Bridge Loans For Buying Before Selling In La Jolla

Found your next La Jolla home but haven’t sold your current one yet? You are not alone. In a high-price, low-inventory market, timing the buy and the sell can feel stressful. This guide explains how a bridge loan can help you move first, the costs and risks to weigh, smarter alternatives, and practical next steps tailored to La Jolla. Let’s dive in.

Bridge loan basics

A bridge loan is short-term financing that lets you tap your equity so you can buy before you sell. You can use it for a down payment, closing costs, or to pay off your current mortgage until your sale closes. Most consumer bridge loans run about 3 to 12 months, often with interest-only payments and a balloon payoff when your home sells, as described in this overview of how bridge loans work by NerdWallet (what a bridge loan is and typical terms).

How lenders size and secure the loan

Lenders typically secure the bridge loan with your current home, and sometimes also the new purchase. Many cap combined borrowing around 70 to 80 percent of the properties’ values and want to see meaningful equity in your current home. Exact limits and documentation vary by lender, but the goal is the same: verify your equity and a clear exit plan.

Why La Jolla buyers consider bridging

La Jolla’s coastal market sees high price points and limited inventory, which can make non-contingent offers more competitive. Down payments in the San Diego area have also trended high in recent reporting, increasing the need to access equity before you sell (San Diego buyers’ down payments are among the highest). Many La Jolla purchases also fall into jumbo territory, which comes with different underwriting and reserve requirements than conforming loans (San Diego 2025 conforming limit context). The right bridge structure can help you act quickly without a sale contingency.

Costs and risks to weigh

Bridge loans usually cost more than long-term mortgages. Expect a higher interest rate plus closing costs and lender fees that commonly total about 1.5 to 3 percent of the bridge loan amount in published examples (typical cost ranges and examples; recent program example). Fees often include appraisal, origination, underwriting, escrow and title.

Underwriting can be tighter. Lenders look at credit, debt-to-income (DTI), reserves, and how they will treat overlapping housing payments. Many will count payments on both properties or require larger reserves (how lenders evaluate DTI and reserves).

The key risk is carrying two housing payments if your home does not sell within the bridge term. This is why a realistic exit plan and cash buffer are essential (bridge loan risks and timing). Also clarify whether the bridge is recourse, what happens if you need more time, and how payoff works. Private or hard-money lenders may fund faster but usually at higher cost and with tighter timelines (recourse and hard-money considerations).

Local tax and paperwork reminders

When you sell or buy in San Diego County, a change in ownership triggers reassessment under California’s system, and the Assessor may issue supplemental property tax bills after closing. Escrow and title handle the filings, but it is smart to budget for timing differences and prorations (Assessor’s guidance on reassessment and supplemental taxes). Your escrow team will also address recording and standard transfer taxes as part of closing.

Alternatives to compare

• HELOC. A home equity line of credit can cost less and offers flexibility, but many lenders will not open a HELOC after you list your home, and rates are often variable (bridge vs. HELOC basics).
• Cash-out refinance. This may lower total borrowing cost, but it increases your long-term loan balance and can take longer to close, which may not fit a fast-moving La Jolla listing cycle (cash-out vs. bridge loan considerations).
• Buy-before-you-sell programs. Marketplace options can advance equity or package a trade-in with transparent fees. For example, HomeLight has disclosed program fees commonly cited around 2.4 percent of the sale price, subject to program rules and eligibility (program fee example and overview).
• Negotiated timing. If the seller agrees, a longer close or a short post-closing rent-back can remove the need to borrow at all. These solutions depend on market conditions and seller preferences.

A quick La Jolla example

At typical La Jolla price points, a 20 percent down payment often equals several hundred thousand dollars. If most of your funds are in your current home’s equity, a bridge loan can unlock that equity so you can write a strong, non-contingent offer. The trade-off is the short-term cost and the responsibility to manage two properties until your sale closes.

Bridge loan checklist

Before you apply

• Get a current valuation for the home you plan to sell, such as a detailed CMA from a local agent.
• Gather documents: pay stubs, tax returns, mortgage statements, HOA info, and your listing agreement or timeline to list.
• Ask whether the bridge requires you to use the same lender for your new mortgage (typical program conditions).

Questions to ask lenders

• What is the rate, and are monthly payments interest-only or principal plus interest?
• What are all fees and the worst-case total cost for the full term (cost items to expect)?
• Is the loan recourse, and what happens if my home does not sell in time (recourse considerations)?
• How will you treat DTI and reserves while I carry both properties (underwriting treatment of overlapping payments)?
• Can I extend the term if needed, and what is the payoff process (common structuring and timelines)?

Next steps

• Speak with your agent and a lender experienced in San Diego bridge financing to map the best path for your goals and timing.
• Get pre-underwritten for your purchase mortgage so you know exactly how lenders will treat the bridge and your new loan.
• Compare at least three options side by side: a traditional bridge loan, HELOC or cash-out quotes, and a buy-before-you-sell program with all fees included (program overview for comparison).
• Build a reserve plan to cover overlapping payments, closing costs, and potential term extensions.

Is a bridge loan right for you?

A bridge can be a smart tool if you have strong equity, a clear exit plan, and the cash flow to handle a short overlap. It can also help you write a stronger offer in a competitive La Jolla segment. If the timeline is uncertain or reserves are tight, a HELOC, seller rent-back, or a packaged trade-in program could be safer.

When you want a tailored plan for your La Jolla move, reach out to the local team you can trust. Connect with The Morabito Real Estate Group to compare options and time your sale and purchase with confidence.

FAQs

How long do bridge loans usually last?

• Most consumer bridge loans run for a few months up to about a year, with many in the 3 to 12 month range (typical terms).

What do bridge loans cost in San Diego?

• Expect higher rates than standard mortgages plus fees that commonly total about 1.5 to 3 percent of the bridge amount, based on published examples (cost breakdown and examples).

Will a bridge loan affect my new mortgage approval?

• Yes. Lenders often count overlapping payments or require larger reserves, which can impact DTI and qualification (how lenders evaluate overlapping payments).

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

• Ask about extension options, costs, and whether the loan is recourse. A realistic exit plan and reserves help manage this risk (bridge loan risks and exit planning).

What are alternatives to bridge loans for La Jolla buyers?

• Consider a HELOC applied for before listing, a cash-out refinance, a negotiated rent-back, or a buy-before-you-sell program with a disclosed fee structure (overview of common alternatives).