How Do Bridge Loans Work?

How Do Bridge Loans Work?

Many lenders do not have set guidelines  nor debt-to-income ratios. Funding is guided by a more
 "make sense" underwriting approach. The piece of the puzzle that requires guidelines is the
long-term financing obtained on the new home.

Some lenders who make conforming loans exclude the bridge loan payment for qualifying purposes. This means the borrower
 is qualified to buy the move-up property by adding together the existing loan payment, if any,
on the buyer's existing home to the new mortgage payment
of the move-up home. The reasons many lenders qualify the buyer on two payments are because:

    Most buyers have an existing first mortgage on a present home.
    The buyer will likely close the move-up home purchase before selling an existing property


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