Bridge Loans

Bridge Loans in Minnesota and Wisconsin

First State Bank and Trust offers bridge loans to homebuyers across Bayport, Stillwater, Hudson, and the greater St. Croix Valley. If you've found your next home before selling your current one, a bridge loan can help you move forward without waiting on a sale to close first.

What is a Bridge Loan?

A bridge loan, sometimes called gap financing, is a short term loan that helps cover the gap between buying your next home and selling your current one. It's built for a specific moment: you've found the right house, but your equity is tied up in a home that hasn't sold yet. Rather than making a contingent offer or rushing your sale, a bridge loan lets you move on your timeline.

Terms are typically up to 12 months, with your rate locked in for the full term. Monthly payments are interest only, keeping your costs manageable while you carry two properties at once.

 How Does a Bridge Loan Work?

A bridge loan helps fund your next home purchase using the equity in your current home, even before that equity is officially available to you. For up to 12 months, the loan can cover part or all of your down payment on the new property. Terms vary by borrower, but it's standard to borrow up to 80% of your current home's value.

Here's what that looks like in practice: say your current home is valued at $400,000 and you still owe $150,000 on your mortgage. You could potentially access up to $170,000 in bridge financing (80% of value, minus what you still owe) to put toward your next purchase, well before your current home ever hits the market.

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 Bridge Loan vs. Gap Loan: What's the Difference?

You'll often see "bridge loan" and "gap loan" used interchangeably, and at FSBT, they refer to the same product. Both describe short term financing designed to cover the transition period between selling one home and buying another. If you've seen either term while researching, you're in the right place.

This is different from a HELOC (home equity line of credit), which is typically a longer term, revolving line of credit rather than a short term loan tied to a specific sale timeline. A loan officer can help you determine which option fits your situation.

During the loan term, your monthly payment is interest only at a fixed rate. Once you sell your current home, the equity from that sale is used to pay off the bridge loan in full. There's a maturity date by which the loan must be repaid, but if your home sells sooner, you can repay the loan at any time with no prepayment penalty.

Bridge Loan Requirements at FSBT

To get started with a bridge loan, you'll generally need:

• Sufficient equity in your current home, typically enough to support borrowing up to 80% of its value.
• An active or planned listing for your current home.
• Standard mortgage qualification documentation (income, credit, and asset verification).
• A signed purchase agreement or offer on your next home, in most cases.
• Every situation is different, and a loan officer can walk you through exactly what applies to yours.

A bridge loan uses the equity in your current home to help fund the purchase of your next one, before your current home sells. You make interest only payments during the loan term, typically up to 12 months, and repay the loan in full once your current home sells.

At FSBT, these terms refer to the same product. Both describe short term financing that covers the transition period between selling one home and buying another.

Terms vary, but it's standard to borrow up to 80% of your current home's value, minus any amount still owed on your existing mortgage.

How long does a bridge loan last?

Bridge loans at FSBT typically run up to 12 months, with your rate locked in for the duration.

Do I need to qualify for two mortgages at once?

In many cases, yes, since you'll temporarily be carrying your current mortgage alongside the new one. A loan officer can review your specific financial picture and walk you through what qualifying looks like.

Can I use a bridge loan if I haven't sold my current home yet?

Yes. That's exactly the situation a bridge loan is designed for. It lets you move forward on a new home purchase before your current home closes.

Does FSBT offer bridge loans in both Minnesota and Wisconsin?

Yes, FSBT offers bridge loans to homebuyers throughout Minnesota and Wisconsin, including Bayport, Stillwater, Hudson, and the surrounding St. Croix Valley.