Want to buy your next home in Tarrytown without waiting for your current place to sell? In a fast-moving central Austin market, access to your equity can be the difference between winning and waiting. In this guide, you will learn how bridge loans and HELOCs work, what they cost, how they affect your approval, and how to pick the right fit for your move. Let’s dive in.
Bridge loan basics
A bridge loan is a short-term loan that helps you tap equity for a down payment on your next home before your current home sells. Terms often run 3 to 12 months, sometimes up to 18 months. Monthly payments are commonly interest-only, and you pay the principal when your current home sells or at maturity.
Most bridge loans are secured by your current home, your new home, or both. Lenders typically charge a higher interest rate than a standard mortgage plus an origination fee and closing costs. Some lenders also require a backup source of funds. This option is useful when you want one lump sum for your down payment and expect your Tarrytown home to sell quickly.
HELOC basics
A home equity line of credit, or HELOC, is a revolving line secured by your home’s equity. You can draw and repay during a draw period, which is often 5 to 10 years, then enter a repayment period of 10 to 20 years. Payments during the draw period can be interest-only depending on the product.
HELOC rates are variable and typically track the prime rate plus a margin. Upfront costs can be lower than a bridge loan, and some banks reduce closing fees for existing customers. HELOCs work well if you want flexible access to equity for a down payment or to cover carrying costs while you list and sell.
Bridge loan vs HELOC: key differences
Upfront costs and fees
- Bridge loans often include higher origination fees, commonly in the range of 0.5 to 2 percent of the loan amount, plus appraisal, title, and closing fees.
- HELOCs usually have lower upfront costs. You may still pay for an appraisal, and some lenders charge annual or early termination fees.
- Ask each lender for a written Loan Estimate so you can compare total costs line by line.
Rates and payments
- Bridge loans generally carry higher short-term rates. Payments are often interest-only, which makes costs predictable for a short window.
- HELOCs are variable-rate. Initial rates can be lower than a bridge loan, but they can rise if the index moves. That adds carry-cost risk if your sale takes longer than expected.
Underwriting and qualification
- Both products require sufficient equity. Lenders commonly want at least 15 to 20 percent usable equity after existing liens, and some prefer more for bridge loans.
- Debt-to-income treatment varies. For HELOCs, some lenders count the actual monthly payment if you have a balance. Others use a percentage of the line limit even with no balance. For bridge loans, lenders may count the interest-only payment, but policies vary.
- Expect lenders to verify credit, payment history, and reserves to cover several months of housing and carrying costs.
Lien position and title
- A HELOC is usually a second lien behind your first mortgage on the current home. A bridge loan can be a first or second lien, depending on your situation.
- In Texas, valid mortgage and HELOC liens can be enforced. Homestead protections do not prevent foreclosure by a lienholder.
Approval speed and funding
- Many HELOCs take 2 to 6 weeks to set up if an appraisal is required. If you already have a HELOC, you may be able to draw quickly.
- Bridge loan timelines vary by lender and customization. Some can fund in 1 to 4 weeks, but plan for 3 or more weeks to coordinate appraisals, title, and underwriting on both the buy and sell sides.
What matters in Tarrytown right now
Tarrytown is a high-demand, central Austin neighborhood where values are well above the metro median. Many owners have strong equity positions. That equity gives you options, but you still want the right structure for your timeline and risk tolerance.
Central Austin homes often sell faster than homes in outlying suburbs. If your listing is likely to move quickly, a short, predictable bridge loan can be a clean way to fund a down payment and close with confidence. If you prefer flexibility or expect a longer sale window, a HELOC can provide a buffer for carrying costs and unexpected needs during the draw period.
For high-value purchases, jumbo underwriting matters. Some lenders apply stricter reserve and debt-to-income rules for jumbo loans. Make sure you understand how your bridge or HELOC will be counted when qualifying for the new mortgage.
Manage risk when you buy before you sell
- Size conservatively. Borrow the minimum you need for your down payment and a realistic carry period, with a cushion for price adjustments or repairs.
- Choose your rate type with intention. If you want predictable short-term cost, a fixed bridge can be comforting. If you value flexibility and plan to repay quickly, a HELOC may work, but be mindful of rate movement.
- Line up backup plans. Have reserves, a contingency line, or family funds. Consider contract tools such as short contingency periods or a rent-back if available and appropriate.
- Price and present your Tarrytown home well. Strong pricing, staging, and marketing reduce days on market and limit how long you need short-term financing.
- Coordinate lien release in advance. Confirm how your lender and title company will handle payoff and release at closing.
- Shop lenders. Compare total cost, reserve requirements, and exactly how each product will be treated in your mortgage approval.
Which option fits your move?
- Choose a bridge loan if you need a lump-sum down payment now, want a strong, non-contingent offer, and expect your current home to sell quickly at a price that pays off the bridge.
- Choose a HELOC if you want flexible, reusable funds during a longer sales process or to cover staggered expenses, and you are comfortable with a variable rate.
- Either can work. Your equity amount, sale probability and timing, rate tolerance, and the way your new mortgage underwriter counts the payment will drive the best choice.
Quick comparison checklist
- Equity required and documentation
- Interest rate type and volatility
- Origination and closing fees, annual or exit fees
- Interest-only vs amortizing payments
- How the payment is counted in debt-to-income
- Lien position and payoff at sale
- Timeline to funding and simultaneous closing logistics
- Flexibility to draw, repay, and redraw
- Term length and any due-on-sale language
- Potential tax treatment of interest based on use
Tarrytown example (illustrative only)
Imagine your current Tarrytown home is worth $1,200,000 with a $400,000 mortgage, so you have roughly $800,000 in equity. You want to buy a $1,600,000 home and need about $320,000 for a 20 percent down payment. Here is how the short-term math could look.
- Bridge loan example: Borrow $320,000 for 6 months at 8.0 percent interest-only with a 1 percent origination fee. Estimated interest over 6 months is about $12,800. The origination fee is $3,200. Total short-term cost is roughly $16,000 plus appraisal, title, and closing costs.
- HELOC example: Open a $500,000 line and draw $320,000 at an example variable rate of 7.25 percent. Six months of interest is about $11,600, plus roughly $1,500 in closing fees and any annual fee. Total short-term cost is about $13,100, but the rate can change.
These figures are hypothetical and for illustration only. Actual rates, fees, and underwriting will vary. Larger loans in Tarrytown may fall under jumbo rules with additional reserve and qualification requirements.
Smart questions for Austin lenders
- Do you offer a bridge loan? What are the terms, interest rate options, and all fees including origination, appraisal, title, and any exit fee?
- How will this product be counted in my mortgage approval? For a bridge, will you use interest-only payments for debt-to-income? For a HELOC, what payment factor or actual payment will you use if the balance is zero or partially drawn?
- For a HELOC, what is the index and margin, the initial rate, any floor or ceiling, and the draw and repayment periods?
- What lien position will you take, and how exactly will payoff and lien release be handled at closing?
- How many months of reserves will I need after closing on both loans?
- How long from application to funding should I expect, and what could delay timelines?
You can also ask a local title company or Texas-licensed attorney how multiple liens are released at sale and whether simultaneous closings pose any complications in Travis County. A tax advisor can clarify if interest is deductible based on how you use the funds.
Next steps
If you are weighing a bridge loan versus a HELOC in Tarrytown, start by clarifying your equity, timeline, and risk tolerance. Then get written estimates from at least two Austin-area lenders that show total costs and how each product affects your mortgage approval. The right structure will help you write a stronger offer and move with confidence.
When you are ready to plan the buy-and-sell strategy, market your current home for a quick, clean sale, and coordinate timelines, connect with Local Color Realty Group. Our owner-led team brings design-forward marketing, neighborhood expertise, and steady guidance from list to close.
FAQs
What is the main difference between a bridge loan and a HELOC for Austin buyers?
- A bridge loan is a short-term lump sum with predictable interest-only payments, while a HELOC is a revolving line with a variable rate that you can draw and repay during a longer draw period.
How do bridge loans and HELOCs affect my mortgage approval on a new home?
- Lenders include the payment in your debt-to-income. For HELOCs, some use a payment factor on the credit limit even with no balance. For bridge loans, many use the interest-only payment, but policies vary.
Which option is better if I expect my Tarrytown home to sell fast?
- If the sale is likely to be quick, a bridge loan can provide a clear lump sum for your down payment and help you close with certainty on a short timeline.
When does a HELOC make more sense in Central Austin?
- A HELOC can be better if you want flexibility to draw and repay over time or expect a longer sale window, and you are comfortable with variable rates.
What are the biggest risks of using short-term equity financing in Travis County?
- Not selling as quickly as planned, rate increases on a HELOC, and carrying two properties longer than expected. Conservative sizing, strong pricing and marketing, and backup funds help reduce risk.
Are there Texas-specific issues I should know about with liens?
- Texas allows HELOCs and second-lien mortgages. Valid liens can be enforced, and homestead protections do not prevent foreclosure by lienholders. Coordinate lien payoff and release with your lender and title company.
