Bridge Loans in NYC: How to Unlock Home Equity to Buy Before You Sell
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
Buying a new home while trying to sell your current one can feel impossible, especially in New York City, where inventory is tight, prices are steep, and timing matters.
You might be curious if there’s a way to access your home’s equity for a down payment before it sells or if your only option is to move out and crash somewhere temporary while you house hunt.
A bridge loan could be the piece that helps everything come together.
This short-term loan is designed to help you buy your next home first, and then sell your current home afterward. In this guide, we’ll break down how bridge loans work in NYC and when it might make sense to use one.
Yes, You Can Buy Before You Sell. Why Move Twice?
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
What is a bridge loan, in simple words?
A bridge loan is a short-term loan that helps you buy a new home before your current one sells. It “bridges” the gap between the two transactions by tapping into your existing home’s equity to free up cash.
With a bridge loan, you can use those funds to cover your down payment, moving costs, or closing expenses—without rushing to sell first. This can be especially helpful in a fast-moving market like New York City, where timing is everything.
Bridge loans usually come with higher interest rates and fees than traditional financing, but they’re built for speed and flexibility during the in-between phase of your move.
How does a bridge loan work in NYC?
A common scenario in New York City where you might need a bridge loan is when you’ve found the right home to buy but haven’t yet sold your current one. In this case, a bridge loan allows you to use the equity in your existing home to cover the down payment and closing costs on your new property.
In many situations, the same lender providing your new mortgage can also offer a bridge loan. They’ll typically require that your current home is actively listed for sale, and the loan term often runs from six months up to one year.
Your lender will also evaluate your debt-to-income ratio, or DTI. This means they may factor in the payments for your current mortgage, your new mortgage, and the interest-only payments on the bridge loan. In some cases, if your current home is under contract and your buyer has final loan approval, the lender may only count your new mortgage payment.
Ultimately, the goal is to make sure you can manage the payments if your old home doesn’t sell right away.
What are the benefits of a bridge loan in NYC?
Borrowing a bridge loan can have benefits, such as positioning you as a more flexible homebuyer in New York City.
- You can make a non-contingent offer on your new home.
- You only have to move once, avoiding temporary housing between selling and buying.
- You can prepare your old home for showings, cleaning, and staging after moving out.
- Some lenders don’t require monthly payments until your old home sells.
- You can act fast on a new listing without waiting for your home to close.
What are the drawbacks of a bridge loan?
While a bridge loan can increase your flexibility and ease the transition between homes, there are a few key drawbacks to consider.
- Additional loan costs like origination, underwriting, and administrative fees can add up.
- You may face the stress of multiple payments if your old home doesn’t sell quickly.
- Qualifying can be more challenging than for a traditional mortgage, especially with stricter equity and income requirements.
- The underwriting process may take longer than expected, delaying your financing timeline.
When is a bridge loan a good solution?
A bridge loan isn’t a blanket solution for all real estate transactions, but it can ease the stress of transitioning between an old home and a new one for some sellers.
Some examples of when a bridge loan might be a fitting solution include:
- You need the equity from your current home for a new home’s down payment.
- You can’t afford a double move and interim housing, or bridging the sale and purchase timelines is essential.
- Your dream home just hit the market, and you want to take immediate action, bypassing competitive delays.
- Your offer’s home sale contingency has been a deal-breaker, and you want immediate purchasing power.
- You want to sell an empty or staged home but can’t properly prep or present your current place while still living in it.
What’s required to get a bridge loan in NYC?
To qualify for a bridge loan in New York City, you typically need the following:
- Qualifying income: Your lender will assess whether you can afford payments on your current mortgage, new mortgage, and the bridge loan.
- Sufficient equity: Most lenders require at least 20% equity in your current home, though some may ask for up to 50%.
- Good credit history: A credit score of 650 or higher is often needed, with stronger scores helping you secure better terms.
- Your current home to be listed for sale: Some lenders require your home to be actively listed to confirm it will sell during the loan term.
How much does a bridge loan cost in NYC?
Below is an example of how much a $650,000 bridge loan might cost, along with possible fees.
You find a home you’d like to purchase, but you’re still waiting for your current NYC house to sell. The new home’s asking price is $850,000. You can only come up with $200,000, but you have at least another $250,000 worth of equity in your current property. You want to access that money to cover the shortfall before your new home is sold to another buyer.
| Net loan amount | $650,000 | $650,000 |
| Interest (varies) | 10% (example for 6 months) | $32,500 |
| Origination fee | 1.5% | $4,500 |
| Underwriting fee | $1,000 | $1,000 |
| Appraisal fee | $700 | $700 |
| Closing cost* | 2% | $13,000 |
| Total repayable amount | $701,700 |
*These closing costs typically range between 1.5%-3%
How Much Is Your NYC Home Worth Now?
Get a near-instant real estate house price estimate from HomeLight for free. Our tool analyzes the records of recently sold homes near you, your home’s last sale price, and other market trends to provide a preliminary range of value in under two minutes.
Who provides bridge loans in NYC?
Due to the underwriting demands for this type of loan, fewer institutions in New York City offer bridge loan products. Curious borrowers may inquire with a variety of lenders before applying. The most common sources include:
- Your mortgage lender
- Local banks
- Credit unions
- Hard-money lenders
- Non-qualified mortgage (non-QM) lenders
Are there alternatives to bridge loans in NYC?
While a bridge loan might not work for every NYC homeowner’s unique situation, there are alternatives to consider:
- Home equity loan: This kind of loan (sometimes called a HEL) allows you to borrow money using the equity in your home as collateral. Interest rates for a home equity loan can be more expensive than your current rate on your first mortgage, but instead of completing a cash-out refinance (paying off the first mortgage and borrowing cash), you can just borrow the money you need at the higher interest rate and leave your first mortgage of at its lower rate.
- Home equity line of credit (HELOC): Another option to use your existing equity is a HELOC. This allows you to pull money out of your property for a relatively low interest rate. Instead of receiving the money all at once, your lender will extend a line of credit for you to borrow against. You may have to pay an early closure fee if you open this line of credit and close it very soon after. Unlike a home equity loan, HELOCs typically have adjustable interest rates.
- Cash-out refinance: This type of loan lets you pull cash out of your home while refinancing your previous mortgage at the same time. Interest rates are typically higher for these kinds of loans compared to regular refinances, but are lower than those for bridge loans. This is not a solution for everyone, though. For example, you cannot do two owner-occupied loans within one year of one another. This would mean that you might have to wait longer to finance your new purchase with an owner-occupied mortgage using the cash from your cash-out refinance.
- 80-10-10 (piggyback) loan: This option is called a piggyback loan because you would be taking a first mortgage and second mortgage out at the same time to fund your new purchase — this means that you would only need 10% down. For buyers who can’t make as large of a down payment before selling their previous home, this could be a solution that helps them avoid the cost of mortgage insurance. You would, however, still be carrying the cost of three mortgage payments until you sell your current home and can pay off the second mortgage.
- A 401k loan: Borrowing against your retirement account comes with some benefits and drawbacks — your repayment period will be relatively short (up to 5 years), and your monthly payment will likely be high. This could affect your ability to qualify for your new mortgage, as your lender will need to include this monthly payment when calculating your debt-to-income ratio. If your 401k plan allows, you might be able to borrow up to $50,000 to put toward your new purchase.
Are there modern ways to buy a house before I sell?
With today’s technology, real estate solution companies like HomeLight incorporate bridge loans into convenient programs that streamline the process of buying and selling a house simultaneously in NYC. These “Buy Before You Sell” programs can provide a more complete “bridge” to help you successfully complete your move to a new home, thereby reducing stress and worry.
Together with your NYC agent, HomeLight can help you move into your new home with speed and certainty, while helping you get the strongest possible offer for your old home. Check with your agent to see if HomeLight Buy Before You Sell is available in your area.
Examples of other “Buy Before You Sell,” or home trade-in service companies include Knock, Orchard, Flyhomes, and Homeward.
How does HomeLight Buy Before You Sell work?
Here is how HomeLight’s Buy Before You Sell program works for home sellers in NYC:
- Apply in minutes with no commitment: Find out if your property is a good fit for the program and get your equity unlock amount approved in 24 hours or less. No cost or commitment is required.
- Buy your dream home with confidence: Once you’re approved, you’ll have access to a portion of your equity in your current home. You’ll be able to submit a competitive offer with no home sale contingency at any time — regardless of how long it takes to find your dream home. Our near-instant Equity Unlock Calculator lets you estimate how much equity we can unlock from your current home.
- Sell your current home with peace of mind: After you move into your new home, we will list your unoccupied home on the market to attract the strongest offer possible. You’ll receive the remainder of your equity after the home sells.
Benefits of Homelight Buy Before You Sell
- Flexibility in timelines: No need to sync up sale and purchase dates perfectly. This program gives you breathing space to plan your move without feeling hurried.
- Financial peace of mind: Say goodbye to the stress of potential double mortgages or dipping into savings to bridge the gap between homes.
- Enhanced buying power: In a seller’s market, a non-contingent offer can stand out, increasing your chances of landing your dream home.
- Sell for up to 10% more: After you move, you can list your old home unoccupied and potentially staged, which can lead to a higher selling price, according to HomeLight transaction data.
For NYC homeowners caught in the buy-sell conundrum, HomeLight’s Buy Before You Sell program offers a convenient and stress-reducing solution. Learn more program details at this link.
HomeLight also offers other services for homebuyers and sellers in NYC, such as Agent Match to find the top-performing real estate agents in your market, and Simple Sale, a convenient way to receive a no-obligation, all-cash offer to sell your home in as little as 10 days.
You might also try HomeLight’s Net Proceeds Calculator as you plan your home sale.
A creative financing solution for NYC homeowners
A bridge loan allows you to borrow against your current home’s equity to help fund your next purchase, giving you time and flexibility without rushing your sale or moving twice.
That said, bridge loans can come with higher costs and may not suit every situation.
HomeLight’s Buy Before You Sell program offers a modern alternative, streamlining the process so you can buy on your timeline and sell with less pressure. HomeLight can also connect you with a top NYC agent who understands bridge loan solutions and can guide you through your best next move.
Editor’s note: As a friendly reminder, this post is intended for educational purposes, not financial advice. If you need assistance navigating the use of a bridge loan in NYC, HomeLight encourages you to reach out to your own advisor.
Header Image Source: (stetsik / Deposit Photos)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
