Using a HELOC as a Bridge Loan | Yieldi
Investor Starter Toolkits
Borrowers

Using a HELOC as a Bridge Loan: The Smart Homeowner’s Guide to Real Estate Financing

Chris Joseph

May 22, 2025 · 6 min read

Using a HELOC as a Bridge Loan

Real estate transactions are often full of unexpected hurdles. Timing, funding gaps, and contingent offers can derail your dream deal in a flash. That’s why savvy borrowers are turning to a flexible and increasingly popular solution—using a HELOC as a bridge loan. It’s a strategic approach that helps homeowners access equity from their current property to fund the purchase of a new one, all without rushing to sell too soon.

In this comprehensive guide, we’ll break down how a HELOC works, how it compares to traditional bridge loans, and why it might be the right move for your next real estate transaction.

What Is a HELOC and How Does It Work?

A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by the equity in your current home. It functions much like a credit card: you’re given a credit limit, and you can draw funds as needed during a draw period (usually 5–10 years), then repay them over time.

Key Benefits of HELOCs:

  • Flexible access to funds
  • Interest-only payments during draw period
  • Lower interest rates than unsecured loans
  • Reusability of funds during the draw period

What Is a Bridge Loan and Why Do Homeowners Use It?

A bridge loan is a short-term financing tool used to “bridge” the gap between buying a new home and selling the current one. Homeowners often rely on it to make a down payment on a new property before receiving the proceeds from their existing home sale.

Bridge loans typically:

  • Have a 6- to 12-month term
  • Come with higher interest rates
  • Require repayment in full when the old property is sold

Using a HELOC as a Bridge Loan: How It Works

Instead of opting for a traditional bridge loan, many borrowers use their existing HELOC to achieve the same result.

Here’s how:

  1. You apply for a HELOC on your current home before it’s listed for sale.
  2. Once approved, you draw funds to cover the down payment or closing costs on a new home.
  3. After your current home sells, you repay the HELOC balance using the proceeds.

This strategy is particularly useful if you already have a HELOC open or have significant equity.

HELOC vs. Bridge Loan: A Side-by-Side Comparison

FeatureHELOCTraditional Bridge Loan
Secured byEquity in existing homeEquity in existing home
Repayment TermLong-term (up to 20 years)Short-term (6–12 months)
Interest RatesVariable, usually lowerFixed or variable, usually higher
Payment StructureInterest-only during draw periodLump-sum or balloon payments
FlexibilityHigh – reusable credit lineLow – single-use financing
Approval ProcessLess aggressive than bridge loansFaster but with stricter criteria

Why Borrowers Choose HELOCs Over Bridge Loans

Borrowers choose HELOCs as bridge loans for several strategic reasons:

  • Lower Cost of Capital: Interest rates on HELOCs are often significantly lower than traditional bridge loans.
  • Extended Repayment Timeline: You’re not under the pressure of a short-term balloon repayment.
  • No Need to Sell Immediately: Offers breathing room to sell your home on your terms, not in a rush.
  • Higher Approval Odds: If you already have a HELOC, there’s no need to undergo a new loan application.

Ideal Scenarios for Using a HELOC as a Bridge Loan

This strategy is particularly beneficial when:

  • You’ve built substantial equity in your current home.
  • The real estate market is competitive, and you want to act fast.
  • Your current home isn’t listed yet, but you’ve found a property to buy.
  • You want to avoid contingencies that make offers less attractive to sellers.

What Are the Risks and Considerations?

Using a HELOC isn’t without its potential drawbacks:

  • Variable Interest Rates: HELOC rates can fluctuate, increasing monthly payments.
  • Qualification Requirements: Your credit score, DTI ratio, and home value will affect approval.
  • Second Lien Position: If you already have a mortgage, the HELOC is subordinate and riskier for lenders.
  • Discipline Needed: Since it’s a revolving credit line, some homeowners may overspend.

Tips for Using a HELOC Effectively as a Bridge Loan

Here’s how to leverage your HELOC wisely:

  • Get Pre-Approved Early: Start the process before you even begin house hunting.
  • Plan a Repayment Strategy: Know how you’ll pay off the balance—usually from your home sale.
  • Limit Your Borrowing: Use only what you need for down payment and closing costs.
  • Consult Your Lender: Ask about early closure penalties or payoff fees.
  • Stay Market Aware: Monitor interest rate trends to anticipate future changes.

Yieldi’s Take: Smart Lending, Strategic Timing

At Yieldi, we understand the nuances of real estate financing. Whether you’re an experienced investor or a first-time buyer looking to upgrade, using a HELOC as a bridge loan offers the financial flexibility you need in today’s fast-paced housing market.

We provide private real estate-backed lending solutions that are tailored, secure, and borrower-friendly—designed to give you a competitive edge.

FAQs

Can I use a HELOC for the entire purchase of a new home?
No. Most lenders won’t allow a HELOC to cover the full purchase price. It’s best used for the down payment, with the balance financed through a traditional mortgage.

Is a HELOC better than a bridge loan?
It depends. A HELOC offers lower rates and flexibility, while bridge loans may be faster for large sums. Evaluate based on your equity, urgency, and repayment plan.

What credit score do I need for a HELOC?
Most lenders require a credit score of 620 or higher, but better rates are available with 700+.

Will using a HELOC affect my mortgage approval for the new home?
Yes, the HELOC balance will impact your debt-to-income (DTI) ratio, so it’s important to factor that in during pre-approval.

Can I get a HELOC if my home is already for sale?
It’s difficult. Most lenders won’t issue a HELOC on a property that’s actively listed. Apply before listing your home.

How fast can I get access to HELOC funds?
Typically, 2 to 6 weeks, depending on appraisal and underwriting. However, if you already have one open, funds are available instantly.

Conclusion: Bridge the Gap with Confidence

Using a HELOC as a bridge loan is a powerful financing strategy that combines cost-effectiveness with flexibility. It’s ideal for homeowners with strong equity and a desire to buy without selling under pressure.

At Yieldi, we help you navigate your financing journey with confidence and clarity, whether you’re leveraging home equity or exploring creative funding options. Your real estate dreams shouldn’t wait—and with the right tools, they won’t have to.

Borrowers
What Are Fix & Flip Loans?

Fix & flip loans are short-term, asset-backed loans that help investors buy, rehab, and resell properties quickly. Typically structured as...

Read More
Borrowers
Why Yieldi is the Hard Money Lender Investors Trust for Speed and Flexibility

When it comes to real estate investments, timing is everything. Missing a closing date or dealing with delays can mean...

Read More

Ready to start investing?

Schedule a Call
Borrowers
Why Yieldi is the Hard Money Lender Investors Trust for Speed and Flexibility

When it comes to real estate investments, timing is everything. Missing a closing date or dealing with delays can mean...

Read More
Borrowers
Bridge Lender 101: Short-Term Financing Made Simple

A bridge lender is a private lender or investment firm that provides short-term loans to real estate investors and businesses....

Read More
Borrowers
Why Real Estate Investors Trust Hard Money Loans in Georgia and Beyond in 2025

As the real estate market evolves, investors are searching for financing options that are fast, flexible, and built around their...

Read More
Read Full Disclosure
THIS PRESENTATION FOR YIELDI, LLC (THE “FUND”) AND ANY APPENDICES OR EXHIBITS IS PROVIDED TO YOU ON A CONFIDENTIAL BASIS AT YOUR REQUEST FOR INFORMATIONAL PURPOSES ONLY AND IS NOT, AND MAY NOT BE RELIED ON IN ANY MANNER AS, LEGAL, TAX OR INVESTMENT ADVICE OR AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY AN INTEREST IN THE FUND. THIS PRESENTATION IS CONFIDENTIAL AND IS ONLY BEING PROVIDED TO “ACCREDITED INVESTORS” WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED. RECIPIENTS OF THIS PRESENTATION MAY NOT REPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, IN WRITING OR ORALLY OR IN ANY OTHER WAY OR FORM, THIS PRESENTATION OR ANY OF THE INFORMATION SET OUT HEREIN. A
private offering of Borrower Payment Dependent Notes (“Notes” or “Note”) will only be made pursuant to a confidential private placement memorandum (the “Offering Memorandum”), each specific Note, and the Fund’s subscription documents, which will be furnished to qualified investors on a confidential basis at their request for their consideration in connection with such offering. This document does not purport to contain all the information that may be required to evaluate an investment in a Note and is subject to completion and amendment. Any prospective investor is advised to carefully review all of the Offering Memorandum, the Note, and the Fund’s subscription documents. Certain factual information has been obtained from third-party sources believed to be reliable but has not been independently verified. The Fund may change some terms of the Offering prior to finalization of the Memorandum. The information contained herein will be superseded by, and is qualified in its entirety by reference to, the Offering Memorandum, which contains additional information about the investment objective, terms and conditions of an investment in a Note or Notes and also contains tax information, information regarding conflicts of interest and risk disclosures that are important to any investment decision regarding a Note or Notes. No person has been authorized to make any statement concerning the Fund other than as set forth in the Offering Memorandum and a Note, and any such statements, if made, may not be relied upon. The information contained herein must be kept strictly confidential and may not be reproduced, redistributed or otherwise used without Yieldi, LLC’s express written approval. Each recipient, by accepting these materials, is deemed to agree to the foregoing, and to agree to return these materials promptly upon request. An investment in a Note or Notes of the Fund is highly speculative and involves significant risks, including potential loss of the entire investment. Before deciding to invest in a Note or Notes, prospective investors should pay particular attention to the risk factors contained in the Offering Memorandum. Investors should also have the financial ability and willingness to accept the risk characteristics of a Fund Note or Notes according to their terms.  An investment in a Note or Notes is not suitable or desirable for all investors and only qualified eligible investors may invest in the Fund. Past performance is not indicative of future returns or Fund results. The views expressed herein represent the opinions of the Fund and are not intended as a forecast or guarantee of future results. Individual investment performance, examples provided and/or case studies are not indicative of overall returns of a Fund Note. In addition, there can be no guarantee of deal flow in the future. Some of the statements in this Presentation, including those using words such as “targets,” “believes,” “expects,” “intends,” “estimates,” “projects,” “predicts,” “anticipates,” “plans,” “pro forma,” and “seeks” and other comparable or similar terms are forward-looking statements. Forward looking statements are not statements of historical fact and reflect Fund’s views and assumptions as of the date of the Presentation regarding future events and performance. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are important factors that could cause a Note or Notes actual results to differ materially from those indicated in these statements. The Fund believes that these factors include, but are not limited to, those described in the “Risk Factors” section of Fund’s Memorandum. The performance figures set forth in this document are provided to you with the understanding that, as a sophisticated investor, you understand the inherent limitation of such illustrations, will not rely on them in making any investment decision, and will use them only for the purpose of evaluating your preliminary interest in investing in a Note or Notes of the Fund. Any performance data represents past performance. Any performance information included in this document is for information purposes only. The Fund makes no guarantee that it will be able to achieve similar results. Targets are objectives and should not be construed as providing any assurance as to the results that may be realized in the future from investments in a Note or Notes of the Fund. HISTORICAL PERFORMANCE IS NOT AN INDICATOR OR GUARANTEE OF FUTURE RESULTS. No representation or guarantee is made that the Fund will or is likely to achieve its investment objectives or be able to avoid losses This document contains selected information regarding transactions entered into by the Fund on behalf of other accounts and clients. The purpose of any historical information is to provide prospective investors with examples of investments the Fund has made in the market in which the Fund expects to invest and illustrate the types of investments that may be targeted by the Fund. Prospective investors should not rely on this information in making an investment decision, as the investments of the Fund in the past and the investments made in the future may be materially different from any historical investments. In view of the foregoing,  there can be no assurance the Fund will make investments similar to those that may be described herein or be able to achieve comparable results or avoid losses. The Fund has not filed, nor does it currently intend to file, a prospectus or similar document with any securities regulatory authority. No securities regulatory authority has passed upon the value of an investment in a Note or Notes of the Fund, made any recommendations as to a purchase of any securities of the Fund, approved or disapproved of the offering of any securities of the Fund, or passed upon the adequacy or accuracy of this document. Any representation to the contrary is unlawful. This document does not constitute an offer or a solicitation in any jurisdiction to any person or entity to which it is unlawful to make such offer or solicitation in such jurisdiction. Prospective investors should make their own investigations and evaluations of the information contained herein. Prior to the closing of a private offering of a Note or Notes of the Fund, the Manager of the Fund will give investors the opportunity to ask questions and receive additional information concerning the terms and conditions of such offering and other relevant matters. Each prospective investor should consult its own attorney, business adviser, and tax adviser as to legal, business, tax and related matters concerning the information contained herein and such offering. Except where otherwise indicated herein, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. AN INVESTMENT IN THE FUND INVOLVES RISK, AND NUMEROUS FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF FUND TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION.