Buying your next Danville home before your current one sells can feel like a high‑wire act. You want a strong, non‑contingent offer, yet you need funds for the down payment and closing costs. The two most common tools are bridge loans and HELOCs, and each can help you move without missing a beat. In this guide, you’ll learn how they work, where they differ, and how to choose the right option for East Bay market conditions. Let’s dive in.

Bridge loans and HELOCs at a glance

What a bridge loan is

A bridge loan is a short‑term, closed‑end loan designed to cover your purchase costs until your current home sells. Most terms run about 6 to 12 months, often with interest‑only payments during the bridge period. Rates tend to be higher than standard mortgages and you can expect origination and closing fees. The loan is usually secured by the home you are selling, and sometimes also by the home you are buying. For a quick overview of how bridge loans work and typical costs, see this clear explainer from Bankrate on bridge loans.

What a HELOC is

A HELOC is a revolving line of credit secured by your current home’s equity. During the draw period, which is commonly 5 to 10 years, you can borrow as needed up to your limit and usually pay interest only on what you draw. Rates are variable, typically tied to prime plus a margin, and initial costs are often lower than a bridge loan. The CFPB’s guide to HELOCs explains how draw periods, variable rates, and combined loan‑to‑value limits work.

Key differences that impact Danville buyers

Eligibility and equity

Both options require good credit and sufficient equity, but underwriting looks different.

• Bridge loan: Lenders focus on your ability to carry both homes during the overlap and may ask for proof your current home will be listed or has a sales plan. Some bridge lenders allow access to funds even when usable equity is tighter, but pricing reflects the added risk.
• HELOC: Lenders cap combined loan‑to‑value, often around 80 to 90 percent on a primary home. If your existing first mortgage plus the HELOC exceeds that cap, the line is reduced or denied. Expect full documentation and an appraisal.

Rates and fees

• Bridge loan: Pricing is typically several percentage points above standard first‑mortgage rates in recent years, with origination fees and closing costs. Many are interest‑only during the term.
• HELOC: Variable rate, often lower than a bridge loan at the start, with lower opening costs. Some lenders offer low or no closing cost HELOCs in exchange for a slightly higher margin. Variable rates can rise, which affects your payment.

For overall rate context, you can track broad mortgage trends through Freddie Mac’s weekly rate survey.

Timeline to funding

• Bridge loan: Often faster than a cash‑out refinance. With an experienced lender, you may close within 1 to 3 weeks if documentation is ready.
• HELOC: Opening a line can take 2 to 6 weeks depending on underwriting and appraisal timelines. Some banks move faster, but backlogs are common during busy seasons.

How lenders view your purchase

Your new mortgage underwriter will review how you are funding the down payment and whether you can handle payments during any overlap.

• Using a HELOC for the down payment is allowed by some programs, but it must be documented and may require reserves. Policies vary, so coordinate with the new mortgage lender early.
• Bridge loan proceeds are typically acceptable when documented on the settlement statements. Underwriters may still require reserves or clear evidence that your current home will sell.

Risks to plan for

• Bridge loan: If your home does not sell within the bridge term, you may face higher carrying costs, extension fees, or need to refinance under pressure.
• HELOC: Rate risk is real, since payments can rise if prime increases. Large new second liens can also affect approval for your new first mortgage. In rare cases, lenders can reduce or freeze lines during adverse conditions.
• Both: Market shifts, appraisal gaps, and tight debt‑to‑income ratios can make the overlap period stressful. Build reserves and a backup plan.

For tax treatment, the IRS guidance on mortgage interest explains when interest may be deductible. HELOC interest is generally deductible only when used to buy, build, or substantially improve the home that secures the loan, so talk with your CPA before you rely on deductions.

Danville and East Bay factors

Competitive offers without sale contingencies

Danville and much of Contra Costa often see limited inventory relative to demand for single‑family homes. In this setting, non‑contingent offers can be more competitive. A bridge loan or HELOC can help you write with confidence while your current home is prepped and listed. Regional data sets show how tight inventory can be; you can review broader Bay Area trends through California Association of Realtors market reports.

Jumbo price points and CLTV

Many purchases in Danville and adjacent communities fall into jumbo territory. Jumbo lenders tend to ask for higher credit scores, larger reserves, and careful review of total obligations. Bigger first‑lien balances also reduce the room available for a HELOC under combined LTV caps. If you need a large down payment fast, a bridge loan may be the more practical tool even if the rate is higher.

Local lender practices

East Bay credit unions and regional lenders often offer specialized bridge products for move‑up buyers and may bundle the bridge with your purchase mortgage for smoother coordination. National banks offer HELOCs too, but underwriting and appraisal timelines can stretch during busy months. Local teams that regularly close Danville transactions can help sequence both closings with fewer surprises.

When each option fits

Choose a HELOC when

• You have strong equity and your combined LTV stays within the lender’s cap.
• You prefer lower upfront fees and you are comfortable with a variable rate.
• You expect your current home to sell soon, or you can carry both payments if needed.
• Your purchase loan program accepts HELOC proceeds for the down payment.

Pros: lower initial costs, flexible borrowing and repayment, potentially lower starting rates. Cons: variable rate risk, line size limited by CLTV, underwriting can take longer than expected.

Choose a bridge loan when

• You need to close quickly and the HELOC will not provide enough funds or will take too long.
• You want a dedicated short‑term instrument designed to be paid off when your current home sells.
• Your equity is tighter, yet you still need access to funds for a competitive offer.
• The market is competitive and you want a clean, non‑contingent offer strategy.

Pros: faster funding with experienced lenders, larger available proceeds, designed for short‑term payoff. Cons: higher rates and fees, short timeline pressure to sell, possible extension costs.

A step‑by‑step plan that works here

1. Get started early

• Speak with both a HELOC lender and a bridge‑loan lender to compare quotes, CLTV rules, fees, and timelines.
• Ask your purchase lender in writing whether HELOC or bridge funds are acceptable for the down payment and what reserves they require.

2. Confirm your numbers

• Estimate equity and CLTV using a realistic price range for your current home. Your listing strategy should target a timely sale, not just a top‑end price.
• Build a best and worst‑case cash‑flow scenario for 3 to 6 months of overlap that includes a HELOC rate increase or a bridge extension.

3. Prep your current home for a quick sale

• Align pricing, presentation, and timing so your listing launches strong. Staging, pre‑inspections, and marketing help reduce days on market.
• Know how you will handle a sale that closes after your purchase. If needed, consider a rent‑back or temporary rental plan.

4. Coordinate both closings

• Sequence your timelines with your lender and agent so bridge or HELOC funds are available before you write a non‑contingent offer.
• Clarify documentation needs and reserve requirements to avoid last‑minute underwriting snags.

5. Keep a safety net

• Budget reserves. Bay Area lenders often want multiple months of payments post‑closing.
• Understand extension terms for bridge loans and rate caps or change provisions for your HELOC.

Quick comparison summary

• Speed to funds: Bridge loans are often faster once approved. HELOCs can take 2 to 6 weeks depending on appraisal and underwriting.
• Cost: HELOCs usually have lower upfront fees and potentially lower initial rates. Bridge loans cost more but can deliver larger proceeds on a short timeline.
• Risk: Bridge risk centers on selling within term. HELOC risk centers on variable rates and line size limits.
• Fit: HELOCs fit strong equity and flexible timing. Bridge loans fit fast closings and larger short‑term needs.

Alternatives to consider

• Contingent offer: Less competitive in tight inventory, but still an option in some situations.
• Sale‑leaseback or rent‑back: Sell your current home and rent it for a short term to free funds for the next purchase.
• Family cash bridge: Short‑term funds from relatives documented per your lender’s gift or loan rules.
• Timing your purchase: If your sale can close first, you may avoid interim financing altogether.

The Patty approach

You deserve a plan that balances cost, speed, and risk. With 40 plus years helping East Bay families, Patty has seen nearly every version of the buy‑before‑you‑sell puzzle. She will coordinate with your lender, map your timeline, and guide pricing and presentation on your current home so your move is smooth and strategic.

If you are weighing a bridge loan versus a HELOC for a Danville move, let’s talk through your specifics. Connect with Patty Barry to build a clear, local plan that wins your next home with confidence.

FAQs

Which is cheaper for Danville buyers, a bridge loan or a HELOC?

• Generally a HELOC costs less up front and can start with a lower rate, while bridge loans cost more but can deliver larger funds faster for a competitive offer.

Can I use a HELOC for my down payment on a new home?

• Some purchase programs allow it with proper documentation and reserves, so confirm acceptability with your new mortgage lender before relying on HELOC funds.

How quickly can I get a bridge loan or a HELOC in Contra Costa?

• Bridge loans can close in about 1 to 3 weeks with experienced lenders and ready documents, while HELOCs often take 2 to 6 weeks depending on appraisal and underwriting.

What happens if my home does not sell before the bridge loan ends?

• You may need to extend the loan at extra cost, refinance, carry both payments longer, or adjust pricing to sell, so build reserves and a backup plan early.

Are there alternatives to bridge loans and HELOCs for buying before selling?

• Options include contingent offers, a sale‑leaseback or rent‑back, a documented family cash bridge, or timing the sale to close before your next purchase.