Buying your next home in Issaquah while you still own your current place can feel like a puzzle. You might want to make a strong offer quickly, but you also want to avoid stretching your cash or missing a great listing in the Seattle, Bellevue, and Everett corridor. You have options. By understanding how a bridge loan compares to a HELOC, you can choose the right tool for your move-up plan. This guide breaks down both choices, local factors in King County, and the steps to keep your timeline on track. Let’s dive in.
Bridge loan basics
A bridge loan is short-term financing that helps you buy a new home before you sell your current one. It often runs 3 to 12 months and is commonly interest-only during the term. You pay it off when your current home sells or when you refinance.
Most bridge loans are secured by your current home’s equity. Because the loan is short term and higher risk for the lender, underwriting is stricter. If you need to write a non-contingent offer in a competitive Issaquah neighborhood, a bridge loan can help you move quickly.
HELOC basics
A HELOC is a revolving line of credit secured by your current home’s equity. You draw funds as needed during a draw period, often 5 to 10 years, and you usually make interest-only payments at first. Later, you enter a repayment period with principal and interest.
HELOC rates are typically variable. Approval depends on your equity, credit, income, and debt-to-income ratio. If you already have a HELOC in place, it can be a flexible way to access cash for a down payment or closing costs.
Key differences to know
Choosing between a bridge loan and a HELOC depends on timing, cost, and how your lender will view the new debt when underwriting your next mortgage. Here are the key differences:
- Qualification: Bridge loans usually require more equity, lower DTI, and stronger credit. HELOCs may be easier to qualify for, though you still need sufficient equity and stable income.
- How you access cash: Bridge loans provide a lump sum or defined draws. HELOCs let you draw as needed up to your limit, which is helpful if your cash needs vary.
- Costs and fees: Bridge loans often have higher rates and upfront fees. HELOCs may offer lower closing costs but come with variable rates and possible annual fees.
- Rate risk: Bridge loan costs are more predictable over a short term. HELOC rates can rise over time, which may increase payments.
- Impact on mortgage approval: Both add to your DTI. Lenders count outstanding HELOC balances and required payments. They also review bridge loan terms closely and may require reserves or payoff at closing.
- Timing: Bridge loans can fund quickly, but appraisals and title work still take time. HELOCs can take weeks to open. If a HELOC is already in place, draws are typically fast.
Local Issaquah factors
Issaquah sits within a high-demand Eastside market that is influenced by major employment hubs. The pace of sales varies with season and economic trends. In competitive periods, sellers often favor non-contingent offers. A bridge loan can help you write that kind of offer. A HELOC provides liquidity, but sellers may still view cash-on-hand or bridge-backed offers as stronger.
Closing timelines in King County can be fast, sometimes under 30 days, if you coordinate inspections, appraisal, title, and financing. During busy seasons, scheduling can stretch. If your current home needs improvements to maximize sale price, account for prep time and any temporary overlap carrying two properties.
Property taxes are prorated at closing in King County. If either home has an HOA, include dues in your carrying cost plan and in your mortgage qualification calculations.
Which option fits you
Use these scenarios to match your situation to the right tool:
- You want a non-contingent offer and can handle a higher short-term cost, you have strong credit and substantial equity: a bridge loan often fits.
- You want flexible access to funds, plan to draw only what you need, and accept variable-rate risk: a HELOC may be better.
- You want protection from rising rates during your short move-up window and a defined cost: a bridge loan offers more predictability.
- You have limited equity or income to qualify: consider alternatives like a home-sale contingency, a rent-back agreement, or carefully timed simultaneous closings.
Risks and safeguards
Both options use your current home as collateral. Focus on risk control:
- Double carrying costs: You could carry two mortgages longer than planned. Build 3 to 6 months of reserves, price your current home competitively, and plan for seasonal slowdowns.
- Rate and payment shock with HELOCs: Rates can rise. Ask about fixed-rate conversion features, draw only what you need, and stress-test payments at higher rates.
- Lender policy differences: Mortgage lenders treat bridge and HELOC debt differently. Get written guidance on how the payment will be counted for DTI and reserve requirements.
- Upfront fees vs duration: Bridge loan fees can feel high if you only borrow for a short period. Compare total cost, including fees and interest, for your expected timeline.
- Market shifts: If your current home sells for less than expected, you still need to repay the loan. Use conservative list and net proceeds estimates.
Costs and rate risk
Before you choose, map the true cost:
- Bridge loan costs: Higher interest rate than a first mortgage, plus origination, appraisal, title, and administrative fees. The short term limits interest exposure but can make upfront costs meaningful.
- HELOC costs: Often lower to open, with possible annual or inactivity fees. Most are variable-rate, so payments can increase over time.
- Tax treatment: Interest may be deductible only if funds are used to buy, build, or substantially improve the home that secures the loan, based on current federal rules. Tax treatment can vary by situation. Consult a tax advisor for specifics.
Impact on approval
Your new mortgage lender will evaluate any bridge loan or HELOC when calculating your DTI and reserves. With a HELOC, the lender may count the actual payment on the outstanding balance or use a calculated payment based on the limit. With bridge loans, policies vary by loan program. Disclose plans early and ask for written underwriting direction so there are no surprises late in escrow.
Timing and logistics
A smooth Issaquah move-up timeline often looks like this:
- Pre-approval with your purchase lender that explicitly accounts for either a bridge loan or HELOC.
- Market prep for your current home, including light updates and staging if needed.
- Finalize financing choice and gather documents for the bridge or HELOC.
- Start home shopping with a clear budget and strategy for non-contingent vs contingent offers.
- Coordinate appraisal, title, and closing dates across both properties. In busy periods, book early to keep a fast close possible.
If you plan to open a new HELOC, allow several weeks. If you already have one, confirm that your lender will treat it as expected for DTI.
Smart next steps
Set yourself up for a confident decision:
- Get a current comparative market analysis for your Issaquah home.
- Obtain written pre-approval from the lender that will fund your purchase. Disclose bridge or HELOC plans and ask how they will count the payment.
- Speak with at least two lenders to compare rates, fees, and timelines for both products.
- Build a worst-case carrying plan for two homes, including mortgage, taxes, insurance, HOA, and utilities.
- Consult a tax advisor on interest deductibility and any potential tax impacts.
- Request written loan estimates and confirm a realistic schedule with your agent, escrow, and lender.
Questions to ask lenders
- What equity, income, and credit are required to qualify for your bridge or HELOC product?
- Is the bridge loan rate fixed, and what are all fees? For the HELOC, what is the index and margin, and are there annual or inactivity fees?
- How will you count the bridge or HELOC payment in DTI for my new mortgage?
- Can the HELOC convert to a fixed-rate second, and what does that cost?
- What is the timeline from application to funding for each option?
Questions to ask your agent
- Based on current data, what is a realistic time on market for my Issaquah home?
- Are non-contingent offers and rent-backs common in my target neighborhoods right now?
- Which staging or minor updates will shorten time on market and improve net proceeds?
Cost checklist
Use this quick list to keep your numbers tight:
- Mortgage(s), property taxes, insurance, HOA, and utilities for both homes.
- Estimated bridge or HELOC interest and all fees.
- Moving costs and any interim housing or storage.
- Cash reserves for 3 to 6 months of worst-case carry.
Alternatives to consider
If a bridge loan or HELOC does not fit, you can still move forward:
- Home-sale contingency in your offer, which may be less competitive in a seller market.
- Rent-back to or from the other party, if the other side agrees, to smooth timing.
- Simultaneous closings where sale proceeds flow directly into your purchase.
- Cross-collateralized or jumbo structures that your lender may offer.
- Personal or 401(k) loan as a short-term bridge, subject to plan rules and tax considerations.
How we can help
You deserve a plan that fits your life and your timeline. Our team pairs local Issaquah and Eastside expertise with hands-on coordination so you can compare options clearly, prepare your current home to sell, and write a competitive offer with confidence. We will help you build the right pricing, prep, and marketing strategy, coordinate with your lender and escrow, and manage the steps so you can focus on the move, not the stress.
If you are weighing a bridge loan vs a HELOC, let’s map the numbers, the timeline, and the offer strategy together. Ready to get started? Schedule your concierge consultation with The Sessoms Group.
FAQs
What is a bridge loan for Issaquah buyers?
- A bridge loan is a short-term, often interest-only loan secured by your current home that helps you buy before you sell, typically repaid when your home sells.
How does a HELOC affect my new mortgage approval?
- Lenders count the HELOC balance and required payment in your DTI, and some use a calculated payment based on the limit, which can reduce your purchasing power.
Can I open a HELOC after I’m under contract on a new home?
- You can, but opening a new HELOC can take weeks and may complicate underwriting or timing, so plan ahead and coordinate with your lender.
What if my current home takes longer to sell?
- Build reserves for several months of double carry, price competitively, and keep a conservative timeline to reduce the risk of extended overlap.
Are interest costs tax-deductible on these loans?
- Interest may be deductible only if funds are used to buy, build, or substantially improve the home that secures the loan, so confirm with your tax advisor.
How fast can I close in King County?
- Fast closings under 30 days are possible with tight coordination on inspections, appraisal, title, and financing, though busy seasons can slow scheduling.
Do HOA dues and taxes impact qualification?
- Yes, HOA dues and property taxes are part of your monthly obligations and affect your DTI and carrying cost plan.
Are rent-back agreements common on the Eastside?
- Rent-backs are used when both parties agree and they can help align sale and purchase timelines in competitive markets.
