Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A bridge loan's interest-only payment structure keeps monthly cost low precisely because it's designed to be short-lived, financing the gap until a specific sale actually closes. The real risk isn't the payment itself; it's what happens if that anticipated sale slips past the loan's short term, since the full balance still comes due on schedule regardless.
Before you rely on it
What to check
Build a delayed-exit scenario into the plan, not just the expected timeline, since a bridge loan's fees and interest accumulate fast if the anticipated sale takes longer than planned.
The common error
Where people go wrong with bridge loan calculator
Planning a bridge loan around the expected sale timeline alone with no contingency for delay. A bridge loan's short term means a slipped closing date can force a costly extension or refinance under pressure.
Sensitivity evidence
How annual interest rate changes the estimated bridge payoff
| Annual interest rate | Estimated bridge payoff | Monthly interest-only payment | Interest and fees |
|---|---|---|---|
| 6.0% | $159,000 | $750 | $9,000 |
| 8.0% | $160,500 | $1,000 | $10,500 |
| 10.0%worked example | $162,000 | $1,250 | $12,000 |
| 12.0% | $163,500 | $1,500 | $13,500 |
| 14.0% | $165,000 | $1,750 | $15,000 |
Every input, tested
Which input moves the estimated bridge payoff most
| Input | Tested from | To | Estimated bridge payoff at each end | Swing |
|---|---|---|---|---|
| Bridge-loan amount | $135,000 | $165,000 | $146,250 to $177,750 | $31,500 (19%) |
| Expected bridge term | 4.0 months | 8.0 months | $159,500 to $164,500 | $5,000 (3.1%) |
| Annual interest rate | 8.0% | 12.0% | $160,500 to $163,500 | $3,000 (1.9%) |
| Origination and closing fees | $4,050 | $4,950 | $161,550 to $162,450 | $900 (0.6%) |
Two variables at once
Estimated bridge payoff by annual interest rate and bridge-loan amount
| Annual interest rate \ Bridge-loan amount | $120,000 | $150,000 | $180,000 |
|---|---|---|---|
| 6.0% | $128,100 | $159,000 | $189,900 |
| 8.0% | $129,300 | $160,500 | $191,700 |
| 10.0% | $130,500 | $162,000 | $193,500 |
| 12.0% | $131,700 | $163,500 | $195,300 |
| 14.0% | $132,900 | $165,000 | $197,100 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Bridge-loan amount | $150,000 |
| Annual interest rate | 10.0% |
| Expected bridge term | 6.0 months |
| Origination and closing fees | $4,500 |
| Estimated bridge payoff | $162,000 |
| Monthly interest-only payment | $1,250 |
| Interest and fees | $12,000 |
Where the inputs come from
The loan amount is usually based on the equity in the home you are selling, and the interest rate is higher than a mortgage, often several points above. The expected term is how many months until the old home sells, which is the input most likely to run long. Fees include origination and closing charges. Ask whether interest is paid monthly or accrued to payoff.
When the result stops applying
Bridge loans are short-term and secured by the property, so a slow sale is a risk, and some carry balloon payments and extension fees. Lenders may require both properties' equity. The rate and term differ widely across lenders, and the estimate does not model the cost of carrying two mortgages if you keep both.
What to compare it with
Ask how long homes like yours take to sell locally, and use a conservative number. Check whether the lender needs a listing agreement, and what happens to the rate after the initial term. Compare the cost with a HELOC on the current home, which may be cheaper if you have equity and time to set it up. The home equity calculator shows how much you could borrow against the home you plan to sell.
People also ask
Frequently asked questions
What happens if my old home does not sell?
You still owe the bridge loan when the term ends, and you may need an extension, which costs more.
How much bridge financing can I get?
Typically up to a percentage of the equity in the home being sold, often 80% of its value less the mortgage, subject to the lender's rules and your income.
Are there alternatives to a bridge loan?
A HELOC on the current home, a contingency clause in the offer or renting back from the buyer.