A Bridge Loan – also known as gap financing or a swing loan; can provide the money you need to help complete the new purchase. The funds from the bridge loan are then used as a down payment on the new home by leveraging the equity in your existing home.
A bridge loan is a short-term loan designed to provide financing during a transition period, such as moving from one house to another. The homeowner is faced with sudden move or transition, such as having to relocate for work, might prefer a bridge loan to the help with cost of buying a new home.
What Are the Advantages of Bridge Loans?
- No monthly payments
- No prepayment penalty
- 1 year term
- 1 fixed rate that is interest only
- 1 balloon payment to payoff bridge loan within 12 months
- Get your dream home now without waiting to sell
- Make non-contingent offers on a home now
- Uses equity from your existing home to buy the next home
- Great option if you need to relocate for work or want to retire
What Are the Requirements of a Bridge Loan?
- Minimum credit score 680
- Minimum down payment for primary home is 25%
- Minimum down payment for investment property is 35%
- Credit report must show 5 current tradeline with a minimum of 2 that are active
- Debt to income ratio is based on second permanent loan using principal, interest, taxes, insurance and home owners association fees if applicable
- Max debt to income ratio is 50%
- No major credit events in the last 4 years
- No mortgage payments events credit events in the last 4 years – no foreclosures, bankruptcies, etc.
- Can qualify on W2 income, retirement income, 12 / 24 month of Bank Statements, or assets as income
- The home being departed must be listed on MLS; the listing agreement is required
- The home being departed cannot be rented; we do not accept any rental income to qualify
- No rural properties
- Bridge loan must be in the first lien position on new property
- Loan amounts from $250,000 to $5,000,000
- Bridge financing only available in conjunction with financing on the new purchase home.