Bridge Loan Cost Calculator
A bridge loan provides short-term financing to help you purchase a new home before your existing home sells. You pay interest only on the loan balance during the bridge period, and the full principal is repaid when your current home closes. Bridge loans typically carry higher interest rates and origination fees than conventional mortgages. This calculator shows your total interest cost, origination fee, and all-in financing cost for the bridge period.
Bridge loan cost formula
Monthly Interest = Loan Amount * Annual Rate / 12 / 100
Total Interest = Monthly Interest * Loan Months
Origination Fee = Loan Amount * Points / 100
All-In Cost = Total Interest + Origination Fee
Effective Annual Rate = (All-In Cost / Loan Amount) * (12 / Months) * 100
The effective annual rate (EAR) captures the true annualized cost of the bridge loan, including the upfront origination fee spread over the loan duration. This allows comparison with other financing options.
Bridge loan considerations
- You typically carry two mortgage payments during the bridge period: the bridge loan and your new home mortgage.
- If your current home does not sell within the bridge term, you may need to extend the loan at additional cost.
- A HELOC may be a cheaper alternative if your current home has available equity and you have it in place before listing.
- Bridge loans are not always available from retail banks; credit unions and private lenders are common sources.
- Include the bridge loan cost in your total transaction cost when calculating the true cost of moving.
Bridge loans: frequently asked questions
What is a bridge loan?
A bridge loan is a short-term loan (typically 6 to 12 months) used to bridge the gap between buying a new home and selling an existing one. It uses the equity in your current home as collateral and is repaid when your current home sells.
How much does a bridge loan cost?
Bridge loans are more expensive than standard mortgages. Rates typically run 1 to 3 percentage points above prime, and lenders charge origination fees of 1 to 3 points. Total cost for a 6-month bridge loan can be significant, so comparing it to alternatives (using savings or a HELOC) is prudent.
Are bridge loan payments interest-only?
Yes. Bridge loans are typically structured as interest-only during the loan term, with the full principal due (balloon payment) when the loan matures (usually when your old home sells). Some lenders allow you to defer all payments until maturity.
What loan-to-value ratio is available on bridge loans?
Lenders typically limit bridge loan amounts to 75% to 80% of the combined value of your current and new homes, minus outstanding mortgage balances. The specific LTV varies by lender and your financial profile.
What are the alternatives to a bridge loan?
Alternatives include: drawing on a HELOC on your current home (if available), making a contingent purchase offer on the new home, using savings or investment accounts, or negotiating a rent-back agreement where you rent your old home after closing to give you time to move.
Official sources
- Consumer Financial Protection Bureau: Owning a Home.
- Federal Reserve: Selected Interest Rates.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.