Bridge loan vs home equity loan in 2027: which is right for buying before you sell?

A bridge loan is a short-term loan (typically 6–12 months) secured against your existing home's equity, designed to bridge the gap between buying a new home and selling your current one. The lender advances you funds based on the equity in your departing home — usually up to 80% of its value, minus your existing mortgage. You pay interest only (or sometimes nothing until maturity), and the loan is repaid when your old home sells. Rates are typically prime + 1.5–3.0%, making them expensive in a high-rate environment. CFPB's bridge loan explainer covers the key disclosures to get in writing.

A HELOC (Home Equity Line of Credit) gives you a revolving credit line secured by your current home's equity — you draw what you need, and pay interest only on the drawn amount. A bridge loan is a lump-sum advance, typically used when you need the full equity amount immediately for a closing. HELOCs are generally cheaper (prime + 0.5–1.0%) but require your current home to not already be listed for sale in many cases — lenders freeze or reduce HELOCs when a property goes on the market. Read the full comparison in our home equity loan vs HELOC guide.

Bridge loans in 2027 typically carry rates of 8.5–11% (US prime rate ~7.5% + 1.5–3.5% lender margin). Fees include origination (1–2% of loan amount), appraisal, and sometimes a prepayment penalty. On a $200,000 bridge loan at 9.5% interest-only for 6 months, the cost is ~$9,500 in interest plus ~$2,000–4,000 in fees. Total cost: $11,500–$13,500. This is the price of certainty — not having a sale contingency on your offer can be the difference between winning and losing a competitive bid.

The primary risk is your current home taking longer to sell than expected — leaving you carrying three payments (old mortgage + bridge interest + new mortgage) simultaneously. If your home does not sell within the bridge loan term, you may need to extend (at high cost) or face a forced sale at a lower price. Other risks: appraisal comes in lower than expected (reducing available equity), rate risk on the floating-rate bridge, and lender qualification requirements if your DTI is stretched carrying both properties. Always model a worst-case 3–6 month delay. CFPB's homeowner resources cover contingency planning.

Yes — if you open the HELOC before listing your current home for sale. Most lenders freeze or cancel HELOCs once a property is listed, because the impending sale represents a change in collateral status. The strategy: open and draw from your HELOC before listing, use the funds toward your new home down payment, then repay the HELOC from sale proceeds. This works best when you have substantial equity and your timeline is clear. Check your HELOC agreement for "demand" clauses that allow the lender to require repayment at any time. Explore home equity fundamentals or compare options in the HELOC vs cash-out refinance guide.

A sale contingency (making your new purchase offer conditional on selling your current home) is cheaper — it costs nothing — but significantly weakens your offer in competitive markets. Sellers prefer buyers without contingencies, and in many 2027 markets sellers routinely reject contingent offers in favor of cleaner bids. A bridge loan or HELOC lets you make a non-contingent offer, which can be the deciding factor. The math: if removing a contingency adds $10,000–20,000 to your negotiating power, the $10,000–15,000 bridge cost may be worth it. NAR buyer/seller data tracks contingency acceptance rates by market.