How to Purchase a Home Non-Contingent

In today’s competitive real estate market, buying a new home before selling your current one—often called a non-contingent purchase—is a powerful strategy to win bids. By following this with a mortgage recast, you can secure your new home immediately and then use the equity from your old house to permanently lower your monthly payments.

Step 1: Navigating the Non-Contingent Purchase

A non-contingent offer means your purchase is not conditional on selling your existing home. This “clean” offer is often the only way to beat out competitors in a hot market.

Financing Your Move Without Selling First

• Bridge Loans: Short-term financing (typically up to one year) that covers the interval between your new purchase and old sale. These often have higher interest rates but provide essential liquidity.

• HELOC or Home Equity Loan: You can tap the equity in your current home for a down payment on the new one, provided you set it up before listing your home for sale.

• Low Down Payment (3–5%): Many buyers choose to put as little as 3–5% down on the new home to keep their cash liquid. You then “fix” the large mortgage balance later through a recast.

• Asset-Based Loans: Tapping a 401(k) loan or a securities-backed line of credit can provide the necessary cash without needing a home sale contingency.

Step 2: Recasting the New Loan

Once your previous home sells, you will have a large lump sum of cash. Instead of just making a standard extra payment, you can ask your lender to recast the mortgage.

How a Recast Works

1. Large Lump Sum: You pay a significant amount toward your new principal balance—lenders typically require $5,000 to $10,000 as a minimum.

2. Re-Amortization: Your lender recalculates your monthly payment based on the new, lower balance.

3. Same Terms: Unlike a refinance, your interest rate and loan term remain exactly the same.

4. Lower Payments: Your monthly principal and interest payment drops immediately.

Recast vs. Refinance

Critical Considerations for 2026

• Eligibility: Recasting is generally only available for conventional loans. FHA, VA, and USDA loans are almost never eligible for recasting.

• PMI Removal: If your lump-sum payment brings your loan-to-value (LTV) ratio below 80%, recasting is often a trigger to request the removal of Private Mortgage Insurance (PMI).

• Lender Specifics: Not all lenders offer recasting. If your loan is sold to a new servicer, they are generally required to honor the original recast provisions if they were part of your conventional loan’s backing.

• Waiting Periods: Some lenders require you to make at least two to six consecutive on-time payments before they will process a recast.

Final Thoughts

This strategy is ideal if you have a great interest rate on your new loan and simply want to lower your monthly overhead once your old house sells.