Buying your next San Francisco home before selling your current one can feel like threading a needle. You want to write a strong offer without a home-sale contingency, yet your equity is still in your present home. You are not alone. In San Francisco’s high-price, competitive market, many move-up buyers weigh a bridge loan or a HELOC to close the gap. This guide gives you a clear, local comparison of both tools so you can plan costs, timing, underwriting, and risk with confidence. Let’s dive in.
Why SF move-ups use short-term financing
San Francisco prices often require jumbo financing and larger down payments, which can make liquidity timing critical. Sellers and their agents commonly favor non-contingent offers, so relying on a sale first can be a disadvantage. Typical escrows run 30 to 60 days, and aggressive buyers sometimes offer shorter timelines or limited contingencies to win. Time-to-sell varies by neighborhood and price band, so higher-end or unique homes can take longer to sell, increasing holding risk if you carry two properties.
What a bridge loan is
A bridge loan is a short-term mortgage that gives you a lump sum for a down payment and closing costs before you sell your current home. Terms are usually 6 to 12 months, sometimes extendable at a cost. Most are interest-only and secured by your current home. Some lenders also secure the new purchase in a simultaneous close.
Rates and fees are higher than permanent mortgages. Expect origination points and third-party costs such as an appraisal or possible exit fees. Lenders limit combined loan-to-value on your current home and may be conservative, especially at higher price points.
Bridge loans fit best when you need a defined amount of cash to write a competitive offer or cover an appraisal gap, and you expect to sell within the term. The key risk is timing. If your home does not sell before the loan matures, you may face extension fees or a costly refinance.
What a HELOC is
A home equity line of credit is a revolving line secured by your current home. You draw as needed during a draw period, often with interest-only payments. HELOC rates are variable and usually tied to a published index plus a margin. Upfront costs are often lower than for bridge loans, though there can be appraisal, annual, or early-closure fees.
Lenders set a maximum combined loan-to-value, often in the 80 to 90 percent range depending on credit and property type. Some lenders restrict using a HELOC for purchase down payment or may require seasoning. Underwriters for your new mortgage will count any drawn HELOC balance as debt.
HELOCs fit best when you want flexibility with lower upfront costs and expect to use the line briefly. Primary risks are rate volatility, the possibility a lender reduces or freezes a line, and added scrutiny from the new mortgage underwriter.
Costs and underwriting in practice
Short-term financing touches multiple lender policies. Align these early so your purchase financing stays on track.
- Borrowed funds treatment. Most mortgage lenders count outstanding HELOC or bridge payments in your debt-to-income ratio. Some will require the HELOC to be closed or paid off at the new mortgage closing. Policies vary by lender.
- Reserves. Buying before selling often triggers reserve requirements that cover payments on both properties for a set number of months.
- Jumbo rules. Jumbo financing is common in San Francisco and tends to be stricter. Some jumbo lenders limit combined loan-to-value and may not allow HELOC funds for a down payment.
- Asset documentation. Expect to document the source and use of funds. Some lenders ask for seasoning or detailed paper trails.
- Payoff coordination. Bridge loans are often structured to be paid off at the sale of your current home. That requires clear payoff instructions and timeline alignment with escrow.
Timing and coordination in San Francisco
Both bridge loans and HELOCs typically require an appraisal on your current home, which adds time and cost. Underwriting can also request extra documentation when you use a second lien for a down payment.
A high-level timeline looks like this:
- Weeks 0 to 2: Get preapproved for your new mortgage. Confirm if the lender permits a HELOC down payment or an outstanding bridge loan and what reserves you will need.
- Weeks 1 to 4: Apply for the HELOC or bridge loan. Order appraisal and submit documentation.
- Weeks 2 to 6: Close the HELOC or bridge. Some HELOCs can close faster. Some bridge lenders can move quickly for lump-sum funding.
- Purchase close: Use the funds for your down payment. List and market your current home.
- Sale close: Pay off the bridge or pay down or close the HELOC. Finalize any permanent financing steps.
Bridge vs HELOC: which fits your plan
When a bridge loan fits
- You need a predictable lump sum to write a strong, non-contingent offer.
- Your required down payment is larger than your available HELOC eligibility.
- You want a short, defined instrument tied to your home sale for payoff.
- You prefer predictable interest-only payments for a few months.
Pros
- Access to a large, single disbursement.
- Clear payoff at sale with escrow coordination.
- Some lenders specialize in quick bridge closes.
Cons and risks
- Higher interest rates and fees than a HELOC.
- Short term. Extensions or a refinance can add cost if your home takes longer to sell.
- Potentially higher combined loan-to-value and tighter collateral requirements.
When a HELOC fits
- You want flexibility to draw only what you need.
- You prefer lower upfront costs.
- You expect a quick sale and want to avoid a separate short-term mortgage.
Pros
- Generally lower upfront costs.
- Flexible draws and interest-only options during the draw period.
- You can pay it down or close it after your sale.
Cons and risks
- Variable rates can raise your payment if rates move up.
- The lender can reduce or freeze the line if values or credit change.
- Underwriters count the outstanding balance as debt. Some purchase lenders limit HELOC-funded down payments.
Risk planning and exit strategy
Buying before selling means planning for overlap. You may carry two payments, insurance, and property taxes for a period. Model these carrying costs for multiple sale timelines, such as 30, 60, 120, and 180 days. Give yourself buffers so you can wait for a solid offer instead of rushing to close.
Market risk is real. If values soften, you might net less than expected. Understand extension terms for a bridge loan and how a refinance would work if your sale is delayed. For HELOC users, consider what happens if rates rise or a lender limits your line while your home is on the market. Have a backup plan for liquidity.
Underwriting surprises can derail otherwise strong deals. Get lender policies in writing when possible and keep a clean documentation trail showing where the funds came from and how they were used.
A simple decision checklist
Use this checklist to choose a path and avoid delays.
- Start with your purchase lender. Confirm acceptance of HELOC funds or an outstanding bridge loan and ask about reserve requirements for two properties.
- Compare total costs. Estimate interest, fees, and potential bridge extensions. For HELOCs, model payments at current rates and at 1 to 3 percent higher.
- Confirm CLTV limits. Check how much equity you can actually access based on your current loan balance and your home’s appraised value.
- Schedule appraisals early. Appraisal turn time can be a bottleneck. Align your HELOC or bridge close with your purchase deadlines.
- Align offer strategy. If you plan a non-contingent offer, make sure your funds will be available when needed and that any conditions are cleared.
- Plan the exit. Know exactly how the bridge will be paid off at sale and what the HELOC closure or paydown steps are.
- Consult advisors. Ask a CPA about interest deductibility and tax implications. Treatment can depend on how proceeds are used.
- Keep the paper trail. Save statements and wire confirmations that show source and use of funds for underwriting.
Work with a team that aligns the moving parts
In San Francisco, the difference between winning and waiting often comes down to precision. A clear financing plan, coordinated with your offer strategy and listing timeline, helps you move with confidence. As a boutique Sotheby’s team, we guide you through lender conversations, escrow coordination, and premium listing preparation so your sale and purchase work together, not against each other.
If you are weighing a bridge loan versus a HELOC for a move-up, we can help you map the numbers, the timing, and the offer path that fits your goals. Request a Private Consultation with Wynne + Morgensen to start a private, step-by-step plan.
FAQs
Can I use a HELOC as a down payment for a San Francisco purchase?
- Sometimes. Your purchase lender may allow it, but they will count the HELOC payment in your debt-to-income and may require extra reserves or even closure at funding.
Which is cheaper for SF move-ups, a bridge loan or a HELOC?
- HELOCs usually have lower upfront costs, while bridge loans often cost more but give you a single lump sum and a defined payoff at sale.
Will a bridge loan slow down my San Francisco purchase?
- It can if you start late. Appraisals and paperwork take time, though some bridge lenders move quickly. Begin the process during preapproval.
What happens if my home takes longer to sell than the bridge loan term?
- You may need to pay extension fees or refinance the bridge. Know the extension path, costs, and backup options before you begin.
What if HELOC rates rise while my home is on the market?
- Your monthly payment can increase. Model higher-rate scenarios and confirm you can carry the payment or switch to another short-term option if needed.
Are there special jumbo considerations for San Francisco buyers?
- Yes. Jumbo underwriting often requires stronger credit, larger reserves, and tighter limits on borrowed down-payment funds and combined loan-to-value.