Can you buy your next home before you sell this one?
Finding the right home before your current one sells creates a real timing problem. In California, where good homes often get multiple offers, waiting for your sale can mean losing the house you want. A buy before you sell loan can help qualified homeowners purchase first and sell afterward. It takes the pressure off, but it needs a careful plan.
What is buy before you sell financing?
Buy before you sell is a broad term for loan options that let you use your buying power before your current home sells. Depending on the program, the money may come from your existing equity, a short-term bridge loan or another structure.
Some programs also help you get your current home ready to sell, or coordinate the timing of your listing. Features, eligibility and costs vary by lender and program, so it’s worth comparing more than one.
How buy before you sell usually works
Most programs follow the same basic steps. First, we look at what your current home is likely to sell for and what you still owe. That tells us how much equity you have to work with.
Next, that equity is used to fund the down payment on your new home, either through a bridge loan, a HELOC or a dedicated program. You buy and move in. Then you sell your old home, and the proceeds pay off the short-term financing.
Why homeowners choose it
The biggest benefit is flexibility. You may be able to make an offer without a home-sale contingency. Sellers usually prefer those offers, which matters when you’re competing with other buyers.
You can also move on your own schedule and get your old home ready for the market once it’s empty. An empty, clean home is easier to show and often easier to sell. For many families, it also means no temporary rental and no moving twice.
What to watch out for
You may carry costs on both homes for a while, and your current home could take longer to sell than you expect. Plan for that from the start, not after you’ve moved.
Qualifying usually depends on your income, equity, credit, savings and the expected sale price of your current home. Before you move forward, review the repayment terms, fees and any sale deadlines with your loan officer. Ask what happens if your home doesn’t sell on schedule, and make sure there’s a backup plan.
For a helpful overview of the home buying process, see the Consumer Financial Protection Bureau’s guide to buying a house.
Is buy before you sell right for you?
Buy before you sell financing can be a great fit if you have solid equity, steady income and a home that’s likely to sell in a reasonable time. It may not be the right move if your equity is limited, or if your budget can’t handle two housing payments for a few months.
The structure has to fit your budget and your local market. I’ll look at your purchase, your sale and your financing together, so you can see whether this strategy makes sense before you commit.
Common questions
Is a bridge loan the same as buy before you sell?
A bridge loan is one type of buy before you sell financing. It’s a short-term loan against your current home that covers the gap until it sells. Other programs work differently, so it’s worth comparing them.
Does this work in California?
Yes. In many California markets, good homes get multiple offers, so being able to make an offer without a sale contingency can make a real difference. Home values here also mean many homeowners have built up enough equity to qualify.
What happens if my home doesn’t sell right away?
That depends on the program. Some have sale deadlines, and you may carry costs on both homes until it sells. This is the most important thing to plan for before you start.
Can I use a HELOC instead?
Sometimes. A HELOC on your current home can cover the down payment on the next one if you intend to keep it as a rental property. Some lender have pre-payment penalties for early pay-off on these loans.
How long does the process take?
It varies by program and by how quickly you find your next home. Getting your financing lined up before you start shopping gives you the most room to move when the right house comes along.
Let’s look at your numbers
If you’ve found a home you love, or you’re starting to think about your next move, let’s talk through your options. Learn more about buying before you sell or book a strategy call.