What is a bridge loan and do I need one in Wisconsin?
Rob Miller explains bridge loans for Wisconsin homeowners — how they work, what they cost, and whether they're the right solution for buying before selling.
Rob Miller, Branch Manager at MadCity Home Loans, explains bridge loans — a short-term financing tool for Wisconsin move-up buyers.
What is a bridge loan and do I need one in Wisconsin?
A bridge loan is a short-term loan (typically 6–12 months) that allows you to borrow against the equity in your current home to fund the down payment or purchase of a new home — before your current home sells.
How It Works
- You apply for a bridge loan secured by your current home's equity
- You use those funds as the down payment on your new home
- You close on the new home and move in
- Your old home sells, you pay off the bridge loan with the proceeds
During the bridge period, you may be paying a mortgage on the old home, a bridge loan payment, and a new mortgage on the new home — though some bridge loans are structured as interest-only to minimize the carrying cost.
When Does a Bridge Loan Make Sense?
- You've found your dream home and can't make a contingent offer competitive enough
- You have substantial equity in your current home
- You're confident your current home will sell quickly (strong market, priced right)
- The carrying cost is manageable for your income
When to Think Twice
- Your current home is in a slow-selling market or overpriced
- Bridge loan interest rates (typically prime + 1–2%) would strain your budget
- You could negotiate a rent-back or find temporary housing instead
Related Post: Compare all buy-and-sell timing strategies in our Buy While Selling Guide.