Amid an ongoing housing crunch, online lender Rocket Mortgage has started offering bridge loans, a form of short-term financing that enables borrowers to buy their new home before they’ve sold their current one.
Also known as gap loans and interim financing, bridge loans are most often used by homebuyers to help with down payments and closing costs. You can take out a larger loan, though, to pay off the balance on your existing mortgage.
With the move, Rocket is now the largest lender by far in the bridge loan landscape, which is mostly populated by credit unions, regional banks and smaller nonbank lenders. In comparison, Rocket closed more than 360,000 home loans in 2024, totalling $97.6 billion.
Rocket Mortgage
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages are available.
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Types of loans
Conventional loans, FHA loans, VA loans, Jumbo loans, low-down-payment mortgages
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Terms
10-, 15- and 30-year fixed-term conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years.
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Credit needed
620 for conventional loans
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Minimum down payment
0% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo
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Juggling the sale of one home while buying another is one of the most stressful parts of the homebuying journey, according to Rocket chief business officer Bill Banfield.
“This is just one more tool in the toolbox to help borrowers get into the home that they desire,” Banfield told CNBC Select. “It’s a little-known product. Most people think that they need to sell their house to extract equity.”
Applicants must have a Rocket Mortgage purchase loan to qualify and the house must be listed, under contract with a listing agent or have a guaranteed buyout agreement in place.
Once approved, borrowers will make up to six months of interest-only payments while they work to find a buyer.
What is a bridge loan?
Unless you’re a first-time homebuyer or independently wealthy, you’ll typically need the proceeds from the sale of your current home to help pay for your new one.
If you haven’t found a buyer, though, a bridge loan can help with your down payment, closing costs and other expenses.
Borrowers make interest-only payments during the loan term, which is usually between six months and a year, then pay the full balance when the term ends.
In many cases, borrowers are required to use their bridge loan lender for their purchase mortgage, as well.
| Bridge loan | Purchase mortgage | |
|---|---|---|
| Term | Six months to a year | 10 to 30 years |
| Time to fund | Up to two weeks | 41 days, on average |
| Closing fees | Typically 1.5% to 3% of loan total | Typically 0.5% to 1% of loan total |
| Repayment structure | Interest-only payments through the term with full repayment due at the end | Steady monthly payments that includes interest and principal over the loan term |
Bridge loan FAQs
What is a bridge loan?
A bridge loan allows a borrower to purchase a new home before they’ve sold their current one. The funds can be used to cover closing costs or a down payment, or to pay off your old mortgage. Interest-only payments are during the loan term, but full repayment is usually due within a year.
Are bridge loans a good idea?
Bridge loans are a good idea if you’re confident your current home will sell within the allotted term. But they have much shorter terms, so there’s a risk you won’t have the funding to repay the bridge loan when it comes due.
How long does it take to get a bridge loan?
Some lenders will approve bridge loans in as little as 24 hours, but it can take up to two weeks to receive the funds.
Meet our experts
At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Bill Banfield, chief business officer and economist with Rocket Companies. Prior to joining Rocket Mortgage in 1999, Bill worked at Lambrecht Mortgage Company in Grosse Pointe Farms, Michigan. He earned his Bachelor’s degree in finance from Western Michigan University.
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