How much equity do I need for a bridge loan?

Most lenders require at least 20% equity in your current home. The loan-to-value ratio is typically capped at 80% of combined property value. A credit score of 620+ is required, with 740+ for the best rates. You also need to show you can carry both your existing mortgage and the bridge loan interest payments.

Bridge Loan Calculator

Q: What happens if my home doesn't sell before the bridge loan expires?

If your home doesn't sell within the bridge loan term, you may need to request an extension (0.25-0.5% fee), reduce your asking price, or in a worst case, sell at a loss. Some lenders allow one extension of 3-6 months. Price your home competitively and factor in local average days on market when choosing the loan term.

Calculate the cost of a bridge loan for buying a new home before selling your current one. Compare bridge loan vs HELOC vs 401(k) loan, see month-by-month carrying costs, and find the cheapest way to bridge the gap.

Calculate the total cost of a bridge loan for your home purchase

Current home value

Estimated market value of your current home

Current mortgage balance

New home purchase price

Bridge loan amount

Typically: down payment + closing costs - liquid assets

Interest rate

Typical: 8.5-12% (prime + 4-6%)

Loan term

Typical: 6-12 months

Origination fee

Typical: 1.5-3% of loan amount

Closing costs

Current mortgage payment

Monthly payment on existing mortgage

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How to Use This Calculator

Bridge Loan Cost tab

The default tab. Enter your current home value, mortgage balance, new home purchase price, and bridge loan amount. The calculator computes monthly interest-only payments, total interest cost, origination fee, combined monthly payment burden, and available equity. Expand "More options" to adjust interest rate (default 9.5%), loan term (6-36 months), origination fee, closing costs, and your existing mortgage payment.

Alternatives tab

Compare five financing options side by side: bridge loan, HELOC, home sale contingency, 401(k) loan, and piggyback loan (80/10/10). See total cost, monthly payment, speed, and pros/cons for each option. The calculator recommends the best option based on your timeline urgency and shows the lowest-cost alternative.

Timeline tab

See month-by-month carrying costs with a bridge loan, including cumulative cost at each month. Set your expected months to sell, listing price, and market conditions (hot/normal/cold). The calculator shows break-even analysis vs a HELOC, risk scenarios (what if sale takes 3/6/9/12 months), and net proceeds from your home sale after repaying the bridge loan.

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The Formula

Bridge loans are interest-only, meaning you pay only the interest each month with the full principal due when your current home sells:

Monthly Interest Payment = Bridge Loan Amount × (Annual Rate / 12)

Total Interest = Monthly Payment × Term (months)
Origination Fee = Bridge Amount × Origination %
Total Bridge Cost = Total Interest + Origination Fee + Closing Costs

Available Equity = Current Home Value × 80% − Mortgage Balance
Combined LTV = (Mortgage + Bridge Amount) / (Current + New Home Value) × 100

Combined Monthly Burden = Existing Mortgage Payment + Bridge Interest Payment

Unlike a traditional mortgage, bridge loans are interest-only with a balloon payment. You don’t pay down principal during the loan term — the entire balance is due when your old home sells. This keeps monthly costs lower but means the total owed does not decrease.

The typical total cost of a bridge loan is 3-6% of the loan amount for a 6-month term, including interest and fees. On a $150,000 bridge loan at 9.5% for 12 months, expect roughly $14,250 in interest plus $3,000–5,000 in origination and closing costs.

Example

Sarah and David — upsizing in Austin, TX with a bridge loan

Sarah and David own a home worth $450,000 with $280,000 remaining on their mortgage. They found a new home for $525,000 and need a $150,000 bridge loan for the down payment. Their current mortgage payment is $1,800/month. Bridge loan rate: 9.5%, 12-month term, 2% origination fee, $5,000 closing costs.

Bridge Loan Cost tab

Bridge loan amount$150,000

Monthly interest-only payment$1,188/mo

Total interest (12 months)$14,250

Origination fee (2%)$3,000

Total bridge loan cost$22,250

Combined monthly payments$2,988/mo

Sarah and David pay $2,988/month combined (existing mortgage + bridge interest) during the bridge period. The total cost of bridging is about $22,250.

Alternatives tab

Bridge loan total cost$22,250

HELOC total cost (8.5%)$13,250

401(k) loan interest + opportunity cost$10,240

Home sale contingency cost$0

If they had planned 6 weeks ahead, a HELOC would have saved $9,000 vs the bridge loan. But their timeline was urgent — they needed funds in 10 days to secure the new home.

FAQ

What is a bridge loan and how does it work? ▼

A bridge loan is short-term financing (typically 6–12 months) that lets you buy a new home before selling your current one. It’s secured by the equity in your current home. You make interest-only payments during the loan term, and the full balance is due as a balloon payment when your old home sells. Bridge loan rates in 2026 typically range from 8.5–12%, with origination fees of 1.5–3%.

How much does a bridge loan cost? ▼

Bridge loan costs include: interest rates of 8.5–12% (interest-only payments), origination fees of 1.5–3% of the loan amount, and closing costs. On a $150,000 bridge loan at 9.5% for 12 months, expect roughly $14,250 in interest plus $3,000–$5,000 in origination and closing costs — about $17,250–$19,250 total. The total cost is typically 3–6% of the loan amount for a 6-month term.

What are the alternatives to a bridge loan? ▼

Five main alternatives: (1) HELOC — lower rates (~8.5%), minimal closing costs, but takes 30–45 days to set up. (2) Home sale contingency — no cost, but sellers in competitive markets may reject it. (3) 401(k) loan — up to $50,000, no credit check, but lost investment growth and 5-year repayment. (4) Piggyback loan (80/10/10) — avoids PMI, no bridge needed, but higher rate on the second mortgage long-term. (5) Sell first and rent temporarily — no financing risk but requires two moves.

How much equity do I need to qualify for a bridge loan? ▼

Most lenders require at least 20% equity in your current home. The loan-to-value (LTV) ratio is typically capped at 80% of combined property value. For example, if your home is worth $450,000, you’d need a mortgage balance of $360,000 or less. Higher equity means better rates and easier qualification. A credit score of 620+ is typically required, with 740+ getting the best rates.

What happens if my home doesn’t sell before the bridge loan expires? ▼

If your home does not sell within the bridge loan term, you may need to request an extension (typically 0.25–0.5% of the loan balance), reduce your asking price to accelerate the sale, or in a worst case, sell at a loss. Some lenders allow one extension of 3–6 months. This is the biggest risk of bridge loans — use the Timeline tab to model different scenarios and price your home competitively.

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