If you’re trying to buy a house in a market like the Bay Area or LA right now, you already know the nightmare scenario. You find the perfect house, the one with the extra bedroom and the yard you’ve been dreaming of, but you can’t pull the trigger because your life savings are currently tied up in the equity of your current place. You can’t buy until you sell, but you can’t sell until you have a place to go.
In a competitive market, a “contingent offer” is basically a polite way of telling the seller to go with someone else. Nobody is going to wait for you to list, stage, and close your old house when they have five other non-contingent offers on the table. This is exactly where a bridge loan comes in, though it’s definitely not for everyone.
What’s the actual deal with a bridge loan?
Think of it as a temporary financial “patch.” It’s a short-term loan, usually six months to a year, that lets you tap into the equity of your current home before you’ve even put a “For Sale” sign in the yard. You take that cash, use it as a down payment (or even buy the new place outright), and move in. Then, once you’re settled, you sell the old house and use those proceeds to kill the bridge loan.
It sounds like a magic wand, but it’s a high-stakes tool. You’re essentially carrying two mortgages at once. If your old house sits on the market for four months instead of two, that interest starts to feel very real, very fast. Buyers who want to better understand short-term mortgage risks and protections can review guidance from the Consumer Financial Protection Bureau.
Why do people take the risk?
In California, speed is everything. If you show up with a bridge loan, you’re essentially a cash buyer. You aren’t asking the seller for permission to wait on your own home sale. That makes your offer significantly more “attractive” because the seller knows the deal won’t fall apart just because your buyer’s buyer had a problem with their inspection.
It also saves you from the “double move.” Without a bridge, most people have to sell, move into a temporary rental (which is its own circle of hell), and then move again once they finally find a house. A bridge loan buys you the luxury of only moving your furniture once.
The stuff the brochure won’t tell you
Lenders aren’t just handing these out. They’re going to look at your credit like you’re applying for a security clearance, and they’ll want to see that you have a massive amount of equity in your current property. You’re also going to pay for the privilege. The interest rates on these are higher than your standard 30-year fixed, and the fees can be a bit of a gut punch.
The real danger is the “what if.” What if the market softens? What if the appraisal on your old home comes in low? If you don’t have a rock-solid exit strategy, you can end up in a serious cash crunch. You have to be realistic about what your home is actually worth today, not what your neighbor’s house sold for last year.
Is it worth it?
If you’re financially stable and you’ve found “the” house, a bridge loan is often the only way to win in a market this aggressive. It’s about buying the flexibility to move on your own terms. Just make sure you’re working with a local pro who knows the neighborhood turnover rates inside and out. In California real estate, a bridge loan is a great way to cross the gap, just make sure you don’t stay on the bridge for too long.