Jul 31, 2026Money3 minute read
What bridge financing actually costs
Bridge financing is priced per day, on the equity you are moving, not on the price of either house. Most people over-estimate it by a factor of ten.
Bridge financing has a reputation it does not deserve. People hear it and picture a second mortgage. It is closer to a very short, very expensive line of credit that exists only for the days when you own two houses, and the number of those days is usually small.
The formula, and nothing else
Interest is charged on the equity being released by your sale, not on the sale price and not on the purchase price. Bridge on $640,000 at 8.50% for 21 days is $3,130. Add a setup fee of $750 and the whole instrument costs $3,880.
$3,880
The setup fee is the part worth noticing. On a short bridge it is a third of the total, which means the cost is far less sensitive to the length of the overlap than people assume. Doubling three weeks to six adds interest, not another fee.
Against the alternative
Now price the other mistake. A gap -- closing your sale before your purchase -- costs $140 a night for furnished short-term in the east end, $310 a month for storage, and $1,450 for the second move you now have to pay for. Twenty-one days of that is $4,700.
Three weeks of owning two houses is cheaper than three weeks of owning none. That surprises almost everybody, and it is the single most useful thing on this page.
What a lender needs before they will write it
- A FIRM sale. Not an accepted offer, not a conditional one. Every condition has to be waived, in writing, before a bridge is approved. This is the constraint that decides your list date, not the lender's rate sheet.
- The purchase agreement on the new home, with its closing date.
- Your lawyer's undertaking to repay out of the sale proceeds on closing day.
The first one is why the whole move is a sequencing problem. A bridge is not available to someone who has not sold; it is only available to someone who has sold and has not yet closed. That window is the entire product.
When not to bridge
When the overlap is long enough that interest overtakes the setup fee by a wide margin, and the purchase can move instead. Ninety days of bridge on the same equity is not a rounding error. At that length the right answer is usually a later closing on the purchase, negotiated before you sign, which costs a conversation rather than a rate.
