Buy before you sell · Franklin Direct · Ladera Ranch, California
Buy your next home before you sell your current one.
You don’t have to sell first — and you don’t always need a bridge loan. Depending on whether your current home is listed yet, there are cleaner, less expensive ways to free up your down payment and move on your own schedule.
At a glance
Start here
Two ways to buy before you sell
The right path depends on one thing: whether your current home is already listed for sale. If it isn’t, a home equity loan is usually the cheaper way to access your down payment. If it is, we look at a bridge loan.
Home not listed yet
Usually the better deal
Borrow against the equity in your current home with a home equity loan to fund the down payment on your next one. It’s less expensive than a bridge loan and gets paid off when your current home sells.
- Up to 90% loan-to-value
- Lower cost than a bridge loan
- Set it up before you list
Home already listed
When equity lending is limited
Lenders generally won’t write a home equity loan on a home that’s currently or recently been listed. A bridge loan works the same way, with higher fees, and is also paid off when your home sells.
- Up to 75% loan-to-value
- Higher fees than home equity
- Available once the home is listed
Before you list
Tap your equity before you list
If your current home isn’t on the market yet, a home equity loan is usually the simplest and cheapest way to buy first. You borrow against the equity you’ve built, use it for the down payment on your new home, and repay the balance in full when your current home sells.
Because a home equity loan can go up to 90% of your home’s value and carries far lower fees than a bridge loan, buyers who plan ahead come out well ahead by setting their funds up before they list. Once the home is on the market, this option usually disappears.
After your home sells
Pay the new loan down, then recast it
When you buy first, your new mortgage starts with a larger balance, because you haven’t cashed out your old home yet. That’s temporary. Once your current home sells, you make a large one-time principal payment and recast the loan.
Recasting re-amortizes your mortgage. After you apply the proceeds from your sale as a lump-sum principal reduction, your lender keeps your same interest rate and remaining term but recalculates the monthly payment on the new, lower balance. Your payment drops to match the smaller loan — without the cost, the appraisal or the paperwork of a refinance.
It’s a powerful tool in a buy-before-you-sell plan: you carry the bigger payment only until your home sells, then reset it down to roughly where it would have been if you’d sold first. Not every loan is eligible and there’s usually a small recast fee, so we confirm it’s available on your specific loan up front.
Already listed
Already on the market? Compare a bridge loan
If your home is already listed, a bridge loan is usually the path. It works much like a home equity loan — secured by your current home, paid off the moment it sells — but it’s available after listing, and it comes with higher fees and a lower borrowing limit.
| Home equity loan | Bridge loan | |
|---|---|---|
| Max loan-to-value | Up to 90% | Up to 75% |
| Relative cost | Lower | Higher fees |
| When it works | Before you list | Once listed or recently listed |
| Secured by | Your current home | Your current home |
| Paid off | When your home sells | When your home sells |
The takeaway: there’s a real advantage to establishing your funds before you list.
The best part
You may not have to qualify with both payments
The biggest worry about buying first is usually “can I even qualify carrying two mortgages?” Often the answer is yes — because several of our loan programs don’t count the payment on your current home when you qualify for the new one.
A lender normally adds both mortgage payments into your debt-to-income ratio, which can cap how much you qualify for. Depending on your situation and the program, we can leave your current home’s payment out of that calculation entirely:
- Your home is pending sale. If your current home is under contract to close before or at the same time as your purchase, its payment is excluded from your debt-to-income.
- You’re keeping it as a rental. Convert the departing home to a rental and a share of the market or lease rent — commonly 75% — is used to offset, and often fully cover, that payment.
- Non-QM and portfolio options. Several of our Non-QM programs will omit the departing-residence payment with enough equity or reserves, no sale or lease required.
- Asset- and rent-based qualifying. On asset-depletion or DSCR-style programs, your personal debt-to-income isn’t the qualifier at all, so a second payment doesn’t hold you back.
Which of these fits depends on your equity, your reserves, and whether you plan to sell or keep the home. We’ll tell you up front which programs let you leave the current payment out, and what each one needs.
The trade-offs
The pros and cons of buying first
- Your offer isn’t contingent on selling. Removing the home-sale contingency makes your offer stronger and easier to accept — which can win you better terms and beat competing buyers.
- A seamless move. You set your own move-in and move-out dates instead of juggling two closings on the same day: no balancing act, no temporary housing.
Common questions
Buying before selling FAQ
Do I need a bridge loan to buy before I sell?
Often no. If your current home isn’t listed yet, a home equity loan is usually cheaper and can go up to 90% of your home’s value. A bridge loan mainly comes into play once your home is already on the market, when home equity lending is limited.
What is a mortgage recast?
A recast re-amortizes your loan after a large one-time principal payment — for example, the proceeds from selling your old home. The lender keeps your same rate and remaining term and recalculates a lower monthly payment on the smaller balance. It’s not a refinance, so there’s no new appraisal and no closing costs, just a small recast fee on eligible loans.
How much can I borrow against my current home?
A home equity loan can typically go up to 90% of your home’s value; a bridge loan up to about 75%. Your available cash is that limit minus what you still owe.
What if my home is already listed?
Most home equity lenders won’t lend on a home that’s currently or recently listed, so we’d look at a bridge loan instead. That’s why it often pays to set your financing up before you list.
Will I really have two mortgage payments?
For the window between buying and selling, yes — you’ll carry both. It’s usually short, and because a new purchase’s first payment starts the second month after closing, you get a little extra breathing room before it begins.
Do I have to qualify with both mortgage payments?
Often no. Several of our loan programs don’t count the payment on your current home when you qualify for the new one — for example, when your home is under contract to sell, when you’re keeping it as a rental (a share of the rent offsets the payment), or on Non-QM, asset- or rent-based programs where that payment can be left out with enough equity or reserves.
Map out your move
See your buy-before-you-sell plan
Tell Justin about your current home and the one you want, and you’ll get the cleanest way to access your down payment, the numbers on both homes, and a plan to recast once you sell. No credit pull to start.
Franklin Direct is a mortgage lender in Ladera Ranch, California, powered by Franklin Loan Center. Our team specializes in Non-QM, self-employed and investor loans, and we typically close Non-QM loans in about 12 days.
Three ways to start
Apply now, or email or text Justin directly — usually answered the same day.