Bridge Loan vs HELOC: Which Is Better When You're Buying Before You Sell?
Both let you borrow against the equity in your current home to buy the next one. The difference is timing, cost, and what happens if your home takes a while to sell. AFC offers both in Connecticut, so this is the comparison we walk clients through every week.
Short version
A HELOC is cheaper if you can open it early, before you list, and you don't mind the extra monthly payment. A bridge loan costs more but closes in about 10 days, doesn't need to be in place before you list, and doesn't require you to carry a new payment while you sell. If you're already under contract or about to write an offer, the bridge usually wins on timing. If you're 60-plus days out and the equity is there, open the HELOC first.
- HELOC: lowest cost, 30 to 45 days to open, most lenders won't open one on a home that's listed
- Bridge: closes in about 10 days, no monthly payment out of pocket, up to 12 months to sell
- Either way, a non-contingent offer is what wins the house
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Prefer to text? Tap to text our teamBridge Loan vs HELOC at a Glance
| Compare | Bridge loan (AFC) | HELOC |
|---|---|---|
| Speed to close | As little as 10 days. We lend our own money, so there's no outside bank to wait on. | Typically 30 to 45 days from application to funding, including an appraisal and a three-day rescission wait on your primary home. |
| Cost | 2.5% origination, interest at 1% per month that accrues and is paid at payoff, about $3,000 in attorney, processing, and wire fees. No prepayment penalty. | Variable rate tied to prime, interest-only during the draw period. Closing costs are often low; some lenders charge an annual fee or an early-closure fee. |
| What you need to qualify | Equity in your current home (up to 80% combined loan-to-value), a credible exit (your home sale), and income to carry the new mortgage. | Equity (most lenders cap combined loan-to-value at 80% to 85%), credit score, and debt-to-income ratio that includes the new HELOC payment. |
| Can you open it after you list? | Yes. A bridge is designed for a home that's about to be sold. | Usually not. Most HELOC lenders won't open a line on a home that is listed or under contract, so you need to open it before you go to market. |
| Monthly payment while you sell | None out of pocket. Interest accrues and is settled at payoff. | Interest-only payment every month on whatever you've drawn, which also counts against your debt-to-income on the new mortgage. |
| If your home doesn't sell right away | You have up to 12 months. We build the month-by-month cost with you up front and work the plan if it runs long. | No deadline, but the payment continues for as long as the balance is open, alongside your old mortgage and your new one. |
| Who you're dealing with | One local Approval Team that holds the bridge and writes the new mortgage. | Often a different bank than your mortgage lender, so two approvals and two sets of conditions. |
HELOC terms vary by lender. AFC offers HELOCs as well; the row above describes the product generally, not a specific AFC offer.
When a HELOC Wins vs When a Bridge Loan Wins
A HELOC wins when...
- You're at least 45 to 60 days from listing and can open the line before your home goes to market
- You'll only need to carry the extra payment for a short time and your debt-to-income has room for it
- You want the lowest total cost and are comfortable with a variable rate
- You might keep the line open after the sale for renovations or reserves
A bridge loan wins when...
- You're already under contract, writing an offer this week, or your home is already listed
- You need to close in about 10 days to compete with cash buyers
- You don't want a new monthly payment stacked on top of two mortgages while you sell
- Your debt-to-income is tight and a HELOC payment would knock you out of the new mortgage
A Worked Example From Fairfield County
Say you own a home in Fairfield worth $650,000 with a $300,000 mortgage, and you're buying an $850,000 home in Trumbull. You want to put $200,000 down so the new mortgage is $650,000 (about $4,108 a month in principal and interest at an illustrative 6.5% rate). Here's what pulling that $200,000 from each source looks like if your old home sells three months after you close on the new one.
| Line item | Bridge loan (3 months) | HELOC (3 months) |
|---|---|---|
| Amount borrowed | $200,000 | $200,000 |
| Upfront cost | $5,000 origination (2.5%) + about $3,000 fees | Often $0 to $1,500 in closing costs, lender-dependent |
| Interest over 3 months | $6,000 (1% per month, accrues, paid at payoff) | About $4,000 (interest-only at an illustrative 8.0%, paid monthly) |
| Paid monthly while you sell | $0 | About $1,333 per month |
| Approximate total cost | About $14,000 | About $4,000 to $5,500 |
| Time to funding | About 10 days | 30 to 45 days, and only if opened before listing |
The HELOC is clearly cheaper on paper. The catch is that it only works if you opened it before you listed, you can carry the payment, and the payment doesn't push your debt-to-income past the limit on the new mortgage. When timing or ratios don't cooperate, the bridge is the option that actually gets you the house. Held six months instead of three, the bridge would run about $20,000 total; there is no prepayment penalty, so a faster sale costs less.
Illustrative only. Uses a $650,000 current home with a $300,000 mortgage balance, an $850,000 purchase, an illustrative 6.5% 30-year fixed rate on the new mortgage, and AFC's representative bridge terms (2.5% origination, 1% per month accruing interest, about $3,000 in attorney, processing, and wire fees). HELOC and home equity loan figures use an illustrative 8.0% rate. Your rate, fees, and eligibility depend on credit, equity, and market conditions. Not a commitment to lend.
How AFC Handles It
Because we offer both products, we have no reason to push you toward one. Our Approval Team runs your numbers both ways and shows you the cheaper path that still gets your offer accepted.
- We are a retail lender, not a broker. Our Approval Team underwrites and closes in our own name, right here in Connecticut. You talk to the same people from first call to settlement.
- We lend our own money on bridge loans. No outside bank has to sign off, which is why we can close in as little as 10 days and give you up to 12 months to sell.
- No prepayment penalty, no minimum interest. Interest accrues only while the loan is open and is settled at payoff, so nothing is due out of pocket month to month.
- Your pre-approval never expires. As long as your income, assets, and credit are unchanged, it stays valid, so you can shop without a clock running.
- We'll tell you when a HELOC is the better call. If you're early enough and the numbers work, we'll open the line and skip the bridge. Bridge financing is for when timing or ratios make the HELOC impractical.
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Bridge Loan vs HELOC: Frequently Asked Questions
Can I get a HELOC on a house I'm about to sell?
Which is cheaper, a bridge loan or a HELOC?
Does a HELOC payment count against me on the new mortgage?
How fast can each one close?
What happens if my home doesn't sell?
Can I use a HELOC and a bridge loan together?
See Which One Fits Your Move
Two minutes, no SSN, no hard credit pull. Our team runs your numbers both ways and tells you straight which option is cheaper and which one wins the house.
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