Trying to buy in Larkspur or San Rafael before your current Marin home sells can feel like threading a needle. You want to move quickly on the right property without sacrificing price or control on your sale. A bridge loan can give you the short‑term buying power to act now and sell on your timeline. In this guide, you will learn how bridge loans work in central Marin, what they cost, how they affect your mortgage approval, and how to use them to write a stronger, more competitive offer. Let’s dive in.
Why bridge loans matter in Marin
Marin County is a high‑price, low‑inventory market. In many neighborhoods, sellers prefer offers that do not depend on the buyer selling a home first. That is why move‑up buyers often look for ways to buy before they sell.
A bridge loan lets you present as a non‑contingent buyer or shorten contingencies. That can improve your odds in multiple‑offer situations typical in Larkspur, San Rafael and nearby communities. You get time to prep and list your current home without rushing.
What a bridge loan is
A bridge loan is a short‑term, interest‑only loan that fills the gap between buying your next home and selling your current one. Lenders typically secure the loan with your existing home, your new home, or both. You pay off the bridge when your current home closes or when you refinance into permanent financing.
There are two common structures:
- Home‑secured bridge: Your current property secures the loan, using your equity.
- Purchase bridge: Your new property secures the loan. This is less common when you do not have cash for a down payment.
Typical terms run 6 to 12 months. Many lenders can extend for a fee if needed. Payments are often interest‑only during the term and principal is repaid when your sale closes or you refinance.
Costs you can expect
Bridge loans cost more than standard mortgages. Pricing varies by lender and borrower profile, but here is what you will typically see:
- Interest rates that are several percentage points above conventional mortgage rates.
- Upfront origination fees, often 1 to 3 percent of the loan amount.
- Standard appraisal, title and closing costs similar to a mortgage.
- Possible reserves for taxes and insurance, and potential extension or exit fees if the term runs long.
The best way to compare options is to request written quotes that show the rate, fees and the total projected cost through your expected payoff date.
How the process works
Most lenders can move quickly once your file is complete. A straightforward bridge can fund in about 1 to 3 weeks from a complete application, though timelines vary. Here is a common sequence:
- Initial consultation and pre‑qualification
- Discuss goals and exit strategy for the bridge payoff.
- Share a preliminary estimate of your current home’s value and equity.
- Application and documentation
- Provide mortgage statements, income verification and a credit check.
- Authorize appraisals on the collateral property or properties.
- Underwriting and approval
- Lender reviews your equity, credit, debt‑to‑income and combined loan‑to‑value.
- You may be asked for a listing agreement or evidence of active market preparation.
- Funding and coordination with escrow
- The bridge loan funds at or just before the purchase escrow closing.
- After your current home sells, escrow coordinates payoff instructions to close the bridge.
Underwriting basics you should know
Lenders focus on equity, your ability to carry payments and a clear exit plan.
- Equity in your current home: Lenders usually want 20 to 30 percent or more. Many evaluate a combined loan‑to‑value (CLTV) cap across all liens, often in the 70 to 80 percent range, depending on the lender.
- Debt‑to‑income and credit: Your bridge payment and the new mortgage payment are counted in your DTI. You still need to meet credit and income standards.
- Appraisals and insurance: Expect appraisals on any property used as collateral and standard title and hazard insurance.
- Exit strategy: A documented plan, such as an active listing at a realistic price or a signed purchase contract, helps strengthen your file.
How it affects your new mortgage approval
Because the bridge loan adds a payment, it can impact qualifying for your permanent loan. The best practice is to coordinate early with both your bridge lender and your permanent mortgage lender. Confirm how the bridge payment will be treated in DTI and whether your permanent lender accepts pending bridge obligations.
Risks and how to manage them
Bridge loans work well when planned carefully. Be aware of the tradeoffs and use a disciplined approach.
Primary risks
- Carrying costs: You may cover interest on the bridge and new‑home expenses until your sale closes.
- Sale timing: If your home does not sell within the bridge term, you may face extension fees or pressure to lower price.
- Higher cost: Bridge financing is usually more expensive than conventional mortgages.
- Collateral risk: Default can put the collateral property at risk.
- Qualification risk: The added payment can complicate your permanent loan approval.
Mitigations
- Choose conservative limits: Keep CLTV within lender guidelines and confirm underwriting early.
- Set a clear exit plan: Have your listing, pricing strategy and timeline dialed in before you go non‑contingent.
- Coordinate closings: Align purchase and sale escrows and use rent‑backs if needed to avoid rushed decisions.
- Compare alternatives: Review HELOCs, cash‑out refinance and contract strategies to make sure a bridge is the right fit.
Alternatives to compare in Marin
- Home‑sale contingency: Simple structure but less competitive in low‑inventory situations where sellers prefer certainty.
- Shortened contingency window: Keeps some protection while signaling confidence. Works best when your listing prep is nearly complete.
- HELOC or home equity loan: May be lower cost than a bridge. Availability and speed depend on the lender.
- Cash or portfolio financing: Eliminates contingency issues if you have liquidity or access to private financing.
- Cash‑out refinance: Pulls equity before you buy. Often lower cost but slower, which can be a challenge in fast markets.
- Seller‑carryback or delayed occupancy: Contract strategies that align timing when both sides are flexible.
Offer strategy for competitive Marin deals
A strong offer is about more than price. Use financing to support terms that sellers value.
- Get pre‑approved and coordinate lenders: Talk with your permanent lender and your bridge lender early. Confirm how the bridge affects your approval.
- Shorten or waive the home‑sale contingency: A bridge can help you present as non‑contingent or offer a shorter contingency period with confidence.
- Strengthen earnest money and timelines: Larger deposits and a quicker close are often attractive. Typical California escrows run 30 to 45 days, so align your bridge funding to match.
- Consider rent‑back: Offering a seller rent‑back can give the seller breathing room and make your offer stand out.
- Keep a backup plan: Maintain a realistic pricing strategy for your sale and consider backup offers to reduce timing risk.
- Get professional guidance: A real estate attorney can help with rent‑back and contingency language. A tax professional can advise on interest deductibility and sale timing.
Example path for a Larkspur move‑up buyer
Here is how a typical path might look when you are moving within central Marin:
- Weeks 1–2: You review equity in your San Rafael home, meet with your lender and obtain bridge loan pre‑qualification. Your agent finalizes a prep plan and timing for listing.
- Weeks 2–3: You find a home in Larkspur and write a competitive offer with short contingencies, supported by the bridge approval. Escrow opens on the purchase.
- Weeks 3–5: The bridge lender completes appraisal and underwriting. You finalize listing prep and photography for your current home.
- Weeks 5–6: The bridge loan funds to close on your Larkspur purchase. You move and launch the listing of your San Rafael home.
- Weeks 7–10: Your sale goes into contract and closes. Escrow pays off the bridge loan from sale proceeds and you transition into permanent financing if needed.
Timelines vary, but the key is sequencing and lender coordination so you never feel rushed on either side of the move.
Quick checklist for Marin buyers
- Confirm equity and a realistic value estimate on your current home.
- Get written pre‑qualification from a bridge lender and clarity on how payments will be calculated.
- Coordinate between the bridge lender and your permanent mortgage lender.
- Document your exit strategy with a listing agreement or accepted contract.
- Budget for carry costs, fees and a contingency fund for a few months of payments.
- Align escrow timelines and negotiate rent‑back if needed to smooth the move.
Is a bridge loan right for you
Bridge financing often makes sense when you have substantial equity, need to move quickly to secure a replacement home in a competitive market, and can document a near‑term sale. If alternatives are slower or less competitive, a bridge can protect your purchase while giving you time to maximize your sale.
If you want a coordinated, low‑stress plan for buying in Larkspur or San Rafael and selling in central Marin, let’s talk about your options and timing. For discreet guidance and a plan tailored to your goals, connect with Stephanie Pratt.
FAQs
What is a bridge loan for Marin homebuyers
- A bridge loan is a short‑term, interest‑only loan that lets you buy a new home before selling your current one, with repayment from your sale proceeds or a refinance.
How long does a bridge loan take to fund in Marin
- Once your application is complete, many lenders can fund in about 1 to 3 weeks, though timing depends on collateral, appraisals and lender process.
What equity and qualifications do I need for a bridge loan
- Lenders often look for 20 to 30 percent equity and limit combined loan‑to‑value to about 70 to 80 percent, while also reviewing your credit and debt‑to‑income.
How does a bridge loan affect approval for my new mortgage
- The bridge payment is counted as a debt in your DTI, so coordinate with both lenders early to confirm how it will be treated in your permanent loan approval.
What happens if my current home does not sell before the bridge loan matures
- You can sometimes pay an extension fee, but costs add up, so plan a clear exit strategy, price realistically and align timelines to avoid last‑minute pressure.
