Bridge financing is short-term funding that can advance expected sale proceeds for a new-home closing; approval usually depends on firm transactions, available equity and closely matched closing dates.
Four points to remember
- Bridge financing is designed for a short timing gap, not an indefinite unsold property.
- Many lenders want a firm sale agreement for the current home and a firm purchase agreement for the new one.
- The bridge amount is based on expected available sale proceeds after mortgage and costs.
- If the sale is delayed or fails, the borrower needs a documented backup plan.
Map both transactions
List the purchase closing date, sale closing date, deposit, down payment, current mortgage payout and expected net sale proceeds. The bridge covers only an eligible timing gap, not every purchase cost.
- Firm purchase agreement
- Firm sale agreement
- Lawyer’s estimate of net sale proceeds
Calculate the bridge amount
Start with the equity expected from the sale and subtract the existing mortgage, commissions, legal costs and any required reserve. The lender may also cap the bridge according to its policy.
- Expected sale price
- Mortgage and secured payouts
- Selling and closing costs
Understand interest and security
Bridge loans are short-term and can have interest and administration costs. The lender and lawyer determine how the bridge is secured and repaid from the sale closing.
- Daily or monthly interest
- Administration and legal fees
- Automatic payout instructions
Plan for a delayed sale
If the current property has not sold, standard bridge financing may not be available. Compare sale conditions, HELOC or mortgage options and the cost of carrying two properties with professional advice.
- Two mortgage payments
- Property taxes, utilities and insurance
- Price-reduction and extended-closing scenarios
Frequently asked questions
Do I need a firm sale to get bridge financing?
Many lenders require an accepted firm sale and purchase, though policies vary. An unsold property usually requires a different analysis.
How long can a bridge loan last?
It is normally designed for a short gap between closings. Maximum duration and extensions are lender-specific and should be confirmed in writing.
What if my buyer does not close?
The bridge may remain outstanding while other obligations continue. Obtain legal advice and a contingency plan before relying on the sale proceeds.
Official sources and verification
This guide prioritizes primary information from governments, regulators and CMHC. Mortgage policies change; confirm the rules that apply when you apply.
This guide and its calculators are for general education only—not an approval, commitment, or legal, tax or investment advice. Actual rates, fees, underwriting and product terms vary by lender and application.