Calculate bridge loan costs including interest-only payments, origination fees, and total financing cost. See the true price of bridging the gap between home purchases.
A bridge loan provides short-term financing when you need to buy a new home before selling your current one. These loans typically last 6 to 12 months, carry higher interest rates than standard mortgages, and charge origination fees of 1–3 %. The tradeoff is speed and flexibility: you can make a non-contingent offer on your new home without waiting for your old one to sell. In competitive housing markets, this ability to close quickly can mean the difference between winning and losing your dream home.
Because bridge loans are short-term, total interest may seem manageable — but the effective annual cost is high. Between origination fees, higher rates, and the stress of carrying two properties, it's essential to understand the full financial picture before committing. Many borrowers underestimate the total cost because they focus only on the monthly interest payment.
This Bridge Loan Calculator shows your interest-only monthly payments, the total cost of the bridge including all fees, and the effective annualized rate — so you can make an informed decision and compare alternatives like HELOCs or contingent offers.
Bridge loans are expensive relative to standard mortgages, and the costs can surprise you. A 2 % origination fee on a $200,000 bridge spread over 6 months is effectively 4 % annualized — on top of the higher interest rate. This calculator helps you see the true cost and compare it to alternatives like a HELOC, contingent offer, or temporary rental.
Monthly Payment = Loan Amount × (Annual Rate ÷ 12). Origination Fee = Loan Amount × Fee %. Total Cost = (Monthly Payment × Months) + Origination Fee + Additional Fees. Effective Annual Rate = (Total Cost ÷ Loan Amount) × (12 ÷ Months) × 100.
Result: Monthly: $1,583 — Total cost: $18,167
A $200,000 bridge loan at 9.5 % for 8 months costs $1,583/month in interest-only payments ($12,667 total interest). The 2 % origination fee adds $4,000, plus $1,500 in additional fees, bringing the total bridge cost to $18,167. The effective annualized cost rate is approximately 13.6 %.
The ideal candidate for a bridge loan is someone in a competitive housing market where non-contingent offers win, who has significant equity in their current home, and is confident the existing home will sell within 6–12 months. In a hot market, the ability to close quickly can save you more than the bridge loan costs.
Don't just look at the interest rate — factor in origination fees, appraisal costs, and any extension fees. A $200,000 bridge at 9 % for 6 months sounds like $9,000 in interest, but add 2 % origination ($4,000) and fees ($1,500), and the true cost is $14,500 — an effective annual rate over 14 %.
Before committing to a bridge loan, consider: a HELOC (if you have one or time to open one), a contingent offer with an escalation clause, a home equity loan, selling your current home first and renting temporarily, or negotiating a rent-back agreement with the buyer of your current home.
A bridge loan is short-term financing that "bridges" the gap between buying a new home and selling your current one. It gives you access to your current home equity before the sale closes, allowing you to make a non-contingent offer on the new property.
Bridge loans typically carry interest rates of 8–12 % and origination fees of 1–3 %. On a $200,000 bridge for 8 months, total costs might run $15,000–$20,000. The effective annualized cost can exceed 15 % when fees are included.
Most bridge loans have terms of 6 to 12 months. Some lenders offer extensions for a fee if your home hasn't sold by the original maturity date. The goal is to sell your current home and repay the bridge as quickly as possible.
A HELOC is usually cheaper (lower rates, no origination fee), but takes 30–60 days to set up. If you already have a HELOC in place, it can serve the same purpose as a bridge loan at a fraction of the cost. Bridge loans are faster to fund (1–2 weeks).
Yes, bridge loans are typically second liens behind your existing mortgage. The bridge amount is usually limited to your equity in the current home minus a cushion. Combined loan-to-value limits typically apply (70–80 %).
If your home doesn't sell before the bridge term expires, you may need to extend the bridge (usually for an additional fee), reduce the asking price, or find alternative financing. Some bridge loans have a conversion option to a longer-term loan.