowner in Sacramento who finds their ideal house listed below market value. Their current home is still awaiting offers, but with a bridge loan, they can secure the new property immediately, then pay off the bridge loan once their old home sells a month later.

Things to Consider Before Taking a Bridge Loan

While bridge loans provide flexibility, they also come with unique features to understand:

Short-term costs: Interest rates are typically higher than long-term mortgage rates.
Dual payments: You might temporarily pay both your existing mortgage and the bridge loan until your sale closes.
Approval criteria: Lenders assess your credit score, income stability, and home equity to determine eligibility.

These loans work best for homeowners confident their current home will sell soon or those in markets with strong buyer demand, like California’s Central Valley, Bay Area, or Inland Empire.

Alternatives to Bridge Loans

If a bridge loan isn’t the right fit, there are other financing strategies that can help you buy before selling:

Home Equity Line of Credit (HELOC): Access cash from your existing equity without refinancing.
Contingent Offer: Make your purchase conditional on selling your current home (though less competitive).
Temporary Financing or Private Loan: Explore short-term lending options if your timing is tight.

Each path has pros and cons, the right choice depends on your goals, timeline, and risk tolerance.

How to Qualify for a Bridge Loan in California

Lenders typically look for:

Strong equity position (usually 20–30% or more in your current home)
Good credit history
Reliable income to handle short-term payments
A realistic plan to sell your existing home within the loan period

Bridge loans can close quickly, often in two to three weeks, making them ideal for competitive purchase situations.

Is a Bridge Loan Right for You?

A bridge loan can be a strategic move when timing is everything. It’s especially useful if:

You’ve found your dream home before your current one sells.
You’re upgrading or downsizing in California’s competitive market.
You want to move once, not twice.

With the right guidance, a bridge loan can make your transition smooth, stress-free, and financially smart.

Make Your Move with Buwalda Mortgage Services

Buying your next home before selling your current one doesn’t have to be stressful. At Buwalda Mortgage Services, we help California homeowners explore bridge loan options that make sense for their goals, timelines, and financial needs.

Our team has decades of experience navigating California’s dynamic real estate market and we’re here to ensure your move is seamless from start to finish.

📞 Contact Buwalda Mortgage Services today to learn how a bridge loan can help you buy your new home before selling your old one.