Bridge Loans in NYC: How to Unlock Home Equity to Buy Before You Sell

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.

Buy Before You Sell

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.