If you’ve found your next home but your current home hasn’t sold yet, you may need a way to unlock your equity fast to cover the down payment. In this situation, homeowners often weigh two main options: a bridge loan or a home equity line of credit (HELOC). While they’re often used for the same purpose, they differ in functionality.
With HELOC rates averaging around 7% in April 2026, compared with 8.5%–12% for bridge loans, and tappable home equity at a record $21.4 trillion, most move-up buyers should default to a HELOC and reach for a bridge loan only when the timeline forces it.[1][2]
The catch: lenders won't approve a HELOC on a home that's already listed for sale, so the decision has to be made weeks before the first open house.
"My favorite is the HELOC," says Josh Bradley, Executive Loan Officer at Best Interest Financial. "The way I always think about it is it's almost like putting a credit card against your home."
However, choosing between the two comes down to timing, certainty, and risk tolerance. Do you need a large lump sum tied directly to the sale of your home? Or would you rather have a more flexible credit line with less strict repayment terms if your home takes longer to sell than expected?
Bridge loan vs. HELOC: Quick comparison
Bridge loan
A bridge loan is a relatively high-interest loan with a short term. It usually must be paid back in full within 6–12 months. It “bridges” the gap between the purchase of your next home and the sale of your current home. According to industry experts, the average bridge loan in 2025 was around $634,000, and demand for them is rising: bridge loans were up 31%, year-over-year.[3]
"[Bridge loans] are typically for individuals who are looking to buy a new home, but can't sell their current home in time," says Bradley. "So what they'll do is get a bridge loan to 'bridge the gap' so that they have funds for a down payment and put a non-contingent offer on a new home, which makes them more competitive."
The timeline is longer upfront but faster once the line is open. Expect two to six weeks for the initial approval and funding, but after that, draws are essentially instant, often available through an app or checkbook tied to the credit line.
Use the calculator below to estimate your bridge loan costs based on your home equity and expected timeline.
Bridge Loan Calculator
Estimate your bridge loan amount, monthly interest cost, and net proceeds when your current home sells.
A bridge loan uses your current home equity as collateral. Lenders typically cap the loan at 80% LTV (loan-to-value) minus your existing mortgage balance. Payments are interest-only until the loan is repaid at closing.
| Item | Amount |
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HELOC
A HELOC, on the other hand, turns your equity into a revolving line of credit. You can draw only what you need for the down payment. The HELOC is secured by your current home, so it usually must be paid off in full when you sell the property.
HELOCs typically require a credit score of 680+ (some lenders accept 620), a CLTV of 85% or less, and a DTI under 43%.[4] You'll need to document income with pay stubs, tax returns, and bank statements, just like a purchase mortgage.
The timeline is longer upfront but faster once the line is open. Expect two to six weeks for the initial approval and funding, but after that, draws are essentially instant, often available through an app or checkbook tied to the credit line.
Use the calculator below to see how much equity you could access through a home equity product.
Home Equity Loan & HELOC Calculator
Estimate how much equity you can access and what your monthly payments would be.
Adjust your loan details and click Calculate Payments to see your results.
| Year | Principal | Interest | Balance |
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Bridge loan vs. HELOC at a glance
| Bridge loan | HELOC | |
|---|---|---|
| Interest rate | Higher than conventional loans or HELOCs | Slightly higher than conventional loans but generally lower than bridge loans |
| Repayment | Interest-only or no payments over a short term but repayment required after 6–12 months | Following a draw period, you make monthly payments of both interest and principal or just pay it off once you sell the home |
| Qualification requirements | Higher credit score (mid-700s), lower DTI, substantial equity | High 600s credit score, moderate equity of at least 20% |
| Typical purpose | Buying next house before current house sells | Funding down payment for next house, home renovations, or consolidating other debt |
How to decide
This isn't a product that's universally better. It depends on your timeline, your home's listing status, and your tolerance for rate risk.
As Bernie Frascarelli, executive loan officer at Best Interest Financial explained, the choice between a HELOC and a bridge loan "largely depends on the timing of selling one's current home." A HELOC works best "when the home is not yet on the market," while a bridge loan is typically used "when a property is about to sell and a quick closing on a new house is needed."
According to Frascarelli, "HELOCs are used more often than bridge loans" for this purpose, partly because bridge loans require "excellent financial standing" and come with less favorable terms. Bridge loans "must be paid back, often ballooning after three months," and typically carry higher rates.
This is why HELOCs are particularly attractive over a bridge loan if you have a low existing mortgage rate. Frascarelli says a HELOC is ideal for homeowners with rates "under 3%," allowing you to preserve your favorable financing while accessing equity for your down payment on a new property.
Choose a HELOC if:
- You have six or more weeks before you plan to list
- You want the lowest possible borrowing cost
- You're comfortable with a variable rate for the short term
- You might use the credit line for other purposes after the move (renovations, reserves)
Choose a bridge loan if:
- Your home is already listed or you need funds in under three weeks
- The seller won't accept a home-sale contingency and you need a non-contingent offer
- You have a clear, fast exit (your home is already under contract or priced to sell quickly)
- You're willing to pay a premium for speed and certainty
Chris Kuclo, Senior Director of Agent Relations and Sales at Best Interest Financial, puts the bigger picture in perspective: "When you're buying the home, you're looking to just get in the home. The mortgage that you start with is not going to be the mortgage you end with."
That applies to bridge financing too. "Start with the loan that works for you," Kuclo says. "Then you work towards the loan that would be the most ideal."
Four alternatives worth knowing
The bridge vs. HELOC framing is incomplete without the platforms and hybrid products that have matured since 2023.
HomeLight Buy Before You Sell unlocks up to 70% of your current home's equity for a down payment, charges a flat 2.4% program fee on the departing residence sale price (2.9% in FL), and provides a guaranteed backup offer if the old home doesn't sell in 120 days.[5]
Knock's Bridge Loan program works in 32 states, charges 2.25% of the new home's purchase price plus about $1,850 in closing costs, and will buy your old home if it doesn't sell in six months. Both solve the "listed home" problem that blocks HELOCs.
80-10-10 piggyback loans split a purchase into an 80% first mortgage, a 10% second mortgage (often structured as a HELOC on the new home), and 10% cash. This avoids PMI and keeps the first loan under the $832,750 conforming limit in most markets. The 10% second is usually variable and sits around Prime plus a small margin.[6]
Home equity loans are a simpler, fixed-rate alternative to a HELOC. "Home equity loans are a little bit different than a HELOC. Those are typically fixed rate," Bradley notes. "The big thing with the home equity loan is that you get it as a lump sum of cash. So there's no way to draw and put money back or take more out. It's a one-time payment."
That fixed-rate structure protects you from rising rates, but it's less flexible: you borrow a set amount upfront and start paying interest on the full balance immediately, whether you need it all or not.
How HELOCs and bridge loans are treated for taxes
HELOC interest is only tax-deductible if you use the money to buy, build, or substantially improve the home that secures the loan. That's straight from IRS Publication 936 and the agency's 2018 clarification (IR-2018-32).[7]
So if you pull $80,000 from a HELOC to put a down payment on your next home, that interest may be deductible (up to the $750,000 combined mortgage cap). If you pull $80,000 to pay off credit cards or cover your kid's tuition, it's probably not. The IRS doesn't care what the loan is called. It cares what the money was used for.
Bridge loan interest technically follows the same rules, but good luck claiming it. The loan is short-term, it's usually secured by the home you're leaving, and the paperwork trail rarely lines up cleanly enough to satisfy an auditor.
One more thing: these TCJA limits were supposed to sunset after 2025, which would bring back the old $1 million cap and deductibility regardless of use. That hasn't happened yet. If taxes are a significant factor in your decision, talk to a CPA before you close. This isn't the kind of thing you want to guess on.
Ready to meet with a loan officer?
Compare bridge loans and HELOCs with Best Interest Financial today. Answer a few questions and we’ll connect you with a dedicated loan officer in minutes to guide you through available loan options and rates—no social or date of birth required. Get started with a 60-second quote from Best Interest here.
🛡️ Why you should trust our advice
This article was written and edited by the Best Interest Financial editorial team, with direct input from three licensed loan officers on our staff: Josh Bradley, Executive Loan Officer (NMLS 1312222), Chris Kuclo, Senior Director of Agent Relations and Sales (NMLS 926690), and Bernie Frascarelli (NMLS 938329), Executive Loan Officer. Their quotes throughout the piece come from recorded interviews, not scripted marketing copy.
The rate data, fee ranges, and qualification thresholds reflect April 2026 market conditions. We sourced them from IRS Publication 936, the Federal Reserve, and TransUnion's Q4 2025 originations forecast — not aggregator sites or AI-generated summaries. When those numbers change, we update.
We don't earn referral fees from the bridge loan lenders, HELOC providers, or buy-before-you-sell platforms mentioned here. Our revenue comes from connecting borrowers with Best Interest Financial loan officers, and we say that upfront. That model only works if people trust what they read, so we don't have much incentive to mislead you.
FAQ about bridge loans and HELOCs
Can I have a HELOC and a bridge loan at the same time?
Technically, yes, but it rarely makes sense. Both are secured by your home equity, and most lenders won't approve a bridge loan if a HELOC already consumes too much of your available equity. Your CLTV (all loan balances divided by home value) typically can't exceed 80%–85% across all liens combined. If you already have a HELOC with a large balance, you may need to pay it down or close it before qualifying for a bridge loan.
What happens to my HELOC when I sell my home?
The HELOC must be paid off at closing, just like your primary mortgage. Your title company or closing attorney will include the payoff in the settlement statement, and the balance is deducted from your sale proceeds automatically. If you opened the HELOC with waived closing costs and a 36-month recapture clause, and you're selling before that window expires, expect to pay back those waived fees at closing.
How fast can I actually get a bridge loan?
Most bridge lenders can close in two to four weeks, with some advertising 10-day closings for borrowers with strong credit and straightforward financials. The bottleneck is usually the appraisal, which takes 7–14 days in most markets. Some lenders accept desktop or hybrid appraisals, which can shave a week off the timeline.
Is a cash-out refinance ever better than both options?
Only if your existing mortgage rate is already above today's market rate, roughly 6.4% for a 30-year fixed in April 2026. About 60% of outstanding U.S. mortgages carry rates below 5%, so giving up a 3.5% first mortgage to access equity at 6.4% is almost always a losing trade. That's precisely why HELOC originations are booming while cash-out refinances are not.
Disclaimer: The information provided in this article is for informational and educational purposes only. It is not intended as legal, financial, investment, or tax advice, and should not be relied upon as such. Mortgage rates, terms, products, and eligibility requirements are subject to change without notice and vary based on individual circumstances, credit profile, property type, loan amount, and other factors. All loans are subject to credit approval. This content does not constitute a commitment to lend or an offer of specific loan terms. For personalized mortgage advice and to discuss loan products that may be suitable for your situation, please contact one of our licensed loan officers.