Bridge Loan Calculator

A bridge loan is a short-term financing tool used to “bridge” the gap between buying a new property and selling your existing one.
It provides temporary capital when the timing does not line up, which is common in real estate transitions and business acquisitions.

Key formulas: Bridge Loan Amount = New Home Purchase Price − Down Payment − Expected Sale Proceeds Monthly Interest = Loan Amount × (Annual Rate ÷ 12) Total Interest Cost = Monthly Interest × Loan Term (months) Total Cost = Origination Fees + Total Interest + Other Closing Costs

What each variable means:

• Bridge Loan Amount: the shortfall between what you need and what you have available before your old home sells. Some lenders also offer bridge loans equal to the equity in the existing home.
• Annual Rate: bridge loans carry higher rates than conventional mortgages, typically 8–12% APR (2024 market). Rates are higher because of short duration and elevated risk.
• Origination Fee: typically 1.5–3% of the loan amount, paid upfront.
• Loan Term: usually 6–12 months maximum. Most bridge loans are interest-only during the term, with the full principal due at maturity.

When bridge loans make sense:

• You need to close on a new home before your old home sells.
• You are buying in a competitive market where contingency offers are rejected.
• Your business needs short-term capital pending a funding round or asset sale.

When they don’t:

• You cannot afford the interest payments if the sale takes longer than expected.
• Your existing home has little equity (bridge loans typically require 20%+ equity).

Worked example: New home price: $650,000. Down payment from savings: $100,000. Old home equity (expected): $280,000 (selling price $420,000, mortgage balance $140,000). You need: $650,000 − $100,000 − $280,000 = $270,000 bridge loan. Rate: 9.5% APR. Term: 9 months. Origination: 2%. Monthly interest = $270,000 × (0.095 ÷ 12) = $2,137.50/month Total interest = $2,137.50 × 9 = $19,238 Origination = $270,000 × 0.02 = $5,400 Total bridge loan cost = about $24,638. That can be well worth paying to avoid losing the house you want, but it is not a trivial expense and it is money you never get back.