Bridge Loan Calculator
Bridge loans, also known as gap financing or interim financing, are short-term loans designed to help borrowers bridge the gap between two transactions, typically the purchase of a new property and the sale of an existing one. Bridge loans are usually used to finance the down payment on a new property while the borrower waits for their current property to sell.
This Bridge Loan Calculator calculates if you need a bridge loan and its payment amount when selling one property while buying another. Also:
- Create a payment schedule showing payments for both loans
- The equity in one property is used as collateral for the bridge loan
- The bridge loan is paid-in-full with the proceeds from the sale of the first property.
To use the bridge loan calculator, the user will need to provide the following inputs:
- Purchase price - The total cost of the new property.
- Cash available - The amount of cash the borrower has available to put towards the down payment.
- First mortgage amount - The amount of the first (or primary long-term) mortgage on the new property that the borrower plans to take out.
- First loan's interest rate - The interest rate on the first mortgage.
- First loan's term - The length of the first mortgage, typically 15 or 30 years.
- Bridge loan interest rate - The interest rate on the interest-only bridge loan.
- Anticipated bridge loan term - The length of the bridge loan, typically 6 to 12 months.
More below
Information
Once the user has provided these inputs, the bridge loan calculator will provide the following outputs:
- Bridge loan amount - The amount of the bridge loan needed to finance the down payment.
- Monthly interest-only payment - If the bridge loan requires the debtor to pay only the interest due, this output will display the monthly interest-only payment amount.
Click on the "Help" button for more details and an example.
This loan calculator creates printable loan schedules with dates.
- Calculate unknown payment, term, interest rate, or loan amounts
- Saves to Excel & Word files.
- Print or export colorful charts
- Supports extra payments too!
Bridge loans may be risky
Bridge loans can be risky because they often come with high-interest rates and fees, and they are typically secured by the borrower's current property. If the borrower is unable to sell their property quickly, they may be unable to pay back the bridge loan, which could lead to default and potentially losing their current property. Additionally, the borrower may be subject to penalties if they are unable to pay back the bridge loan on time.
To minimize the risks associated with bridge loans, borrowers should carefully consider their financial situation and ensure that they have a solid plan for selling their current property before taking out a bridge loan. They should also shop around for the best rates and terms and avoid lenders who charge excessive fees.
Bridge loans are most commonly reserved for real estate financing though they don't have to be. A bridge loan is usually a short term loan that provide funds for purchasing an asset (such as a home) when the cash-on-hand along with the primary loan is not enough to pay for the asset.
For example, if you currently have $50,000 cash and a home that you are selling for $400,000 for which there is a balance on the mortgage of $200,000 and you plan to buy a home for $800,000, you might be a candidate for a bridge loan.
If the lending institution for the new mortgage requires that you put a deposit of 20% down, $160,000, at closing, you will not have the cash if the closing has not taken place on your current home. This is where a bridge loan can be used.
-$50,000 cash on hand
-$640,000 mortgage available
$110,000 covered by bridge loan
The new home mortgage will be $640,000 (800,000 - 160,000 = 640,000). The selling price less the cash on hand and the mortgage money available leaves a short of $110,000. This is the amount covered by the bridge loan. A bridge loan is typically an interest-only loan. This means you make only interest payments. The loan is also usually a short term loan offered at a higher interest rate. The idea is that once the first property is sold, the bridge loan will be paid off immediately from the $200,000 net proceeds from the sale of the first house.
That's the background. This calculator will calculate your total payment for the primary new mortgage and the interest-only bridge loan payment. The bridge loan has no term for it is due when the closing occurs on the first house. The only thing you have to know about the bridge loan is the annual rate of interest you'll be charged.
"Anticipated Bridge Loan Term? (#)" — Enter number of months you anticipate needing a bridge loan. That is, how many months you think it will be until you close on the property you are selling. This value does not impact the bridge loan amount. It impacts the payment schedule and charts.
This calculator makes these assumptions:
- Payments for both loans are made monthly
- The bridge loan is an interest-only loan (payments never go toward principal)
Bodie Gentry says:
Why is your amount for bridge loans cut off at $30,000? My understanding is that I can get a bridge loan to buy condo, secured by my paid-off home of which I am told $175,000 will sell quickly. I am up in years and need to get moved while I can; but can’s sell without place to go—no place to go until I have money to buy it. How on earth do you think $30,000 or $50,000 would be a bridge? Also, rates go up from 3.5, current, up to 8—and why set for 24 months—not just the 6 months I read—or even 2 months if one wants it that way? Everything seems to be such a rip-off these days. I have no place to even lay my head if I were to put everything in storage while trying to find a place after selling. Condos are not coming available quickly and new ones are being built for younger 40ish folk with ceilings too high and too much sq. ft. for older to care for in latter years; thus reason for down-sizing; but clearly builders do not understand this. Thanks for listening, I have been trying to get moved for several years; but government is not loaning to elderly even with 833 credit score and no debt—trying to put healthy elderly into hi-rise infernos which cost $3,000 to $5.000 a month—not many elderly people can do that and thus are being forced into our graves. No one bears another’s burdens these days.
Karl says:
Hello, none of the limitations you mention are accurate. Please click on the "Help" button for the instructions on how to use this calculator. If, after reading them, if you have a question, please ask. The calculated "bridge loan amount" is the amount you need to close the deal on the 2nd home, given your current cash available and the purchase price. You are always free to borrow more. In that case, use the loan calculator on this site to create the schedule for what you want to borrow. Hope this gets you started.
Rich says:
Hi Karl,
Nice calculator. We may be building a bridge loan website. Is this calculator available for use on a site?
What would you charge for that?
Rich
Karl says:
Thank you Rich. At this time, the calculator is not available for use on another site. Can you link to it?
Troy says:
The house we want to purchase is $215000,the house we currently have is valued at $365000 we owe $225000. How does each of these numbers fit in the calculator?
Karl says:
A bridge loan calculator doesn’t consider the value of your current home. The purpose of the calculator is to tell you when purchasing the new home if a bridge loan is needed. You have approximately $145,000 equity in your current home (365,000 – 225,000). If you need a bridge loan, the equity can potentially be a collateral source to secure the needed bridge loan. A credit card could potentially be the source of funds too. Funds do not need to be secured by your current property.
Cody says:
my wife and I are selling our home for $370,000 and purchasing a home for $447,000. We are going to make about $154,000 on the sale of our first house. We plan on using $120,000 as a down payment for the new purchase. We had everything lined up to close on both the purchase and the sale on the same day, however, our buyer is having finance issue which is causing us to delay the purchase. To get our new home, would a bridge loan be a good idea to get the $120,000 for the down payment of the new home? My current mortgage payment is $1400 FYI.
Karl says:
Yes, a bridge loan would be appropriate. The calculator will tell you the size of loan that you need.
Tiffany says:
I don’t understand how a bridge loan works fully. I’ll post my understanding/questions below and maybe you can clear it up as I can’t find any answers as of yet.
We have a current mortgage that’s only 2 years old so we don’t really have an equity in it other than the upgrades we’ve made to it. While it hasn’t been appraised yet, I’m estimating maybe 15,000-20,000 value in upgrades. So if the house appraises higher now than what we purchased it for, the difference is considered equity correct?
Second and biggest question: Say we take out a bridge loan to cover remaining (98%) of previous mortgage plus a down payment for new house, what happens when the first house is sold? Do we then take out a mortgage on the new house? I don’t really understand how a bridge loan is supposed to help you get into a house faster when all it’s really providing is a down payment. Do you actually have 3 loans to pay all at once (supposing the bridge loan requires payments as opposed to allowing nonpayment for a few months); 1 loan for old house, 1 loan for bridge, and 1 for full amount of new house. The first two being paid off by previous home being sold?
Signed: totally confused on transition from bridge to new mortgage.
Karl says:
Regarding "if the house appraises higher now than what we purchased it for, the difference is considered equity correct"? Almost, but not exactly. Equity is actually the difference between the appraised value and the principal balance (or remaining balance) of the mortgage (not what you purchased it for).
Let’s say your equity is $25,000.
Say you want to buy a new home from $300,000 and you need to put 20% down ($60,0000). If, besides the equity in your home, you have an additional $50,000 in cash and investments you are $10,000 short of the required 20% down. You would, therefore, not be able to buy the new house.
This is where the bridge loan comes in. Borrow $10,000 from the equity in the existing home and use that to make the $60,000 ($50,0000 cash + $10,000 bridge loan) cash down payment when you go to closing on the new home.
Then, when you sell the first home, the proceeds from the sale will be used to pay off the bridge loan. You’ll get to keep $15,000 cash from the sale because you’ve used $10,000 of the $25,000 equity for the down payment on house #2.
So, you are NOT taking out a bridge loan "to cover remaining (98%) of previous mortgage". That mortgage is paid off when the first house is sold.
The big question is, can you afford to make payments on all 3 loans at the same time?
Melissa Gash says:
We own our house outright. Current value $300,000. It is up for sale. We have a contingency contract on a new home for $396,000. We want to get a bridge loan to buy the new home so we don’t lose it. Is that a good idea?
Karl says:
Are you looking for cash for a down payment on the new home? You should be able to use the equity you have in your current home to raise the funds for the down payment. That’s what a bridge loan is.
Christine says:
Hello,
We want to buy a new home. One of them is $450K. We bought our current home for $315K 10 years ago and have $264,867.97 left on our mortgage at 3.625%. Homes have increased in price in our NYC area. They rarely go down in price. I have one appraiser that hasn’t seen the inside of our home, and states if we didn’t change anything (which we have a new kitchen, roof, hot water heater, driveway, etc) then our home would be worth $330K. Similar homes in the area are going for about $400K. We really don’t have much to put down for a new home. Should we sell our current home first? Or can we somehow take the equity out of our home to buy a new house? I would love to move by the fall for the kids.
Thank you!!
Karl says:
Hi, if I understand you, this is how you would use the calculator to answer your question:
You didn’t mention how much cash you had, you only said "we really don’t have much to put down", so I estimated you have $10,000 free cash.
I also estimated that the first mortgage (the mortgage on the new home) would be 80% of the purchase price. That is, you would want to put 20% down – eventually, That’s where the $355,000 comes from for the new mortgage.
Feel free of course to adjust these numbers as needed.
Joseph Tate says:
We own our house $650k, we want to buy a new house and move to leave our house empty for the sale. We don’t want to cash in stock for the purchase of the new home.
Karl says:
Thank you for visiting my website. Do you have a question?
Wil says:
Hi Karl-
We are struggling with using the correct dollar amounts to determine our total monthly liability using a bridge loan. Please run the numbers with the following data (approx values are being used):
Bridge loan with LTV of 75%
existing home broker valued at $585K
existing mortgage payoff $214k (360 month loan @ 3.875%)
New home price $600k
Bridge loan 4.2% for 6 months
cash available $20k
Please let me know if you need additional info or make assumptions as necessary. Thank you!
Karl says:
I’m sorry, I provide the calculators free, but I don’t "run the numbers." If you have a question, please ask, and I’ll try to answer them.
Wil says:
Sorry – poor choice of words on my part.
In using the bridge loan calculator, which of the dollar amounts I provided go in which fields of the calculator and, if any, what values am I missing in my original comment to complete the calculation?
Thanks!
Karl says:
Hi,
The point of this calculator is to see if a bridge loan is required given your particular financial situation. This is how you should enter the values:
You’ll need to adjust the above some. You said the first mortgage is for 360 months, and the balance is $214k. For the # of months for the first mortgage, you’ll want to enter the number of remaining months. Otherwise, the first mortgage payment will be quoted too low.
Karl says:
Wil, I made an error when I replied to your message. I didn’t think about what you had written carefully enough. The bridge loan calculator is NOT concerned with your existing mortgage. However, you should know what equity you have in your existing home, and you do – $371,000 (585,000 – 214,000). This is how you should use the calculator, assuming that the lender for your new mortgage will want 20% down $120,000.
Fill the calculator in this way:
The error I made was using your existing mortgage as the "First Mortgage." First mortgage here, refers to the new mortgage that you plan to get on the new home.
The results tell you you’ll need a bridge loan:
The equity you have in your current home, $371,000, is more than enough to cover the bridge loan of $100,000.
The payment total is the amount that covers the bridge loan and the new mortgage.
Sorry for my error. I hope this clarifies this calculation for you, and hopefully, you’ll be able to adjust the numbers to meet your particular case for the new mortgage.
Sandra Davis says:
Wow, what a great website! I have spoken to a couple of local loan officers, and I still don’t completely comprehend the bridge loan. One loan officer said they only lend 70% of our equity, which left only $8000 for a bridge loan. I did run the numbers on your handy calculator, but it doesn’t ask for our current appraised value. I’m trying to understand what actually happens when we get the bridge loan, it is showing an amount of $131,000, is that the down payment for the new home? Thank you in advance for your help!!
Purchase Price?:
$350,000.00
Cash Available?:
$10,000.00
First Mortgage?:
$209,000.00
First Interest Rate?:
3.8750%
First Term? (Months) (#):
180
Bridge Loan Interest Rate?:
8.0000%
Anticipated Bridge Loan Term? (#):
12
Bridge Loan:
$131,000.00
First Mortgage Payment:
$1,532.89
Bridge Loan Payment:
$873.33
Both Payments Total:
$2,406.22
Karl says:
Thank you. I appreciate the compliment.
The point of this calculator is to tell the user if a bridge loan is needed and if so, for what amount. In addition, it calculates the bridge loan payment amount and the total payment amount (the bridge loan payment plus the payment amount for the new mortgage).
In the example you provided, the $131,000 is the amount of the bridge loan.
The bridge loan (131,000) + the first (new) mortgage (209,000) + cash available (10,000) = $350,000 purchase price