Buying your next home before selling your current one can feel like a high-wire act. You want the right house in Larkspur or San Rafael, but you do not want to move twice or lose in a competitive bid. A bridge loan can give you the timing and leverage to act with confidence. In this guide, you will learn what bridge loans are, how they work in Marin, real costs and timelines, risks to plan for, and smart alternatives. Let’s dive in.
What is a bridge loan
A bridge loan is short-term financing that covers the gap between buying a new home and selling your current one. It is typically secured by your current home, the new purchase, or both. Most terms run 3 to 12 months, and some extend up to 18 months depending on the lender.
Monthly payments are often interest-only, which keeps carrying costs lower while you hold two properties. Some products defer interest until payoff, but those usually cost more overall. Most buyers pay off the bridge loan in one lump sum once their current home sale closes.
Common types include standalone bank or credit union bridge loans, portfolio lender swing loans tied to your future mortgage, and using a HELOC or home equity loan as a functional bridge. Private or portfolio lenders can move faster, but they often come with higher costs.
Why bridge loans matter in Marin
Marin’s submarkets, including Larkspur and San Rafael, are higher priced with relatively low inventory. That structure can create multiple-offer situations where sellers prefer offers without a sale contingency. A bridge loan lets you write a clean, non-contingent offer, which can be the difference between winning and missing out.
Speed also matters. Desirable homes can go under contract quickly, and a bridge loan can help you close faster than waiting to sell. Because many bridge lenders rely on the equity in your current home, getting an accurate valuation upfront is critical in our micro-market neighborhoods where comps can vary street to street.
How the numbers work
Bridge loans are underwritten more conservatively than standard mortgages. Expect the lender to review credit, income, debt-to-income, and reserves. Many lenders cap combined loan-to-value, often in the 70 to 80 percent range across your existing and new properties, although exact limits vary by lender.
Rates are typically higher than a traditional 30-year mortgage because the loan is short-term and higher risk for the lender. Plan for origination, appraisal, title, escrow, and recording fees. Ask whether the bridge loan will be a first or second lien, since lien position can affect your permanent financing.
Here is an illustrative cost snapshot to help you think through budgets. Always get live quotes from lenders before deciding.
- Example bridge amount: 500,000 dollars
- Example rate: 8 percent, interest-only
- Monthly interest: about 3,333 dollars
- Typical fees: 1 to 2 percent origination, plus appraisal and closing costs
If you use the bridge for 3 months, interest would be roughly 10,000 dollars, plus one-time fees. At 6 months, interest cost would roughly double. The key is how long you carry both properties.
Timelines that win in Marin
Every situation is unique, but these scenarios capture common paths for move-up buyers in Larkspur and San Rafael.
Fast-close plan
- Day 0: Offer accepted without a sale contingency. Apply for the bridge immediately.
- Day 7 to 21: Bridge approval and clear to close.
- Day 21 to 45: Close on the new home. Begin carrying two properties.
- Day 30 to 120: List and sell the current home. Pay off the bridge from sale proceeds.
Many buyers carry both homes for 1.5 to 4 months. Some take longer and may face extension fees if the sale is delayed.
Flexible plan
- Get pre-approved for a bridge before you start touring.
- Close in 30 to 60 days when you secure the right home.
- List your current home within 2 to 4 weeks of closing on the new home. Time-to-sale varies with pricing, preparation, and market conditions.
Risks to plan for
Bridge loans are powerful tools, but they come with real risks. Plan ahead to protect your downside.
- Carrying two mortgages longer than expected if your current home takes time to sell.
- Market risk if prices soften, which can reduce sale proceeds and available equity.
- Higher rates and fees than a standard mortgage.
- Lender rules around payoff timing, extensions, occupancy, and penalties.
- Appraisal risk on your existing home, which can limit the available bridge funds.
- Liquidity risk if your cash reserves get tight while holding two homes.
Practical ways to manage risk
- Get a realistic pricing strategy. Use a detailed CMA and consider a pre-list inspection to avoid surprises.
- Base your loan amount on a conservative sale price, not the highest comp.
- Clarify extension terms and fees with the lender before you sign.
- Maintain strong reserves. A 6 to 12 month cushion for combined payments increases safety.
- Prepare your current home to sell quickly. Consider light repairs, staging, and targeted marketing.
- Keep a backup plan. Explore the option to rent your current home if needed, and confirm HOA or lender rules first.
- Ask about a bridge-to-permanent option with the same lender to reduce re-qualification risk.
Alternatives to compare
Bridge loans are not the only route. Here are common alternatives and when they may fit better.
- Sale contingency. Lower risk and cost, but often less competitive in tight listings.
- Seller rent-back or flexible possession. Can help you avoid a double move without taking new financing.
- HELOC or home equity loan. May be faster and cheaper if you have equity and strong credit.
- Bridge-to-permanent or portfolio swing loan. Simplifies the path from short-term to long-term financing with one lender.
- Use other assets. Personal lines of credit or investment liquidations can work, but consider tax and planning impacts.
- Sell first, then rent short-term. Removes the double-carry risk, though it adds a move and temporary housing.
Choose a bridge when the market is competitive, you have meaningful equity, strong credit, and adequate reserves, and the value of winning the right home outweighs short-term costs.
How to choose a lender
Prepare well and ask detailed questions so you know your true cost and timeline.
What to prepare
- Recent mortgage statements and estimated equity.
- Income docs, tax returns, and bank statements for reserves.
- A current CMA for your home in Larkspur or San Rafael.
Key questions to ask
- What is the exact interest rate and is it fixed or variable?
- What are all fees: origination, appraisal, title, escrow, administration, extension, and any prepayment penalty?
- Are payments interest-only or deferred? Will I make two monthly payments while I own both homes?
- What is the term length and how do extensions work?
- Will the bridge be a first or second lien on my property?
- What combined LTV will you allow across my current and new home?
- What appraisal is required and will you accept a broker price opinion?
- How do I repay the bridge at sale and can it convert to a permanent loan?
- What are the minimum credit, DTI, and reserve requirements?
- Are you properly licensed in California and what consumer protections apply?
Your action plan
- Align on your budget and reserves. Decide how many months of double-carry you are comfortable holding.
- Get pre-approved for both the bridge and your permanent mortgage before touring.
- Secure a detailed valuation for your current home. Price with a realistic timeline in mind.
- Prepare the property. Use strategic updates, staging, and a strong launch plan to shorten time on market. Compass Concierge can help with approved presale improvements.
- Coordinate the team. Your lender, local title and escrow, tax advisor, and agent should be aligned on timing and paperwork.
When you plan well, a bridge loan can turn a stressful shuffle into a smooth move. If you want a clear, tailored plan for Larkspur or San Rafael, let’s talk about your goals, your numbers, and your timeline.
Ready to explore whether a bridge loan is right for you? Reach out to Raquel Newman for a private consultation and a data-driven plan for your Marin move-up.
FAQs
Will a bridge loan let me waive a sale contingency in Marin?
- Yes, many buyers use bridge financing to write non-contingent offers, but you should have documented pre-approval for the bridge before waiving contingencies.
How long might you carry two mortgages with a bridge loan?
- Typical use is 3 to 12 months, and you should plan reserves to cover a longer period in case your sale takes more time.
What if your current Marin home sells for less than expected?
- That is a core risk, so base your bridge amount on a conservative sale price, maintain reserves, and clarify extension or payoff options with your lender in advance.
Do bridge loans make it harder to qualify for the new mortgage?
- Lenders underwrite both obligations at once, so the bridge can affect debt-to-income; get pre-approved for the combined structure early.
Are bridge loans expensive compared to using a HELOC?
- Bridge loans usually carry higher rates and fees than permanent mortgages, and a HELOC can be cheaper for some borrowers, but the best choice depends on your equity, credit, and timing needs.
