Chatsworth move-up buyers who need to close on a replacement home before selling the current one have two main bridging tools: a bridge loan or a HELOC. I'm Brian Cooper at eXp Realty, and this 2026 guide compares the two side-by-side — rates, qualification, timing, and the tradeoffs that determine which one fits a specific buyer's situation.
The Two Tools, Side by Side
Bridge loans are short-term first-position loans on the new property, secured by both the new home and the existing home as cross-collateral. They are designed specifically for the 6-12 month gap between buying the new home and selling the old one. Rates in 2026 run 9-13%.
HELOCs (home equity lines of credit) are revolving credit lines on the existing home, secured by a second mortgage. They can be drawn down as needed and repaid as funds become available from the sale of the existing home. Rates in 2026 run 8.5-11%, often tied to prime.
Qualification Differences
Bridge loans qualify on the equity in the existing home plus the down payment requirement on the new home. Income qualification is less strict because the loan is short-term and structured as a transition. Some bridge loan programs do not require income verification.
HELOCs qualify on the existing home's equity (typically 80-85% CLTV maximum) and on the borrower's debt-to-income ratio including the existing mortgage and the new mortgage. This makes HELOC qualification meaningfully harder for buyers who do not have enough income to service both mortgages simultaneously.
Rate and Cost Comparison
Bridge loan rate: 9-13% in 2026, plus 1-3 points origination, plus higher closing costs (typically $4K-$10K total). The shorter term means the absolute interest cost is contained even at the higher rate.
HELOC rate: 8.5-11% variable, typically tied to prime plus margin. Origination costs are usually lower ($500-$2,000). Interest accrues only on drawn amounts. If only used for 3-4 months, total interest cost can be lower than a bridge.
| Feature | Bridge Loan | HELOC |
|---|---|---|
| Rate (2026) | 9-13% | 8.5-11% |
| Origination | 1-3 points + $4K-$10K | $500-$2,000 |
| Income qual | Less strict | Both mortgages in DTI |
| Term | 6-12 months | 10-20 years draw |
| Position | First on new home | Second on existing |
| Typical use | Tight transition | Flexible bridging |
When Each Makes Sense
Bridge loan: when the buyer does not have enough income to qualify for both mortgages simultaneously, when the existing home has strong equity but limited income coverage, or when the timing is tight and HELOC setup time (often 30-45 days) is too slow.
HELOC: when the buyer can qualify on income for both mortgages, when there is time to set up the line in advance (ideally 60+ days before purchase), or when the bridging need is uncertain — HELOCs are flexible and can be left unused if not needed.
Cost Modeling on a Typical Chatsworth Move-Up
Example: Chatsworth seller has $700K equity in current home, buying replacement at $1.6M with $400K down. Needs $400K bridge financing for 4-6 months until current sells.
Bridge loan at 11%: 4 months interest = $14,667. Plus origination $4K-$10K. Total cost ~$22K.
HELOC at 9.5%: 4 months interest on $400K drawn = $12,667. Plus setup $1K. Total cost ~$14K.
HELOC wins by $8K assuming the buyer qualifies on income. If income is tight, bridge is the only option.
Tax Treatment
Interest on a bridge loan or HELOC may be deductible as mortgage interest if used to purchase or improve a primary residence, subject to the $750K combined mortgage cap under current federal tax law. Consult a CPA for your specific situation.
California state tax follows similar rules with different limits. The deductibility math affects effective cost meaningfully on high-bracket buyers and should be factored into the bridge-vs-HELOC decision.
Frequently Asked Questions
What's the difference between a bridge loan and a HELOC?
Bridge loan: short-term first-position loan on the new property, cross-collateralized with the existing home, designed for the 6-12 month transition. HELOC: revolving credit line on the existing home, second position, drawn down as needed and repaid as funds come from the sale. Different qualification, rates, and use cases.
Which is cheaper, bridge or HELOC?
HELOC is typically cheaper if the buyer qualifies. Lower rate (8.5-11% vs 9-13%), lower origination costs ($500-$2K vs $4K-$10K), and interest accrues only on drawn amounts. Bridge becomes the right answer when income qualification on both mortgages is not possible or timing is too tight for HELOC setup.
How long does HELOC setup take?
Typically 30-45 days from application to funding. Some lenders are faster (15-25 days) and some are slower. Set up the HELOC well before the contemplated move-up purchase — ideally 60+ days ahead — so the line is available when needed. Do not wait until escrow is open.
Does a HELOC affect my ability to qualify for the new mortgage?
Yes. Most lenders include the HELOC payment in debt-to-income calculation for the new purchase loan, even if the line is undrawn. This is one of the gating factors for HELOC use as a move-up tool. Bridge loans avoid this issue because they replace the existing mortgage rather than stacking on top.
What if my current home doesn't sell quickly?
Both tools have risks if the current home sale extends. Bridge loans become more expensive as the term extends and may not extend beyond 12 months. HELOCs continue to accrue interest at the variable rate. Build a backup plan — price the current home aggressively, refresh marketing, or prepare for short-term rental during the gap.
