Trying to buy a larger home in La Cañada Flintridge while your current one is still on the market can feel like a leap. In a low‑inventory, high‑price area, the right home often appears fast and sells quickly. Bridge loans and HELOCs can unlock your equity so you can buy first and sell later without missing an opportunity. In this guide, you’ll learn how these tools work, what they cost, timelines to expect, and how to reduce risk in a jumbo‑heavy market like La Cañada Flintridge. Let’s dive in.
Why bridge loans in La Cañada Flintridge
La Cañada Flintridge is a premium, low‑inventory market. Prices often exceed standard conforming loan limits, which means many purchases use jumbo financing. That affects appraisals, underwriting, and how quickly you need to move when the right home appears.
In this setting, bridge financing can help you write a cleaner offer with fewer contingencies. It can also give you the time to sell your current home after you close on the next one. Used correctly, it is a tool to compete while keeping your long‑term plan on track.
Bridge loan basics
A bridge loan is a short‑term loan secured by your current home that provides funds to help you purchase a replacement home before you sell. Lenders may structure them in a few ways:
- Closed bridge loan if your current home is already under contract to sell.
- Open bridge loan if you have not yet accepted an offer on your current home.
- Cross‑collateralized bridge where the lender uses both the current and new property as collateral until your sale closes.
Typical features:
- Term generally 3 to 12 months, sometimes up to 18 months.
- Interest higher than a standard mortgage. Interest may be interest‑only during the term.
- Fees can include an origination fee and closing costs.
- Combined loan‑to‑value limits commonly fall around 70 to 85 percent across liens on the current home.
Qualification often requires strong equity, solid credit, and the ability to carry both payments for a period of time. Expect to provide mortgage statements, proof of income and assets, and a recent valuation of your current home.
HELOCs as a bridge
A home equity line of credit functions as a revolving line secured by your current home. You can draw only what you need for the down payment and pay interest on the outstanding balance. Many homeowners prefer HELOCs because they can be flexible and often carry lower upfront costs than a specialized bridge loan.
Key points:
- Lenders size HELOCs by a combined loan‑to‑value cap. In many markets, caps range from about 70 to 90 percent depending on lender policies.
- Rates are usually variable and tied to prime, which can move during your draw period.
- You can repay the HELOC with sale proceeds once your current home closes.
For a clear overview of how HELOCs work, see the Consumer Financial Protection Bureau’s explanation of how a HELOC functions.
Bridge vs. HELOC: key differences
- Speed: Bridge loans are often designed to fund quickly for purchase closings. HELOCs can take longer to set up.
- Cost: Bridge loans typically carry higher interest and fees. HELOCs often have lower upfront cost but variable rate risk.
- Structure: Bridge loans are short term with a set payoff. HELOCs are revolving lines with draw and repayment periods.
- Underwriting: Some bridge products consider an expected sale. HELOC underwriting is usually standard home equity underwriting.
When each strategy fits
- Buy first, sell later: Use a bridge loan or HELOC to fund the down payment on the new home and list your current home right after closing. This is common when you need a non contingent offer in a competitive environment.
- Contingent offer backed by HELOC: In a moderately competitive setting, you might keep a short home‑sale contingency while pre‑arranging a HELOC as a fallback.
- Creative terms: If the seller is flexible, consider extended closing or a short rent‑back. These can reduce overlap and can pair well with a modest HELOC draw.
Timeline to buy first
Below is a typical, conservative timeline. Actual timing depends on your lender, appraisal scheduling, and local days on market.
- Weeks 1 to 3: Obtain pre‑approval for your purchase mortgage and pre‑qualification for a bridge loan or HELOC. Order a broker price opinion or appraisal on your current home if needed.
- Contract to close on the purchase: Plan for 30 to 45 days, adjusting for appraisal complexity on higher‑value properties.
- Listing your current home: Launch within days of your purchase closing to reduce carry time. Many sellers complete their sale within 30 to 45 days once under contract, but unique or luxury homes can take longer.
- Bridge or HELOC cushion: Aim for 60 to 120 days of availability to be safe, with an option to extend if needed.
For context on standard California contingency and escrow norms, you can review the California Association of Realtors’ resources.
Costs, risks, safeguards
Common costs and risks:
- Double carrying costs while you own both homes.
- Interest and fees on the bridge loan or HELOC.
- Market risk if values soften before your sale closes.
- Appraisal shortfalls that cap the amount you can borrow.
Smart safeguards:
- Borrow less than the maximum allowed to keep a cushion.
- Keep 3 to 6 months of payments in reserve for both properties.
- Negotiate an extension option on your bridge loan upfront.
- Price and prepare your listing to shorten days on market.
- Coordinate early with your lender, agent, title, and CPA.
Example numbers for a move‑up
Here is a simplified illustration. Numbers are hypothetical and for clarity only.
- Current home value: $2,500,000
- Current mortgage balance: $400,000
- Target purchase price: $3,500,000
- Desired down payment at 20 percent: $700,000
Combined LTV assumption: If a lender allows up to 80 percent combined LTV on the current home, the maximum secured debt on that home would be $2,000,000. After your $400,000 existing mortgage, you could potentially access up to $1,600,000 through a bridge or HELOC. That would comfortably cover a $700,000 down payment and closing costs, while staying within the combined LTV cap in this example.
Carry cost illustration: If you borrowed $700,000 on a bridge loan at an interest‑only rate of 6 percent for 6 months, interest would be about $21,000 during that period, plus any origination and closing fees. You would weigh that cost against the benefit of securing the right home and the expected proceeds from your sale.
Taxes, jumbo, and property rules
- Jumbo prevalence: Because prices in La Cañada Flintridge often exceed conforming loan limits, many buyers use jumbo loans. You can check the current limits through the FHFA conforming loan limits.
- Property taxes: California’s Proposition 13 means your assessed value resets at purchase price when you buy. The Los Angeles County Assessor provides guidance on assessments and transfers at the Assessor’s office.
- Interest deductibility: Interest on home equity debt may be deductible if the funds are used to buy, build, or substantially improve a home. For current guidelines, review IRS Publication 936 on home mortgage interest and speak with your tax advisor.
Team workflow and checklist
Getting the right people involved early reduces risk and speeds up closing.
Who to involve and when
- Immediately: A mortgage professional experienced with jumbo and bridge products, your buyer’s agent for the new home, your listing agent for the current home, a title or escrow officer, and your CPA.
- Before writing an offer: Secure purchase pre‑approval and a bridge or HELOC term sheet. Obtain a pricing opinion or appraisal for your current home.
- After acceptance: Finalize bridge or HELOC paperwork, align closing dates, and confirm payoff mechanics for a smooth lien release.
Documents to gather
- Two years of W‑2s or tax returns if self‑employed
- Recent pay stubs, bank and investment statements
- Current mortgage statements and payoff details
- Homeowners insurance declarations
- Title report and HOA documents if applicable
- Recent appraisal or broker price opinion
- Listing agreement and any sale contract if you have one
How we help
You do not need to juggle this alone. Our team pairs neighborhood‑first guidance with hands‑on coordination so the pieces move in sync. We help you map the financing path, price and prepare your current home for a fast sale, and time both escrows so you minimize overlap.
Expect white‑glove support that includes staging, vendor coordination, and clear communication at each step. In a market like La Cañada Flintridge, that combination can be the edge that wins the home and keeps your plan on budget.
Ready to explore your options and line up the right plan for your move? Connect with Drew Smyth to get started.
FAQs
What is a bridge loan for buying before selling?
- A bridge loan is a short‑term loan secured by your current home that provides funds to help you purchase your next home before your sale closes.
How does a HELOC help with a move‑up purchase?
- A HELOC lets you draw funds for your down payment, close on the new home, then repay the balance when your current home sells, often with lower upfront costs than a bridge loan.
What timelines should La Cañada Flintridge buyers expect?
- Plan 1 to 3 weeks for pre‑approvals, 30 to 45 days to close on the purchase, and a 60 to 120 day bridge or HELOC cushion to cover marketing and sale time.
What are the main risks of bridge financing?
- The biggest risks are double carry costs, higher interest and fees, appraisal limits on loan size, and market shifts that could affect your sale price or timing.
How much equity do I need for a bridge or HELOC?
- Many lenders want significant equity, often targeting combined LTVs of roughly 70 to 85 percent on the current home, along with strong credit and income.
Are bridge loan or HELOC interest payments tax deductible?
- Interest may be deductible if the funds are used to buy, build, or substantially improve a home. Always confirm with a CPA and review IRS Publication 936.
Where can I check current conforming loan limits and tax rules?
- You can review conforming loan limits at the FHFA site and property tax assessment basics through the Los Angeles County Assessor.
