Buying a home is a significant milestone, but one of the most common questions potential…
Should I Use a Bridge Loan if I Haven’t Sold My Current Home Yet?
In a competitive real estate market, timing is everything. You may find your “dream home” before you’ve even listed your current property, creating a stressful financial gap. A bridge loan (also known as a “swing loan” or “gap financing”) is specifically designed to solve this problem by providing temporary funds to cover the transition.
However, these loans are not one-size-fits-all. Here is what you need to know to decide if a bridge loan is the right move for your situation in 2026.
What Exactly is a Bridge Loan?
A bridge loan is a short-term loan (typically lasting 6 to 12 months) that uses your current home as collateral. It allows you to tap into your home’s equity to provide a down payment for your next house without waiting for your current sale to close.
How it Works:
- Speed: Approval can often happen in as little as 72 hours, with funds available in about two weeks—much faster than a traditional mortgage.
- Structure: You can use it as a second mortgage for the down payment, or take a larger loan to pay off your old mortgage entirely.
- Repayment: Most bridge loans require interest-only payments. Metropolitan Mortgage offers a specialized 0% interest period to help you transition without the immediate cash flow sting.
| Feature | Traditional Bridge Loan | Metropolitan Bridge Loan |
|---|---|---|
| Interest Rate | 10.5% – 12.0% | 0% for 6 Months |
| Max Loan Amount | Varies | Up to $750,000 |
| Closing Speed | 30-45 Days | As fast as 21 Days |
| Home Prep Funds | Not Included | Up to $35,000 |
The Strategic Advantages
Using a bridge loan provides several powerful benefits in the current 2026 market:
- Non-Contingent Offers: In 2026, sellers often reject offers that are contingent on the buyer’s home selling first. A bridge loan removes this contingency, making your offer nearly as strong as cash.
- Move Once, Not Twice: You can buy and move into your new home before you even list your old one, avoiding expensive short-term rentals.
- Avoid PMI: By using your current equity to reach a 20% down payment, you can avoid private mortgage insurance on your new primary loan. Compare this strategy against current Kansas City interest rates to see your total monthly savings.
The Risks and Costs to Consider
While convenient, bridge loans come with higher stakes than standard financing:
- Higher Standard Rates: Outside of our 0% introductory period, bridge rates are typically 2% to 4% higher than 30-year fixed mortgages.
- The “Dual Mortgage” Trap: If your old home doesn’t sell within the term, you could be responsible for multiple payments. However, with the KC housing market currently seeing homes sell in an average of 43 days, this risk is mitigated for well-priced homes.
- Equity Requirements: Most lenders require at least 20% equity in your current home to qualify.
Is It Right for You?
Consider a bridge loan if:
- You have significant equity (20% or more) in your current home.
- You are buying in a competitive area like Overland Park, Brookside, or Lee’s Summit where non-contingent offers are required.
- You have a strong credit score (typically 620+ for Metropolitan programs).
Avoid a bridge loan if:
- You are in a sluggish market where your home might sit for more than six months.
- You prefer a lower-risk path, such as a HELOC, and have the time to wait for a contingent offer to be accepted.
Final Thoughts
A bridge loan is a powerful tool for homeowners who need flexibility and speed. Because even a small rate change on your long-term loan impacts your “exit strategy,” we recommend checking the latest Kansas City mortgage rates as you plan your move.
Ready to make a non-contingent offer? Contact us for KC home loan solutions today to see if you qualify for 0% interest bridge financing.
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