Buying your next Littleton home before your current one sells can feel like a juggling act. You want a stronger offer, a smoother move, and time to list your home the right way. Bridge loans can make that possible by unlocking your equity for a buy-first strategy. In this guide, you will learn how bridge loans work, what they cost, how lenders qualify you, and the local checks to complete in Littleton and Arapahoe County. Let’s dive in.
What is a bridge loan?
A bridge loan is a short-term loan that lets you buy your next home before selling your current one. It “bridges” the gap so you can write a non-contingent offer and move on your timeline.
Common options include:
- Closed-end bridge loan. A short-term, standalone loan secured by your current home or both properties.
- HELOC used as a bridge. A revolving line of credit against your current home that you draw for the purchase.
- Purchase bridge from your new lender. A combined product or temporary second lien tied to the new mortgage.
Most bridge loans run 6 to 12 months, sometimes up to 24 months depending on the lender. Payments are often interest-only. Rates are typically higher than a standard first mortgage, and you should expect origination, appraisal, title, and closing costs.
How bridge loans work for move-up buyers
Here is the typical sequence when you buy first and sell later:
- Document your current equity with an appraisal or broker opinion.
- The lender calculates combined loan-to-value (CLTV) using balances on your current mortgage, the new mortgage, and the bridge amount.
- Approval is based on CLTV, your credit, debt-to-income ratio, and required cash reserves.
- You close on the new home using bridge funds for the down payment or purchase.
- When your current home sells, the sale proceeds pay off the bridge loan. Any remaining proceeds come to you.
Qualification basics
Lenders typically look for:
- CLTV at or below their limit, often around 80 percent depending on the lender.
- Debt-to-income that can support carrying two homes temporarily or a projected new payment.
- Several months of mortgage reserves after closing.
- Strong credit and evidence that your current home is marketable.
Example: estimating available bridge funds
This illustration shows how CLTV can set your bridge amount:
- Current home value: $600,000
- Current mortgage balance: $250,000
- Lender CLTV limit on current home: 80 percent
- 0.80 × $600,000 = $480,000 allowable total debt
- Max additional borrowing against current home = $480,000 − $250,000 = $230,000
Actual approval depends on DTI, reserves, and whether the new home is included in the CLTV.
Bridge vs HELOC vs contingent sale
- Bridge loan. Short term with a fixed payoff plan. Often interest-only, higher rate, one closing.
- HELOC as bridge. Flexible draws and typically lower cost, but variable rate and payment changes can add risk.
- Contingent sale. No bridge needed if you sell first, but your offer may be less competitive.
Pros and cons for Littleton buyers
Benefits
- Stronger offers. You can write a non-contingent offer and compete more effectively.
- Faster closings. You can close on the new home without waiting on sale proceeds.
- Smoother move. Avoid short-term housing and rushing your sale.
- Pricing flexibility. List at a market-driven price instead of discounting for speed.
Costs and risks
- Higher financing cost than a standard first mortgage.
- Temporary double payments increase monthly obligations until your home sells.
- Repayment risk if your home takes longer to sell or sells below expectation.
- Missed payments on either property can lead to serious consequences.
- Tax treatment varies. Interest deductibility depends on use of funds and IRS rules. Consult a tax professional.
Littleton and Arapahoe County factors to watch
Local conditions affect whether a bridge loan is a smart move:
- Market pace and seasonality. Days on market vary by neighborhood and time of year. A slower market can extend your carry period.
- Neighborhood dynamics. Demand differs across Littleton’s single-family areas, newer subdivisions, and condos. Timelines and financing rules can vary for condos.
- School district boundaries. These can shape buyer demand and search patterns. Keep your pricing and timing strategy grounded in current comps.
- Carrying costs. Property tax, HOA dues, insurance, utilities, and maintenance add up if you hold two homes at once.
- Title and payoff logistics. Experienced Arapahoe County title companies can coordinate simultaneous closings and automate the bridge payoff at your sale.
Your local prep checklist
Before you apply, complete these Littleton-specific checks:
- Validate pricing with a current appraisal or broker price opinion for your home.
- Review market stats from REcolorado or DMAR to align price and timeline.
- Estimate carrying costs using your tax bill from the Arapahoe County Assessor, plus HOA, insurance, and utilities.
- Confirm lender licensing in Colorado and compare quotes from at least two local banks or brokers.
- Ask your title company about handling a bridge payoff at your sale closing.
When a bridge loan is a bad idea
Consider alternatives if any of these apply:
- Low equity leaves little room for a down payment after costs.
- High DTI makes qualifying tough or pushes you into risky payment territory.
- Minimal cash reserves or irregular income.
- Your home’s likely market time is longer than the bridge term.
- You prefer rate stability and lower costs over speed and convenience.
Questions to ask prospective lenders
Use this shortlist to compare offers and understand terms:
- Do you offer a bridge loan, a HELOC used as a bridge, or a combined purchase product?
- What maximum term do you offer for the bridge?
- How do you calculate CLTV and do you include the new mortgage?
- How will you count monthly housing expenses for qualifying?
- What interest rate, type, and APR should I expect? Interest-only or principal-and-interest?
- What are total closing costs, origination, appraisal, title fees, and any prepayment penalties?
- How many months of reserves do you require after closing?
- Do you require my current home to be listed or appraised before approval?
- How is the payoff handled at sale and will title coordinate it automatically?
Alternatives to bridge loans
- Contingent offer. Lower cost but may be less competitive.
- Rent-back or seller leaseback. Sell first, then rent for a defined period to control timing.
- Piggyback financing. Second mortgage from your purchase lender if they offer a bridge-style product.
- HELOC from your current lender. Flexible and often cheaper, but variable rate and draw rules apply.
- Trade-up and home sale programs. These vary widely and require careful vetting.
A simple Littleton action plan
- Price and prep your current home with a data-backed plan.
- Get pre-approved for your purchase and bridge or HELOC.
- Align your closing timeline with a title company experienced in bridge payoffs.
- Budget for carrying costs across both homes for the full bridge term.
- Review tax implications with a qualified advisor.
Ready to move up with confidence?
You deserve a plan that balances speed, certainty, and cost. With boutique, advisor-first guidance and deep Littleton expertise, you can buy first, sell well, and keep your timeline intact. For a private strategy session tailored to your home, neighborhood, and goals, connect with Ashley Behrens.
FAQs
What is a bridge loan and how long does it last?
- A bridge loan is short-term financing that lets you buy before you sell and typically runs 6 to 12 months, sometimes up to 24 months depending on the lender.
How do Littleton lenders qualify a move-up buyer for a bridge?
- Lenders look at combined loan-to-value, debt-to-income, credit, required reserves, and the marketability of your current home.
Can I use a HELOC instead of a bridge loan?
- Yes, some buyers use a HELOC as a bridge because it can be flexible and cost-effective, but the rate is usually variable and payments can change.
What if my current home does not sell before the bridge term ends?
- You may need to extend, refinance, reduce price, or carry both homes longer, which increases cost and risk.
How does a bridge loan impact offer strength in Littleton?
- It allows you to write a non-contingent offer, which can be more competitive in multiple-offer situations.
Are bridge loan interest payments tax deductible?
- Deductibility depends on how you use the funds and current IRS rules, so you should confirm with a qualified tax professional.
