It’s a conundrum countless families need to solve: how to buy a new home when you need to sell your current house to fund the purchase. For many homeowners, the solution is a bridge loan, a short-term financial assist that fills the gap in this real estate riddle. In this guide, we’ll walk through the basics of bridge loan requirements and common hurdles you may face. We’ll also share a modern Buy Before You Sell program alternative that helps you buy your next home first without the complexity and stress of piecing together a traditional funding puzzle. A bridge loan is a short-term financing option that’s designed to “bridge” the gap between buying your next home and selling your current one. Instead of stressing about timing, you can access your equity early to make an offer with confidence. Here’s how it typically works: This tide-over arrangement can be a lifesaver, especially in competitive markets, but it comes with higher costs and tougher qualifications than a standard mortgage. Most lenders want to see a solid credit history, with minimum scores often ranging from 650 to 700. A stronger score can help you qualify for better rates. You’ll usually need at least 20% equity in your current home to qualify. Lenders want assurance that your property has enough value to secure the loan. Your DTI — the percentage of your monthly income that goes toward debts — typically needs to fall below 43% to 50%. If your debt load is too heavy, lenders may hesitate to approve you. Lenders want proof that you can handle payments during the short loan term. Expect to provide pay stubs, tax returns, or other documentation of steady income. Your LTV compares the loan balance to your home’s value. For bridge loans, lenders often cap this ratio at 70%–80%, meaning you can’t borrow against the entire value of your home.What is a bridge loan?
Bridge loan requirements: What lenders look for
Credit score
Equity in your current home
Debt-to-income (DTI) ratio
Income and employment stability
Loan-to-value (LTV) ratio
