Using a HELOC as a bridge loan let one Broward County homeowner buy his next home before selling his current one. He did not want to wait for a sale, and he did not want a contingent offer. So we opened a $400,000 home equity line of credit on the home he already owned. It closed in 4 days, with no appraisal, and he bought his new home with cash.
Case Summary: HELOC as a Bridge Loan
- Location: Broward County, Florida
- Goal: Buy a new home before selling the current one
- Solution: A $400,000 HELOC on the current home
- Appraisal: None required for this program
- Time to close: 4 days
- Result: A cash purchase of the new home, with the HELOC paid off from the sale of the old one
The Challenge: Buy First or Sell First?
Most homeowners face the same problem when they move. Their down payment is tied up in the home they live in. Selling first means moving twice or renting in between. On the other hand, buying first usually means a contingent offer, which sellers often turn down.
Our borrower had plenty of equity, but it was locked in his current home. He found the home he wanted and did not want to lose it while he waited for a buyer. In short, he needed cash now, not after a sale.
Why We Used a HELOC as a Bridge Loan
A traditional bridge loan is one option. However, those loans can be slow and costly. A HELOC does the same job in many cases. It turns your existing equity into a line of credit you can draw on right away.
For this borrower, the HELOC had three clear advantages:
- Speed. The line closed in 4 days, so he could act before another buyer did.
- No appraisal. This program did not require one, which removed a common delay.
- Flexibility. He drew only what he needed and could repay it in full at any time.
Learn how our home equity lines of credit work, or read the Consumer Financial Protection Bureau’s plain-language explanation of a HELOC.
How the Purchase Came Together
First, we opened a $400,000 line of credit on his current home. Then he combined those funds with his own savings to make a cash offer on the new home. A cash offer has no financing contingency. As a result, the seller could count on a quick, certain closing.
His existing first mortgage did not change. The HELOC sat behind it as a separate loan. So he kept his current rate while he moved.
What Happens When the Old Home Sells
Once the old home sells, the sale proceeds pay off the HELOC in full at closing. In other words, the line of credit works as a short-term bridge. He pays interest only on what he drew, and only for the months between his purchase and his sale.
Is a HELOC Bridge Loan Right for You?
This approach works best for homeowners who:
- Have substantial equity in their current home
- Can qualify for the HELOC payment alongside their current housing costs
- Want to make a stronger offer without a sale contingency
- Expect their current home to sell within a reasonable time
There are also trade-offs. HELOC rates are usually variable, so your payment can change. In addition, you will carry two homes for a while. Plan for that before you shop. Also, many lenders will not open a HELOC on a home that is already listed for sale. So set up the line before you list.
HELOC as a Bridge Loan: FAQs
Can I use a HELOC to buy a house before selling mine?
Yes. Many homeowners use a HELOC on their current home to fund the down payment or the full purchase of their next home. Then they repay the line when the old home sells.
Do I need an appraisal for a HELOC?
Not always. Some HELOC programs, including the one in this case, close without a traditional appraisal. Others require one, especially for larger lines or unusual properties.
How fast can a HELOC close?
This one closed in 4 days. By contrast, a traditional bank HELOC can take several weeks because of appraisals and manual review.
Thinking About Buying Before You Sell?
We can tell you quickly how much of your equity you can access and how fast. Call (754) 289-0196 or send us a message. You can also explore our home purchase options.
This case study describes one borrower’s experience. Programs, terms and approval depend on each borrower’s credit, income and equity. Results vary.
