Bridge Loans in Scottsdale: 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 home while trying to buy a new one in Scottsdale can feel like a juggling act. You need the equity from your existing home to fund your next purchase — but getting the timing right isn’t always easy.
It might seem like your only option is to sell, move out, and temporarily rent while you search for your next home.
A bridge loan could be the solution to help everything fall into place. In this post, we’ll explain everything you need to know about bridge loans in Scottsdale so you can decide the best path forward for your situation.
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.
Yes, You Can Buy Before You Sell. Why Move Twice?
What is a bridge loan, in simple words?
A bridge loan is a short-term loan designed to help you buy a new home before your current one sells. It lets you tap into your existing home’s equity to cover a down payment and closing costs, giving you more flexibility in a tight timeframe.
Bridge loans are typically more expensive than traditional mortgages, but they offer convenience and speed — especially when you need to act fast and don’t want to risk losing your next home.
Also referred to as:
- bridge financing
- bridging loan
- interim financing
- gap financing
- swing loans
How does a bridge loan work in Scottsdale?
If you’re researching bridge loans in Scottsdale, you may have found your next home but are still in the process of selling your current one. Rather than miss out, you can use your home’s equity to fund the down payment and closing costs for your new property.
Often, the same lender issuing your new mortgage can also provide your bridge loan. They may require your current home to be listed on the market and typically cap the loan term at six months to one year.
Your debt-to-income ratio (DTI) will also factor into approval. Lenders may include your current mortgage, your new mortgage, and interest-only payments on the bridge loan in the calculation.
However, if your current home is already under contract and the buyer’s loan has final approval, your lender may only count the new mortgage payment. Lenders want to see that you can handle both payments if your current home takes longer to sell.
What are the benefits of a bridge loan in Scottsdale?
Here are a few ways bridge loans in Scottsdale can help make your transition smoother:
- You can make a non-contingent offer on your new home: Sellers often prefer buyers without home sale contingencies.
- You only have to move once: Forget about temporary housing or storage costs.
- You can prepare your old home for sale: Vacate first, then focus on preparing your home with staging and repairs.
- Lenders don’t always require payments during the loan period: You may not owe anything until your previous home sells.
- You can move on the right property quickly: Make an offer without worrying about selling first.
What are the drawbacks of a bridge loan?
While a bridge loan can provide more flexibility and alleviate some stress when it comes to selling your current home and purchasing a new one, there are some notable drawbacks:
- Additional loan costs: You may need to pay underwriting fees, origination fees, and other closing costs.
- Added financial stress: You could end up covering two mortgages and a bridge loan simultaneously.
- Qualifying may be more difficult: Lenders often have stricter requirements than they do for a traditional mortgage.
- Underwriting can be a slower process: The review process can take longer than you might expect.
When is a bridge loan a good solution?
A bridge loan isn’t a one-size-fits-all solution, but for some sellers, it can ease the stress of transitioning between an old and a new home.
Some examples of when a bridge loan might help:
- 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.
- Your dream home just hit the market, and you want to take immediate action before another buyer beats you to it.
- Your offer’s home sale contingency has been a deal-breaker for sellers.
You want to sell an empty or staged home, which can often be more lucrative.
What’s required to get a bridge loan in Scottsdale?
Bridge loans in Scottsdale typically require the following:
- Qualifying income: Your lender will assess whether you can afford your current mortgage, your new mortgage, and the bridge loan.
- Sufficient equity: Most lenders require at least 20% equity in your current home, though some may require up to 50%.
- Good credit history: A credit score above 650 is typically required. Higher scores may improve your loan terms and approval odds.
- Your current home to be listed for sale: Lenders may require that your current home is on the market to help ensure it will sell before the loan term ends.
How much does a bridge loan cost in Scottsdale?
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 purchase, but you’re still waiting for your current Scottsdale house to sell. The new home’s asking price is $1,000,000. You can only come up with $700,000, 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 you lose your dream home 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%
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.
What's Your Current Home Worth?
Who provides bridge loans in Scottsdale?
Not every lender in Scottsdale offers bridge loans, since they require more involved underwriting. If you’re considering one, start by reaching out to a few different lenders to compare your 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 Scottsdale?
Although a bridge loan may not be the right fit for every Scottsdale homeowner, there are other options worth considering:
- Home equity loan: This loan (sometimes called a HEL) enables you to borrow money using the equity in your 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 leave your first mortgage at its lower rate.
- Home equity line of credit (HELOC): Another way to tap into your existing equity is through a HELOC. This gives you access to funds from your property at a relatively low interest rate. Rather than receiving a lump sum, your lender provides a line of credit you can borrow from as needed. If you open the line and close it shortly afterward, you may be charged an early closure fee. Unlike a home equity loan, HELOCs usually come with adjustable interest rates.
- Cash-out refinance: This 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. As a result, you might have 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 known as a piggyback loan because you take out a first and second mortgage at the same time to finance your new purchase — allowing you to put just 10% down. For buyers who can’t make a larger down payment before selling their current home, this can be a way to avoid paying mortgage insurance. However, you would still be responsible for three mortgage payments until you sell your existing home and pay off the second mortgage.
- A 401k loan: Borrowing against your retirement account has upsides and downsides — your repayment period will be relatively short (up to 5 years), and your monthly payment will likely be high. This could affect your ability to qualify for your new mortgage, as your lender will need to factor in this monthly payment when calculating your debt-to-income ratio. If your 401k plan allows, you might be able to borrow up to $50,000 to put toward your new purchase.
Are there modern ways to buy a house before I sell?
Thanks to recent advancements in technology, real estate solution companies like HomeLight incorporate bridge loans into convenient programs that simplify the process of buying and selling a house in Scottsdale. These “Buy Before You Sell” programs can provide a more complete “bridge” to help you successfully transition to a new home, making the process less stressful.
Together with your Scottsdale agent, HomeLight can help you move into your new home quickly and confidently while ensuring you get the strongest possible offer for your current home. Check with your agent to see if HomeLight Buy Before You Sell is available in your area.
Examples of other “Buy Before You Sell” or home trade-in service companies include Knock, Orchard, Flyhomes, and Homeward.
How does HomeLight Buy Before You Sell work?
Here’s how HomeLight’s Buy Before You Sell program works for home sellers in Scottsdale:
- Apply in minutes with no commitment: Find out if your home is a good fit for the program and get your equity unlock amount approved in 24 hours or less. No cost or commitment is necessary.
- Buy your dream home with confidence: Once approved, you’ll be able to access 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 the time it takes to find your dream home. Our near-instant Equity Unlock Calculator lets you estimate how much equity we can unlock from your old home.
- Sell your current home with peace of mind: After you move into your new home, we will list your unoccupied home on the market to attract the strongest offer possible. You’ll get the remainder of your equity after the house sells.
Benefits of Homelight Buy Before You Sell
- Flexible timeline: You don’t need to perfectly align your sale and purchase dates. This program gives you breathing room to plan your move without feeling rushed.
- Financial peace of mind: Say goodbye to the hassle 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 from the rest, increasing your chances of landing your new home.
- Receive up to 10% more: After you move, you can list your old home unoccupied and potentially staged, which can lead to a higher selling price, according to HomeLight transaction data.
For Scottsdale homeowners dealing with the challenge of buying and selling at the same time, HomeLight’s Buy Before You Sell program offers a convenient, stress-reducing solution. You can learn more details about the program at this link.
HomeLight also offers other helpful services for Scottsdale buyers and sellers, including Agent Match to connect you with top-performing real estate agents in your area, and Simple Sale — a quick, no-obligation option to receive an all-cash offer and sell your home in as little as 7 days.
As you prepare to sell, you might also try HomeLight’s free Net Proceeds Calculator to estimate how much you could walk away with.
A creative financing solution for Scottsdale homeowners
As Scottsdale homeowners face the challenge of buying and selling at the same time, many are turning to bridge loans to help streamline the transition.
Bridge loans allow you to borrow against the equity in your current home to fund your next purchase — giving you more flexibility and taking the pressure off getting the timing just right.
While this financing option can be helpful, it may not fit every situation and often comes with higher costs.
HomeLight’s Buy Before You Sell program offers a modern alternative to reduce stress and give you more control. HomeLight can also connect you with a top-performing Arizona buyer’s agent who understands bridge loans and can guide you through the 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 a bridge loan in Scottsdale, HomeLight encourages you to reach out to your own advisor.
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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.