Bridge Loans in Sacramento: How to Unlock Home Equity to Buy Before You Sell
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Cheyenne Wiseman Associate EditorClose
Cheyenne Wiseman Associate EditorCheyenne Wiseman is an Associate Editor at HomeLight.com. Previously, she worked as a writer for Static Media (Mashed.com and Chowhound.com) and as an editor for CBR.com. Cheyenne holds a bachelor’s degree in English from UC Davis, where she also founded and led a literary magazine called Open Ceilings. She has four years of experience writing and editing on topics including real estate, financial advising, and pharmaceuticals.
Selling your current house while buying a new one can feel like a balancing act. Timing the sale and purchase just right — especially in a highly competitive market like Sacramento, California — can be a stressful undertaking.
When inventory is low and prices are high, it might seem like your only option is to sell your current house and move into a temporary place while you search for your forever home. But who wants to move twice? Thankfully, there’s another option.
A bridge loan might be just what you need to buy your next home without waiting to sell your current one. This short-term financing option gives you flexibility and control over your timeline. In this guide, we’ll walk you through everything you need to know about bridge loans in Sacramento.
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.
What is a bridge loan, in simple words?
A bridge loan is a short-term financing option that helps you buy a new home while your current one is still on the market. It taps into the equity you’ve built in your existing property, giving you fast access to cash for a down payment or closing costs on your next purchase.
While bridge loans typically cost more than a traditional mortgage, many Sacramento buyers find the added flexibility worth it to avoid rushed sales or temporary housing.
Bridge loans are also sometimes called:
- bridge financing
- bridging loan
- interim financing
- gap financing
- swing loans
How does a bridge loan work in Sacramento?
In Sacramento, bridge loans are common when you find the perfect new home but haven’t yet sold your current one. With a bridge loan, you can use your existing home’s equity to help fund the down payment and closing costs for your new property.
Often, the same lender handling your new mortgage can also offer the bridge loan. Most will require that your current home be actively listed for sale, and the loan term typically ranges from six months to a year.
Your lender may evaluate your debt-to-income ratio using your existing mortgage payment, the new mortgage payment, and interest-only payments on the bridge loan. However, if your current home is already under contract and the buyer has final loan approval, the lender may only factor in your new mortgage payment — offering more breathing room in your financial calculations.
What are the benefits of a bridge loan in Sacramento?
Here are a few ways bridge loans in Sacramento can help make your move smoother:
- You can make a non-contingent offer: Sellers often prefer buyers without home sale contingencies.
- You only need to move once: Skip the hassle and extra costs of temporary housing or storage.
- You can ready your old home: Move out first, then focus on preparing your home with staging and repairs.
- Some lenders don’t require payments during the loan period: You may not owe anything until your previous home sells.
- You can act fast on the right home: Make an offer without worrying about selling first.
What are the drawbacks of a bridge loan?
While a bridge loan can give you more flexibility and alleviate some pressure during a buy-sell move, there are still a few downsides to consider:
- Additional loan costs: You may pay underwriting fees, origination fees, and other closing costs.
- Extra financial stress: You could be responsible for covering two mortgages and a bridge loan at the same time.
- Qualifying may be more complicated: Lenders often have stricter requirements than they do for a traditional mortgage.
- Underwriting can be slower: The review process might take more time than expected.
When is a bridge loan a good solution?
A bridge loan may not suit every real estate situation, but in the right circumstances, it can help simplify the move from one home to another. For those buying and selling at the same time, bridge loans in Sacramento can offer a valuable solution.
Here are a few scenarios where using one might make sense:
- You need the equity from your current home for your new home’s down payment.
- You can’t afford the costs of moving twice between selling and buying.
- Your dream home just hit the market, and you want to jump on the opportunity before it’s gone.
- Your offer’s home sale contingency has been a deal-breaker for sellers.
- You’re unable to prepare or sell a staged home while still living in it and need to vacate first.
What’s required to get a bridge loan in Sacramento?
To qualify for a bridge loan in Sacramento, you typically need the following:
- Qualifying income: Your lender will verify that you can afford payments on your current mortgage, new mortgage, and bridge loan.
- Sufficient equity: You’ll typically need at least 20% equity in your current home, but some lenders may require up to 50%.
- Good credit history: Most lenders look for a credit score above 650, which can impact your interest rate and loan terms.
- Your current home must be on the market: Some lenders will only approve a bridge loan if you can show that your home is actively listed for sale.
How much does a bridge loan cost in Sacramento?
Below is an example of how much a $300,000 bridge loan might cost, along with possible fees.
You find a home you’d like to buy, but you’re still waiting for your current Sacramento house to sell. The new home’s asking price is $500,000. You can only come up with $200,000, but you have at least another $300,000 worth of equity in your current property. You want to access that money to cover the shortfall before your new home sells to another buyer.
| Net loan amount | $300,000 | $300,000 |
| Interest (varies) | 10% (example for 6 months) | $15,000 |
| Origination fee | 1.5% | $4,500 |
| Underwriting fee | $1,000 | $1,000 |
| Appraisal fee | $700 | $700 |
| Closing cost* | 2% | $6,000 |
| Total repayable amount | $327,200 |
*These closing costs typically range between 1.5%-3%
What's Your Current Home Worth?
As you make plans to buy a new home, get a value estimate on your current house from HomeLight for free. Our tool analyzes records of recently sold homes near you, your home’s last sale price, and other market trends to provide a preliminary range of value in under two minutes.
Who provides bridge loans in Sacramento?
Because of the unique underwriting requirements, not all lenders offer bridge loans in Sacramento. If you’re considering this type of financing, it’s wise to check with several institutions to compare options. The most common sources include:
- Your mortgage lender
- Local banks
- Credit unions
- Hard-money lenders
- Non-qualified mortgage (non-QM) lenders
Are there alternatives to bridge loans in Sacramento?
A bridge loan might not work for every Sacramento homeowner’s unique situation. Here are a few alternatives you can consider:
- Home equity loan: This type of loan (sometimes called a HEL) allows you to borrow money using the equity in your Sacramento home as collateral. Interest rates for a home equity loan can be more expensive than your current rate on your first mortgage, but instead of completing a cash-out refinance (paying off the first mortgage and borrowing cash), you can just borrow the money you need at the higher interest rate and keep your first mortgage at its lower rate.
- Home equity line of credit (HELOC): Another option to use your existing equity is a HELOC. This lets you pull money out of your Sacramento property for a relatively low interest rate. Rather than receiving the money all at once, your lender will extend a line of credit for you to borrow against. You may have to pay an early closure fee if you open this line of credit and close it very soon after. Unlike a home equity loan, HELOCs typically have adjustable interest rates.
- Cash-out refinance: This type of loan allows you to pull cash out of your home while refinancing your previous mortgage at the same time. Interest rates are typically higher for these types of loans compared to regular refinancing options but are lower than those for bridge loans. This is not a solution for everyone, however. For instance, you can’t have two owner-occupied loans within one year of one another. This means you might need to wait longer to finance your new purchase with an owner-occupied mortgage using the cash from your cash-out refinance.
- 80-10-10 (piggyback) loan: This option is called a piggyback loan because it involves taking a first and second mortgage out simultaneously to fund your new purchase — this means that you would only need 10% down. For buyers who can’t make as large a down payment before selling their old home, this could be a solution that helps them sidestep the cost of mortgage insurance. You would, however, still be carrying the cost of three mortgage payments until you sell your current home and can pay off the second mortgage.
- A 401k loan: Borrowing against your retirement account has benefits and drawbacks — your repayment period will be relatively short (up to 5 years), but your monthly payment will likely be high. This could affect your ability to qualify for your new mortgage, as your lender will need to include this monthly payment when calculating your debt-to-income ratio. If your 401k plan allows, you can potentially borrow up to $50,000 to put toward your new purchase.
Are there modern ways to buy a house before I sell?
Thanks to modern technology, real estate solution companies like HomeLight now offer bridge loans through streamlined programs designed to help you buy and sell a home in Sacramento at the same time. These “Buy Before You Sell” services offer a more complete “bridge” to your next home, easing stress and simplifying the process.
Working alongside your Sacramento agent, HomeLight can help you move with greater speed and confidence — while helping you get the strongest possible offer for your old home. Ask your agent whether HomeLight’s Buy Before You Sell program is available in your area.
Other companies offering similar home trade-in or “Buy Before You Sell” services include Knock, Orchard, Flyhomes, and Homeward.
How does HomeLight Buy Before You Sell work?
Here is how HomeLight’s Buy Before You Sell program works for home sellers in Sacramento:
1. Apply in minutes with no commitment: Find out if your Sacramento property is a good fit for the program and get your equity unlock amount approved in 24 hours or less. No cost or commitment necessary.
2. Buy your dream home with confidence: Once approved, you’ll have access to a portion of your equity in your current home. You can submit a competitive offer with no home sale contingency at any time — regardless of how long it takes to find your dream home. Our near-instant Equity Unlock Calculator gives you an estimate of how much equity we can unlock from your current home.
3. Sell your current home with peace of mind: After you settle into your new home, we will list your vacant house on the market to attract the strongest offer possible. You’ll receive the remainder of your equity after the home sells.
Benefits of Homelight Buy Before You Sell
- Timing flexibility: You don’t have to worry about syncing up sale and purchase dates perfectly. This program gives you breathing room to plan your move without feeling hurried.
- Financial peace of mind: Say goodbye to the stress of potential double mortgages or dipping into savings to bridge the gap between homes.
- Enhanced buying power: In a seller’s market, a non-contingent offer can stand out, improving your chances of landing your dream home.
- Sell for up to 10% more: After you move, you can list your unoccupied (and potentially staged) home, which can lead to a higher selling price, according to HomeLight transaction data.
HomeLight’s Buy Before You Sell program offers a convenient and stress-reducing solution for Sacramento homeowners caught in the buy-sell conundrum. Learn more about the program details here.
HomeLight also offers other services for homebuyers and sellers in Sacramento, such as Agent Match, which helps you find the top-performing real estate agents in your market, and Simple Sale, a convenient way to secure a no-obligation, all-cash offer to sell your home in as little as 7 days.
You might also try HomeLight’s free Net Proceeds Calculator to help you plan your home sale.
A creative financing solution for Sacramento homeowners
With Sacramento’s competitive market and rising home prices, more buyers are turning to bridge loans as a way to purchase a new home before selling their current one.
These loans let you access your existing equity to secure your next home, giving you breathing room to sell without the pressure of tight deadlines.
While bridge loans offer flexibility, they also come with added costs and aren’t the right fit for every situation. For a simpler, more modern approach, consider HomeLight’s Buy Before You Sell program. HomeLight can also match you with a top Sacramento buyer’s agent who’s experienced in guiding clients through the bridge loan process.
Editor’s note: As a friendly reminder, this post is intended for educational purposes, not financial advice. If you need assistance navigating the use of bridge loans in Sacramento, HomeLight encourages you to reach out to your own advisor.
Header Image Source: (Roger Starnes Sr/ Unsplash)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
