A bridge loan is a short-term financing option designed to help borrowers transition between two properties, typically when buying a new home before selling their current one. It “bridges” the financial gap, allowing the borrower to access funds needed for the down payment or closing costs on the new property.

Bridge loans are secured by the borrower’s existing property, with the loan amount based on the home’s equity. They usually have a term of 6 to 12 months and come with higher interest rates compared to traditional mortgages due to their short-term nature and increased risk.