How Do I Buy a New Home Before Selling My Current One?

The timing problem is one of the most common sources of stress in real estate: you want to buy your next home, but your current home has not sold yet, and the proceeds from that sale are what you need for the down payment. There are several strategies that can solve this problem, each with different costs and trade-offs.

Bridge Loans

A bridge loan is short-term financing that lets you tap your current home's equity to fund the purchase of a new property. Once your existing home sells, the bridge loan is paid off from the sale proceeds. Bridge loans typically carry higher interest rates than standard mortgages and may have origination fees of 1% to 2%. They are best suited for borrowers with substantial equity in their current home and a realistic expectation that it will sell within a few months.

Home Equity Line of Credit (HELOC)

If you already have a HELOC or can open one before listing your home, you can draw against it for the down payment on the new purchase. This approach tends to have lower fees than a bridge loan, though the variable interest rate means your cost of borrowing can change. The drawback is that applying for a HELOC while also applying for a new mortgage can complicate underwriting.

Contingent Offers

You can make an offer on a new home that is contingent on the sale of your current property. This costs nothing extra but puts you at a disadvantage in competitive markets. Sellers generally prefer non-contingent offers because there is less risk of the deal falling through.

Buying First With a Larger Down Payment

If you have savings or investments outside of your home equity, you may be able to purchase the new home without waiting for the sale. This means temporarily carrying two mortgages, so your debt-to-income ratio needs to support both payments. Some lenders will qualify you for the new mortgage while accounting for the projected sale of your current home, but this varies by lender and loan program.

Negotiating Extended Timelines

In some cases, you can negotiate a longer closing period on the new home (60 to 90 days instead of the standard 30 to 45), giving you time to list and sell your current property. Alternatively, you can negotiate a rent-back agreement on your current home after selling it, giving you time to close on the new purchase without needing temporary housing.

Choosing the Right Strategy

The best approach depends on your equity position, local market conditions, how quickly your current home is likely to sell, and your tolerance for carrying two properties at once. A mortgage advisor who has structured these transactions before can model the costs of each option and help you pick the path that minimizes risk and expense.