Bridge loan vs HELOC — which works better when you're buying before you sell in Arizona
Both products solve the same problem: free up your current-home equity to make a non-contingent offer on the next house. Picking the wrong one costs you $3,000–$8,000.
When the HELOC wins
If your current home isn't listed yet, you have 60%+ equity, your credit is over 720, and your debt-to-income ratio can absorb the HELOC's payment plus the new home's PITI, the HELOC is the cheapest option on the table. Period.
Typical Phoenix-metro HELOC: $0 origination, ~8.75% rate, 10-year draw period, interest-only payment optional. Draw the down payment, write the non-contingent offer, close on the new home, list the old home, pay off the HELOC at the sale.
When the bridge wins
If your current home is already listed (most HELOC lenders won't fund), if you have under 30% equity (HELOC max draws shrink), if your credit is between 660–719 (HELOC pricing punishes), or if you need to close in under 21 days, bridge is the right answer.
Bridge loans also work for self-employed borrowers who can document equity but who run into HELOC documentation friction with tax-return averaging. A 12-24-month bridge with interest-only payments gives time to season the next chapter.
Qualification side-by-side
| Factor | HELOC | Bridge |
|---|---|---|
| Minimum credit | 680 (best at 720+) | 660 |
| Max LTV current home | 85% combined | 75% bridge LTV |
| Current home can be listed? | No | Yes |
| DTI inclusion of new PITI | Required | Sometimes flexible |
| Income documentation | Standard W-2 / Schedule C | Asset depletion possible |
| Close timeline | 21–30 days | 14–21 days |
Common questions
Can I do both — HELOC for down payment, bridge for closing costs?
Yes, and we structure that combo when it saves money. The HELOC covers the down payment cheaply; the bridge covers the rest if HELOC max-draw runs short.
What if I get a HELOC then list and lose it?
If the lender discovers the listing they may freeze the line. We sequence the timing carefully: HELOC funded → buy new home → list old → pay off HELOC at sale. Don't list before the HELOC funds.
Does my bridge loan affect my new mortgage qualification?
Yes — the bridge payment counts in your DTI. We back-solve to make sure the combined PITI of both properties plus the bridge payment fits your ratios. Often this is why we use interest-only structures on the bridge.
Can I pre-qualify for both before I find the next house?
Absolutely. Mike issues pre-approvals on both products simultaneously so you can write whichever offer makes sense for the property you find.
How Mike + Cornerstone help
I'll model both scenarios with real Arizona numbers for your equity, target purchase, and timeline. We've structured these every month for 23 years — there's a clear right answer for your specific situation, and I'll show you which one and why.
Talk to Mike first Get pre-approved
No pressure, no commitment. Free 20-minute consult. Mike will look at your scenario and tell you straight whether this works for you.