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How to Use Bridge Loans to Buy Before You Sell in California and Texas

In fast-paced markets like California and Texas, timing can make or break your next home purchase. The problem? Most of your equity is stuck in your current home—and sellers aren’t waiting around for you to sell. That’s where bridge loans come in.

At Invest by Ali, we work with buyers who need to act fast, beat contingent offers, and still protect their financial flexibility. A bridge loan can help you buy first and sell later—without losing sleep or overcomplicating your financing.

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TLDR – Quick Guide

  • Bridge loans are short-term loans that help you use your home equity to buy a new home before selling.
  • Common in competitive markets where sellers avoid contingent offers.
  • Most lenders require 20%–30% equity in your current home.
  • The loan is typically paid off once your old home sells.
  • Best suited for move-up buyers, relocations, or downsizers who want to avoid temporary housing.

What Is a Bridge Loan?

A bridge loan is a temporary financing tool that lets you “bridge” the gap between buying a new home and selling your current one. It allows you to access the equity in your existing home without having to wait for it to sell.

You can use a bridge loan to:

  • Cover the down payment on your new home
  • Pay for closing costs or moving expenses
  • Buy a home non-contingent, making your offer more attractive to sellers

The loan is typically paid off with proceeds from your home sale within 6–12 months.

How Bridge Loans Work in California and Texas

California Buyers:

  • Face higher home prices, so bridge loans may be larger in size
  • Common in markets like Irvine, Orange County, or the Bay Area, where homes move fast
  • Important to work with lenders experienced in jumbo or non-conforming loan structures

Texas Buyers:

  • Often use bridge loans to buy in cities like Austin, Dallas, or Houston
  • Loans are more conservative—LTV (loan-to-value) ratios may be stricter
  • Property taxes and title structures vary, so local expertise is crucial

Invest by Ali’s Tip:
 Bridge loan structures and approvals vary widely by lender. Get prequalified early and review all repayment terms, including balloon payments or prepayment penalties.

Pros of Using a Bridge Loan

  • No need for contingent offers—make a strong bid on your new home
  • Move directly from old to new—no need for temporary housing or double moves
  • Use equity now, not later
  • Short-term solution—you’re not stuck with long-term financing

Cons and Considerations

  • Higher interest rates than traditional mortgages
  • Short repayment window (usually 6–12 months)
  • You may carry two mortgage payments briefly
  • Lender fees and closing costs can add up

Is a Bridge Loan Right for You?

Bridge loans are ideal for:

  • Homeowners with at least 20% equity in their current home
  • Families relocating and needing to move quickly
  • Buyers upgrading or downsizing without delay
  • Sellers in strong markets who expect a quick sale turnaround

They may not be right if:

  • Your home may take months to sell
  • You’re uncertain about timing or the next property
  • You can’t comfortably manage two payments temporarily

Key Takeaways

  • Bridge loans give you speed and leverage in competitive California and Texas markets.
  • You must have sufficient equity and a reliable plan to sell your current home quickly.
  • They’re best used as a short-term strategy, not a crutch for poor planning.
  • Work with experienced professionals like Invest by Ali to structure your financing smartly.
  • The right bridge loan can help you move forward without getting stuck in limbo.

FAQs

How much equity do I need to qualify for a bridge loan?

Most lenders require at least 20–30% equity in your current home, but more equity can unlock better terms and higher loan amounts.

How fast can a bridge loan be approved?

Some lenders can approve bridge loans in as little as 5–10 business days, but timing depends on your documentation and the lender’s process.

Can I use a bridge loan on an investment property?

Yes, though it’s more complex. Investment bridge loans often require higher credit scores, larger equity, and come with tighter terms.

What happens if my home doesn’t sell in time?

You may need to refinance the bridge loan or make a balloon payment. Some lenders offer short extensions, but they often come with additional fees.

How does Invest by Ali help with bridge loans?

We connect you with trusted lenders, help you evaluate loan structures, and guide you through the timing of buying and selling—so you avoid costly mistakes.