A bridge loan lets you make a clean, non-contingent offer by borrowing against your current home’s equity, but it costs real money. A contingent offer costs nothing extra to write, but sellers often pass on it. The better choice depends on how hot your market is, how much equity you have, and how confident you are that your current home will sell on schedule.
This guide compares the two on the points that decide the outcome: cost, strength in front of a seller, qualifying, timing and what happens if your home sits. It is written for Metro Detroit homeowners in Wayne, Oakland and Macomb counties, though the mechanics apply across the U.S.
TL;DR
- A bridge loan is short-term financing, usually secured by your current home, that funds your down payment and extra payments until that home sells. It lets you avoid a home-sale contingency and compete with cash offers.
- A contingent offer makes your purchase conditional on selling your current home. It has no separate borrowing cost, but sellers rank it below an offer with no contingencies.
- Bridge loans cost more: rates often run 7% to 10% and closing costs 1.5% to 3% of the loan, per CNBC.
- Choose a bridge loan when speed and offer strength matter and you have equity. Choose a contingency when the market is slow or your equity is thin.
Table of Contents
- What each option actually is
- Bridge loan vs. contingent offer at a glance
- What each one costs
- Which one sellers prefer
- Qualifying: two housing payments, one approval
- What happens if your current home does not sell
- Other ways to buy before you sell
- How to choose
- Our perspective
- Compare local lenders and agents before you commit
- FAQ
- Sources
What each option actually is
How a bridge loan works
A bridge loan is a short-term loan that is often secured by the home you already own. It can supply cash for the down payment on the new house and cover the extra monthly payment until the old house sells. Bankrate reports that terms are usually six to 12 months, with some lenders offering as little as three. Payments may be interest-only or deferred until the sale, then you repay a lump sum at the end.
The key risk is simple. If the current home does not sell and you cannot repay, the loan is secured by that home, so you could face foreclosure, according to the same Bankrate guide.
How a home-sale contingency works
A home-sale contingency is a clause in your purchase contract. The National Association of Realtors describes two versions: a “Home Sale” contingency gives you time to sell your current home before closing on the new one, and a “Home Close” contingency applies when you already have a contract on your home and need that sale to close.
If the condition is not met inside the agreed window, the contract typically ends and your earnest money is returned. That protection is the whole appeal. We cover how deposits and contingency deadlines interact in our guide to protecting your earnest money with offer contingencies.
Bridge loan vs. contingent offer at a glance
| Factor | Bridge loan | Contingent offer |
|---|---|---|
| Extra borrowing cost | Yes: interest plus fees | None from the clause itself |
| Strength with the seller | Strong, no sale condition | Weaker, depends on a second deal |
| Down payment source | Equity in current home | Usually proceeds of the sale |
| Main risk | Old home sells slowly while costs mount | Seller picks a cleaner offer, or you lose the house |
| Qualifying | Must carry old home, new home and bridge payments | Still need full mortgage approval on the new home |
| Typical time frame | Roughly six to 12 months | Often 30 to 90 days |
What each one costs
Bridge loan costs
As of September 2026, CNBC reported bridge loan rates between 7% and 10%, against 6.76% for a conventional mortgage and 8.13% for a home equity loan. Closing costs run about 1.5% to 3% of the loan, compared with 0.5% to 1% for a purchase mortgage.
U.S. News adds that rates are typically 1.5 to 2 percentage points above prime, which stood at 6.75% as of June 2026, and that borrowers should expect a 1% to 2% origination fee on top of ordinary closing costs. If the home has not sold when the principal comes due, the lender might extend the deadline, but for a fee and at a higher rate.
Here is a rough illustration, not a quote. On a $100,000 bridge loan, a 2% fee is $2,000. Interest-only at 8% for six months is roughly $4,000. That is about $6,000 before appraisal and title charges, and each extra month adds roughly $667 in interest at that rate.
Contingent offer costs
The contingency has no borrowing cost of its own. The price shows up elsewhere: a seller may take a competing offer with fewer conditions, or may ask for a higher price or a shorter deadline in exchange. You may also pay for carrying two homes if the sale closes before you can move. Compare that hidden price with the bridge loan’s visible one, and look at the full cost of each loan estimate using our guide on comparing mortgage offers by the five-year line.
Which one sellers prefer
NAR’s Melissa Dittmann Tracey says a cash offer is probably the strongest, with an offer free of contingencies next, and that relying on selling your current home is among the biggest contingencies. A bridge loan, she says, lets you avoid it, according to NAR’s 2025 report.
From the seller’s side, a sale contingency means betting on two closings instead of one. That is why many sellers add protections when they accept one:
- Continued showings. Per NAR’s consumer guide, a seller can ask to keep showing the home.
- A right of first refusal. If another acceptable offer with no contingencies arrives, you typically get the chance to show you can perform without your home-sale or home-close contingency. If you can, your contract stays in place. This is the kick-out clause, and the notice window is negotiable.
- Deadlines. The contract can set whether your home must be under contract or fully closed, and by when.
A contract can also hold other closing conditions beyond your own sale. Municipal requirements are one example: in New Jersey, a backflow inspection before closing can be part of the process for buyers and sellers. Michigan transactions have their own local checklists, so ask your agent which items apply in your city.
In a fast, competitive market, a contingent offer can lose before it is read. In a slower market, sellers accept them more readily, particularly a “Home Close” version where your buyer is already under contract.
Qualifying: two housing payments, one approval
Neither route skips underwriting. With a contingency, you still need full mortgage approval on the new home, and the lender looks at the status of your current property while both deals move forward. Know the difference between the two early stages in our explainer on preapproval vs. prequalification.
With a bridge loan, the lender wants proof you can carry everything at once. NerdWallet says requirements vary, but borrowers may find it easier to qualify with a credit score of 700 or higher, a debt-to-income ratio (DTI) below 50%, at least 20% equity and stable employment. You may also pay for an appraisal of the current home.
The Consumer Financial Protection Bureau’s bridge-financing explainer notes this temporary financing is used when you buy a new home and plan to sell the existing one afterward. If your DTI is already tight, our guide on mortgage approval near 36% DTI shows how lenders treat borderline files.
Timeline matters too. Bridge approval can take several weeks because of underwriting and the appraisal, so apply before you write offers, not after you win one.
What happens if your current home does not sell
With a bridge loan
This is the real exposure. Interest keeps accruing, and an extension typically means more fees and a higher rate. Bridge loans reward realistic timelines and punish optimistic ones. A home that is overpriced or needs repairs can turn a four-month plan into an eight-month one, which can double the interest.
That is why preparation matters. Price from recent local sales, and fix what buyers will ask about before listing. Repairs such as a roof can stall a sale, so understand hidden costs in roofing estimates before you budget the repair work that gets your home ready.
If a retail sale looks uncertain, some Metro Detroit homeowners line up a backup. Our rankings of cash home buyers in Metro Detroit cover buyers who can close on a short timeline when a standard listing drags.
With a contingent offer
The downside is mostly the loss of the house, not money. If your sale does not happen in the window, the contract voids and you recover your earnest money, assuming you followed the contract’s terms. You can also be kicked out sooner if a better offer arrives and you cannot remove the contingency in time.
The sale-timeline math is worth doing honestly. A contingent offer window is often 30 to 90 days, and the new home’s loan usually needs its own underwriting period on top of however long your sale takes.
Other ways to buy before you sell
These are not the same as the two main options, but they solve the same gap:
- A home equity line or loan. It can supply the down payment, but only if you can qualify and close before you need the funds.
- A post-occupancy agreement. You close on your sale and stay briefly after. See our guide to a post-occupancy agreement.
- A gift toward the down payment. Family help is allowed with documentation, covered in our gift funds rules.
- A cash sale of your current home. It removes the timing uncertainty, since the buyer is not waiting on financing.
How to choose
Use these questions in order:
- How competitive is your target market? If homes draw several offers, a contingency puts you behind. A bridge loan or a clean offer is the stronger play.
- How much equity do you have? Lenders often look for 15% to 25% or more. With thin equity, a bridge loan may not be available.
- Can you carry three payments for several months? Your old mortgage, your new mortgage and the bridge interest all count toward qualifying.
- How fast will your home sell? Ask an agent for days-on-market in your city, not the county. Our ranking of Metro Detroit real estate agents is a place to begin.
- How much loss can you stomach? A contingency risks the house. A bridge loan risks extra cost and, in the worst case, your current property.
Our perspective
We read a lot of Metro Detroit transactions through the lens of timing, and the pattern is consistent: the buyers who feel most stress are the ones who picked a financing path before they knew how long their own sale would take.
Our view is that the choice is rarely bridge loan or contingency in the abstract. It is about your numbers. Start with an honest sale-timeline estimate from a local agent, then price the bridge loan using actual loan estimates, not rules of thumb. If the bridge cost is a few thousand dollars and the house is the one you want, that can be cheap insurance on an offer a seller takes seriously.
This is also why we rank lenders and agents without taking payment for placement. When the cost of a wrong call is two mortgages and a deadline, you need comparisons built on research and customer sentiment, not on who bought the top slot. Our rankings are updated quarterly, with the methodology shown.
Bryan
Compare local lenders and agents before you commit
Whichever route you pick, you will need a lender who understands two-home qualifying and an agent who can price your current home to sell. At CompareSpot, we publish free, independently researched rankings for Wayne, Oakland and Macomb counties. Providers cannot pay for placement.
Start with our Metro Detroit mortgage lender rankings, then read our guide to home loans for 2026 buyers to see how local conditions affect your options.
FAQ
Is a bridge loan better than a contingent offer?
It depends on the market and your equity. A bridge loan gives you a stronger offer because you drop the sale condition, but it adds interest and fees. A contingent offer costs nothing extra to write, yet it may lose to cleaner bids.
What does it mean when an offer is contingent?
The purchase depends on a condition being met, such as selling your current home, passing an inspection or getting financing. If the condition fails inside the agreed window, the buyer can usually leave with the earnest money, subject to the contract’s terms.
How long does a bridge loan last?
Most run six to 12 months, and some lenders offer as little as three months or as long as three years, per Bankrate and CNBC. Payments are often interest-only, with the full balance due at the end.
What is a kick-out clause?
It lets the seller keep marketing the home after accepting your contingent offer. If another acceptable offer arrives, you are notified and must remove your contingency or step aside. The notice period is negotiable and set in your contract.
Do I still need a mortgage with a bridge loan?
Yes. A bridge loan covers the gap, but you still qualify for a mortgage on the new home. The lender must document that you can carry the old home, the new home and the bridge payments.
Sources
- Bankrate: What Is A Bridge Loan And How Does It Work?
- CNBC Select: What Is a Bridge Loan and How Does It Work?
- U.S. News: What You Need to Know About Bridge Loans
- NerdWallet: What Is a Bridge Loan and How Does It Work?
- NAR: Consumer Guide to Real Estate Sales Contract Contingencies
- NAR: Buying and Selling a Home at the Same Time