Ever found the right San Jose home, only to hesitate because your current place is not sold yet? You are not alone. In a high-cost, low-inventory market like Santa Clara County, many buyers want to move first and sell second to stay competitive. This guide shows you how bridge loan options work, what they cost, how to compare them, and how to manage risk so you can move with confidence. Let’s dive in.
Why buy before you sell in San Jose
San Jose is a competitive market with limited inventory and frequent multiple-offer situations. Sellers often prefer offers without a sale contingency, so having funds ready can be the difference between winning and missing out. If you need to relocate for work or school timing, or you are upsizing or downsizing, buying first can simplify your move.
That said, you should plan for the risks. Carrying two high-value mortgages and property expenses can be costly if your sale takes longer than expected or if the market shifts. A careful plan around pricing, timelines, and reserves is essential.
Local data changes quickly across neighborhoods. We regularly monitor MLSListings and county records for price, inventory, and time-on-market trends so you have current context when deciding on a strategy.
Bridge financing options at a glance
Traditional bridge loan
A traditional bridge loan is a short-term, often interest-only loan secured by your current home, sometimes also the new purchase. Terms are usually 6 to 12 months, and you repay principal when your current home sells.
- Pros: Fast access to equity, stronger position for contingency-free offers.
- Cons: Higher rates and fees than permanent mortgages, stricter underwriting, the potential to carry two payments if your sale is delayed.
- Best for: Sellers with substantial equity who need short-term funds to close quickly.
- San Jose note: Lenders will focus on combined loan-to-value and your ability to carry both housing payments if needed.
HELOC (home equity line of credit)
A HELOC is a revolving line secured by your current home. You draw what you need and pay interest on the amount drawn during the draw period.
- Pros: Flexible draws, often lower fees than a bridge loan, potential for lower rates with strong credit.
- Cons: Lender may not subordinate to a new first loan on the purchase, and limits may not be high enough unless you have significant equity.
- Use case: You have sizable equity and a lender that permits the structure you need for your purchase.
Home equity loan (second mortgage)
This is a lump-sum, closed-end loan secured by your current home, sometimes with a fixed rate.
- Pros: Predictable payments, simple if you know the exact amount you need.
- Cons: Subordination and combined LTV limits can complicate a simultaneous purchase, and there may be prepayment costs.
Cash-out refinance
You refinance your current mortgage for more than the existing balance and use the difference as your down payment on the new home.
- Pros: One consolidated loan, potentially lower borrowing cost than short-term bridge options.
- Cons: Longer timeline than many bridge structures, which can be a challenge in a hot market, and closing costs apply.
- Best when: You have time to plan before buying and want lower ongoing borrowing costs.
Cross-collateralized or concurrent financing
Some lenders will finance your purchase and tie it to your current property in one package, underwriting the full picture.
- Pros: Streamlined process with a single lender that can factor your planned sale timeline.
- Cons: Not widely available, more complex documentation, and potential restrictions when you go to sell.
Portfolio or private bridge lenders
Private or portfolio lenders hold loans on their books and can be more flexible and quick.
- Pros: Faster closings and flexible underwriting driven by local market knowledge.
- Cons: Higher rates and fees, and stronger reserve requirements are common. Careful review is essential.
Sale-leaseback or rent-back
Instead of borrowing, you can negotiate selling your current home with an agreement to stay for a short period after closing, or lease it back.
- Pros: Can remove the need for interim financing.
- Cons: Depends on buyer willingness and can affect price or terms.
Savings, investments, or family gifts
Some clients bridge the gap with liquid savings, investment liquidations, or family assistance. Always consider tax implications and timing before you move funds.
How lenders qualify you
Key metrics lenders review
Lenders evaluate your complete picture, including:
- Combined loan-to-value across both properties.
- Loan-to-value and available equity on your current home.
- Debt-to-income ratio and your capacity to carry both payments.
- Credit score and payment history.
- Reserves for several months of payments, taxes, and insurance for both properties.
- Exit strategy and sale plan, such as a listing agreement, comps, or pre-listing inspections.
Costs to expect
Bridge financing usually carries a premium over long-term mortgages. Plan for:
- Higher interest rates than permanent mortgages with interest-only payments in many cases.
- Origination or lender fees, plus title, escrow, and notary costs.
- Appraisals on the collateral property, sometimes both properties.
- Possible prepayment penalties, so review terms closely.
- Carry costs like taxes, insurance, HOA dues, utilities, and maintenance on both homes.
Timelines
- Traditional bridge loans often close in 2 to 6 weeks, depending on appraisal and lender capacity.
- Private lenders can sometimes close faster.
- HELOCs can take 2 to 6 weeks, with some banks moving faster for existing customers.
- Cash-out refinances typically take longer, often 4 to 8 weeks or more.
Alternatives and tradeoffs
- Contingent offer on your purchase
- Pros: You avoid carrying two payments and extra borrowing costs.
- Cons: In a competitive San Jose market, sellers often decline sale contingencies.
- Rent-back after you sell
- Pros: Buy time to shop without borrowing.
- Cons: Requires buyer agreement and may involve added rent-back costs.
- Offer a stronger price or earnest money with a contingency
- Pros: Can make a contingent offer more competitive.
- Cons: Raises your exposure if your sale does not happen on time.
- Co-borrower or family bridge
- Pros: Potentially lower cost and more flexibility.
- Cons: Personal relationship risk and the need for a clear written agreement.
- Sell first, rent temporarily, then buy
- Pros: Simplifies cash flow and reduces financing costs.
- Cons: Two moves and potential rental challenges in the Bay Area.
A practical game plan
Step-by-step timeline
Meet with your agent to evaluate neighborhood-level conditions, likely sale timing, and a listing strategy for your current home.
Get a realistic estimate of net proceeds and a sale timeframe using comparable sales and a prep plan.
Consult a mortgage professional to review bridge options and documentation, and secure preapproval for your new purchase loan.
Compare products such as a traditional bridge, HELOC, home equity loan, cash-out refinance, or private bridge lender.
Select your product and lender, align closing dates with your purchase escrow, and confirm your exit plan.
Execute your purchase while your agent manages your sale timeline and communications to avoid title or closing conflicts.
Borrower checklist
- Recent mortgage statements and payoff estimates.
- Homeowner’s insurance declarations page.
- Property tax bills and any HOA dues.
- Proof of income such as pay stubs, W-2s, 1099s, and tax returns.
- Bank statements showing reserves for several months of payments.
- Evidence of property condition and repairs or prep completed.
- Listing agreement or market analysis for your sale plan.
- Pre-inspection reports and your agent’s contact information.
Questions to ask every lender
- What type of product is this, and is the rate fixed or variable? If variable, what is the index and margin?
- What is the total cost, including origination, appraisal, title, escrow, and any servicing fees?
- How long is the term, and can I extend if my sale is delayed? On what terms?
- Are there prepayment penalties or yield maintenance fees?
- How many months of reserves do you require for both properties?
- Will you subordinate if I need a first loan on the new purchase and use a HELOC from my current home?
- What documentation do you need, and what is the realistic time to close?
- Are you licensed to lend in California, and what does your state regulator record show?
Manage risk like a pro
Watch for red flags like unclear exit plans, excessive prepayment penalties, unusually high upfront fees, or lenders not licensed in California. Be cautious about aggressive combined LTVs that leave you with thin reserves. Keep a conservative cash buffer, have a backup plan such as a temporary rental or the ability to lease out your current home, get all terms in writing, and coordinate closing dates carefully.
For tax topics such as interest deductibility and capital gains timing, speak with a qualified tax professional. The right plan can help you avoid surprises and protect your financial flexibility.
How The Samit Shah Team helps
You get a coordinated buy-and-sell strategy tailored to San Jose neighborhoods and adjacent Silicon Valley markets. Our team pairs hyperlocal pricing guidance with Compass-enabled tools so you can move decisively.
- Bridge solutions support: We help you evaluate traditional bridges, HELOCs, cash-out refis, private lenders, and Compass Bridge Loans, then coordinate the financing timeline with your purchase and sale.
- Sale prep and speed: With Compass Concierge and a proven listing process, you can bring your home to market quickly and attract qualified buyers while you focus on your purchase.
- Offer strategy without a sale contingency: We craft strong, clean offers and coordinate rent-backs or other terms to reduce overlap risk when appropriate.
- Lender introductions and verification: We connect you with reputable local and national lenders, and we encourage verification of licensing and track records through state regulators.
Ready to explore a buy-before-you-sell plan for your home in Evergreen, Almaden, Cambrian, Santa Teresa, Cupertino, Sunnyvale, Los Gatos, or nearby? Work With Us at The Samit Shah Team to move forward with confidence.
FAQs
What is a bridge loan for San Jose buyers?
- A bridge loan is a short-term loan secured by your current home, sometimes also the new one, that provides funds to buy before you sell. You typically repay it when your existing home closes.
How long do bridge loans usually last?
- Most terms run 6 to 12 months, with extensions sometimes available at additional cost depending on the lender.
Will a bridge loan cover my entire down payment?
- It depends on your equity, lender policies, and combined loan-to-value limits. Many bridge products cover part of the needed funds, so you may still bring cash.
What are the main risks of buying first in Santa Clara County?
- The main risks are carrying two high-value mortgage payments and expenses, potential sale timing delays, and market shifts that could reduce expected equity.
Do I need to list my current home before applying?
- Many lenders prefer or require a listing agreement or a clear sale plan. Documentation like comps and pre-listing inspections strengthens your application.
What if I want to avoid a bridge loan altogether?
- You can try a sale-contingent offer, negotiate a rent-back, sell first then rent temporarily, add a co-borrower or family bridge, or offer stronger earnest money to improve a contingent bid.
