Buying your next home before you sell your current one can feel like a juggling act. In Milpitas and across Santa Clara County, it is often the smarter play if you want to avoid interim housing, move once, and compete with confidence. This guide explains how bridge loans work, what they cost, who they fit, and how to run a clean, low-drama plan from offer to payoff.
Why buy-before-you-sell works in Milpitas
The timing problem you are solving
Inventory has been tight across Santa Clara County, and well-priced homes can still draw strong interest. County reports show median prices well over 1 million dollars with supply that tends to run lean. In that context, sellers favor certainty and clean offers. Buying first with temporary financing lets you remove a sale contingency, which can improve your odds in competition and reduce the stress of lining up two closings per county-level trends.
Why move once matters
- You avoid renting between homes and paying for storage.
- Your family can transition on your timeline instead of a buyer’s.
- You can prep and stage your current home after you move out, which often shows better.
Confidence without taking outsized risks
A buy-before-you-sell plan is not about gambling. It is about a coordinated timeline, conservative budgeting, and a clear exit strategy. That blend lets you act quickly without losing sight of costs and downside scenarios.
Bridge loan basics and workflow
A bridge loan fills the gap between the day you buy and the day you sell. It is short-term financing, usually secured by the home you are selling, sometimes by both properties. Rates are higher than a standard mortgage, and terms are shorter because the lender expects to be repaid from your sale or a refinance definition and purpose.
What a bridge loan can fund
- Down payment and closing costs on your next home
- Payoff of your existing mortgage so you can qualify for the new loan more easily
- Carrying costs during the overlap period
Some lenders structure interest-only payments with the balance due at sale. Others allow interest to accrue and be paid off at the end. Know which structure you are getting and how it affects cash flow typical structures.
Qualification and approvals
Expect a fast but thorough review. Lenders will look at:
- Your equity in the departing home
- Your credit and assets
- A clear exit plan: listing prep, pricing strategy, and timeline
- Property valuation and, in many cases, an appraisal
Private and specialty lenders may offer more flexible documentation but often at higher cost. Most will ask for a defined payoff path and adequate reserves to cover a few months of overlap common underwriting expectations.
Typical timeline from offer to payoff
- Pre-approval: align loan size, terms, and timeline with your purchase plan.
- Offer accepted: lock terms and order valuation.
- Close on new home: move in; begin final prep and staging on your old home.
- List and sell: accept offer and clear contingencies.
- Payoff: use sale proceeds to retire the bridge loan and settle any remaining closing balances.
Most buy-before-you-sell bridge loans run 6 to 12 months with options to extend for a fee. Extensions add cost, so keep your sale timeline tight and realistic common term ranges.
Pros, tradeoffs, and alternatives
Advantages in competitive markets
- Write a non-contingent offer for stronger negotiating power.
- Move once on your schedule.
- Tap your equity now instead of waiting for sale proceeds how it bridges timing and equity.
Costs, risks, and mitigations
Bridge loans usually cost more than standard mortgages. Market snapshots in 2025 show many residential bridge products in an approximate 8 to 12 percent rate range, plus 1 to 3 percent in origination points and closing costs. Pricing depends on equity, loan position, and lender type market ranges.
Your key risks:
- Carrying two homes longer than expected
- Paying extension fees if your sale slips
- Qualifying for your permanent loan if the bridge is not structured to be paid off at purchase
Practical mitigations:
- Price your departing home based on current comps and demand, not best-case scenarios.
- Keep a cash buffer for 3 to 6 months of overlap.
- Choose clear terms: interest-only vs accrued interest, and confirm any prepayment penalties payment structures.
Note: Bridge loans are treated as temporary financing under federal rules, which affects disclosures and underwriting categories. Your lender will provide required disclosures per Regulation Z and RESPA regulatory context.
When a bridge loan fits (and when it does not)
Good fit:
- You have strong equity and a marketable Milpitas home.
- You want to remove the sale contingency to win a competitive home.
- You have reserves and are comfortable with short-term higher-cost debt.
Possible mismatch:
- Thin equity or limited reserves.
- You are highly rate-sensitive and a lower-cost option is available.
- Your preferred next home is not time-sensitive and a contingent path would be accepted fit considerations.
Alternatives to compare
- HELOC or home equity loan: may be cheaper but requires qualification and comfort with variable rates in some cases HELOC considerations.
- Contingent offer: safer on paper but often less competitive; you can tighten contingency periods to improve acceptance odds contingency context.
- Portfolio or jumbo strategies: structure the new mortgage to reduce or remove the need for bridge financing; discuss with your lender portfolio approach.
Step-by-step buy-before-you-sell plan
Align financing and pricing early
- Get pre-approved for both the purchase loan and the bridge loan amount you may need.
- Review a pricing plan for your current home with current comps and days-on-market.
- Decide on your floor price, timeline, and concessions before you shop.
Prep, stage, and pre-market your current home
- Complete repairs and updates that deliver speed and impact.
- Stage and capture photography before you move or immediately after.
- Prepare disclosures and inspection reports so you can launch quickly.
Write a stronger offer on your next home
- Use your bridge pre-approval to remove the sale contingency.
- Keep contingencies tight but realistic for appraisal, inspection, and loan.
- Communicate your closing schedule and proof of funds clearly to the listing agent.
Sequence the two closings and repay
- Close on the new home first so you can move and finish staging.
- List promptly. Aim to accept an offer with clear milestones and buyer capacity.
- At your sale closing, the escrow officer wires payoff to retire the bridge loan and settles your remaining balances. Confirm payoff statements a few days in advance so numbers are accurate.
Budgeting the overlap with confidence
Estimate carrying costs and reserves
Build a simple monthly budget that covers:
- Principal and interest on any mortgages in place
- Bridge loan interest or accrued interest accrual
- Taxes, insurance, utilities, HOA dues, and routine maintenance
Use a conservative hold period. Sample calculators or lender illustrations can help you see total cost with points, fees, and possible extensions cost modeling.
Plan for proceeds and payoff mechanics
- Ask your escrow team to prepare a draft settlement statement for both transactions.
- Confirm how sale proceeds will be allocated to the bridge loan payoff and any prepayment items.
- Verify whether your bridge has a minimum interest period or prepayment penalty so timing does not surprise you term awareness.
Keep records for your advisor
Save:
- Loan documents and payoff statements
- Closing disclosures for both transactions
- Receipts for staging, repairs, and moving
Organized records make tax and financial planning easier later.
Start your coordinated move in Milpitas
You do not have to navigate this alone. A coordinated buy-and-sell plan can reduce risk and help you act with confidence. Our team will help you compare options, line up financing, craft a winning offer, and sell your current home on a clear timeline.
- Explore bridge loan planning and tools built for competitive offers overview and planning resources.
- Ready to run the numbers and map your timing end-to-end? Work with a local team that does this every week. Work With Us: start a conversation with The Samit Shah Team.
FAQs
What does a bridge loan cost in today’s market?
- Many residential bridge loans in 2025 show rates roughly in the 8 to 12 percent range, plus 1 to 3 percent in points and typical closing costs. Pricing varies by equity, loan position, and lender type market ranges.
How long do I have to pay off a bridge loan?
- Common terms for buy-before-you-sell scenarios are 6 to 12 months, with optional extensions for a fee. Lenders expect a clear exit plan tied to your home sale or a refinance term expectations.
Can a bridge loan hurt my ability to qualify for my new mortgage?
- It depends on structure. If the bridge is not paid off at purchase, some lenders may count it as debt when qualifying you for the permanent loan. Align structures early with your lender and agent structural considerations.
Is a HELOC better than a bridge loan?
- A HELOC can be cheaper but may have variable rates and slower approvals. If you need speed or a non-contingent offer, a bridge may fit better. Compare both paths with current quotes HELOC pros and cons.
What are the main risks I should plan for?
- Longer-than-expected market time, extension fees, and carrying two homes. Build a cash buffer, price realistically, and set a firm launch timeline for your sale risk planning.
Are these loans regulated differently?
- Bridge loans are typically treated as temporary financing with specific disclosure rules under federal regulations. Your lender will provide the required documents and timelines regulatory overview.
Where can I compare lenders?
- You can review specialty bridge lenders, private lenders, and broker channels active in the Bay Area, then request written quotes for your scenario and timeline lender landscape.
