Bridge Loan Calculator

About the Bridge Loan Calculator

A bridge loan provides short-term financing when you need to buy a new home before selling your current one. These loans typically last 6 to 12 months, carry higher interest rates than standard mortgages, and charge origination fees of 1–3 %. The tradeoff is speed and flexibility: you can make a non-contingent offer on your new home without waiting for your old one to sell. In competitive housing markets, that can make your offer more workable when timing is tight.

Because bridge loans are short-term, total interest may seem manageable — but the effective annual cost is high. Between origination fees, higher rates, and the stress of carrying two properties, it's essential to understand the full financial picture before committing. Many borrowers underestimate the total cost because they focus only on the monthly interest payment.

This Bridge Loan Calculator shows your interest-only monthly payments, the total cost of the bridge including all fees, and the effective annualized rate — so you can make an informed decision and compare alternatives like HELOCs or contingent offers.

When This Page Helps

Bridge loans are expensive relative to standard mortgages, and the costs can surprise you. A 2 % origination fee on a $200,000 bridge spread over 6 months is effectively 4 % annualized — on top of the higher interest rate. This calculator helps you see the true cost and compare it to alternatives like a HELOC, contingent offer, or temporary rental.

How to Use the Inputs

1. Enter the bridge loan amount (typically the equity in your current home).
2. Set the interest rate (bridge loans usually run 8–12 %).
3. Enter the loan term in months (6–12 typical).
4. Enter the origination fee as a percentage (1–3 % typical).
5. Add any additional fees (appraisal, admin, etc.).
6. Review the monthly interest-only payment and total cost.

Example Calculation

Tips & Best Practices

• Negotiate the origination fee — some lenders will reduce it if you're also getting your permanent mortgage through them.
• Consider a HELOC as a cheaper alternative to a bridge loan if you have enough equity and time to set it up.
• Price your current home aggressively to minimize the bridge loan duration and total cost.
• If your home sells quickly, you may only need the bridge for 2–3 months — reducing total interest significantly.
• Some bridge loans allow you to roll the interest into the loan balance, meaning no monthly payments but a higher payoff.
• Factor bridge loan costs into your overall home-buying budget to avoid stretching too thin.

When Bridge Loans Make Sense

The ideal candidate for a bridge loan is someone in a competitive housing market where non-contingent offers win, who has significant equity in their current home, and is confident the existing home will sell within 6–12 months. In a hot market, the ability to close quickly can save you more than the bridge loan costs.

The True Cost of Bridge Financing

Don't just look at the interest rate — factor in origination fees, appraisal costs, and any extension fees. A $200,000 bridge at 9 % for 6 months sounds like $9,000 in interest, but add 2 % origination ($4,000) and fees ($1,500), and the true cost is $14,500 — an effective annual rate over 14 %.

Alternatives to Bridge Loans

Before committing to a bridge loan, consider: a HELOC (if you have one or time to open one), a contingent offer with an escalation clause, a home equity loan, selling your current home first and renting temporarily, or negotiating a rent-back agreement with the buyer of your current home.

Frequently Asked Questions

• What is a bridge loan?

  A bridge loan is short-term financing that "bridges" the gap between buying a new home and selling your current one. It gives you access to your current home equity before the sale closes, allowing you to make a non-contingent offer on the new property.

• How much does a bridge loan cost?

  Bridge loans typically carry interest rates of 8–12 % and origination fees of 1–3 %. On a $200,000 bridge for 8 months, total costs might run $15,000–$20,000. The effective annualized cost can exceed 15 % when fees are included.

• How long do bridge loans last?

  Most bridge loans have terms of 6 to 12 months. Some lenders offer extensions for a fee if your home hasn't sold by the original maturity date. The goal is to sell your current home and repay the bridge as quickly as possible.

• Is a HELOC better than a bridge loan?

  A HELOC is usually cheaper (lower rates, no origination fee), but takes 30–60 days to set up. If you already have a HELOC in place, it can serve the same purpose as a bridge loan at a fraction of the cost. Bridge loans are faster to fund (1–2 weeks).

• Can I get a bridge loan if I have a mortgage?

  Yes, bridge loans are typically second liens behind your existing mortgage. The bridge amount is usually limited to your equity in the current home minus a cushion. Combined loan-to-value limits typically apply (70–80 %).

• What happens if my home doesn't sell?

  If your home doesn't sell before the bridge term expires, you may need to extend the bridge (usually for an additional fee), reduce the asking price, or find alternative financing. Some bridge loans have a conversion option to a longer-term loan.