Can You Buy a House Before Selling Your Own?

Many homeowners aim to buy a new home before selling their current property. While this transition presents financial and logistical complexities, it is often feasible with diligent planning and understanding available strategies. This process requires assessing your financial position, knowing interim financing options, and effective real estate negotiation.

Assessing Your Readiness to Buy

Before searching for a new home, evaluate your financial standing to understand your buying power. First, calculate your home equity by subtracting your outstanding mortgage balance and any other property loans from its estimated market value. This equity can be leveraged for your next purchase.

Next, review your personal financial health, including your credit score and debt-to-income (DTI) ratio. Lenders use DTI, which compares monthly debt payments to gross monthly income, to assess your ability to manage additional debt. Most mortgage programs prefer a DTI ratio of 43% or less, though some lenders may approve higher ratios based on other factors.

Obtain a mortgage pre-approval for the new home to estimate how much a lender will finance. The pre-approval process requires submitting financial documents like recent pay stubs, W-2s from the past two years, bank statements, and existing debt details. This letter strengthens your offer when you find a suitable property.

Estimate all associated costs for both buying and selling properties. Sellers’ costs include real estate agent commissions (5% to 6% of sale price) and closing costs (1% to 3% of sale price). Buyers’ closing costs are 2% to 5% of the loan amount, covering fees like loan origination, appraisal, and title insurance. Budget for potential double mortgage payments, property taxes, and moving expenses.

Securing Interim Financing

Financial mechanisms can bridge the gap between buying a new home and selling an existing one. A bridge loan is a short-term loan secured by your current home, providing immediate funds for a down payment or full purchase of a new property. Bridge loans have terms from six to twelve months, sometimes up to three years, and often involve initial interest-only payments. They are repaid in a lump sum once the original home sells. While offering quick capital access, they have higher interest rates than traditional mortgages.

Another approach uses home equity through a Home Equity Line of Credit (HELOC) or a Home Equity Loan (HEL). A HELOC is a revolving line of credit, allowing you to borrow funds as needed up to a predetermined limit, with interest paid only on the amount drawn. HELOC interest rates are variable; as of August 2025, national averages are around 8.12%.

A Home Equity Loan provides a lump sum upfront with a fixed interest rate and a consistent repayment schedule. National average interest rates for home equity loans as of August 2025 are approximately 8.23%. Both HELOCs and HELs allow homeowners to leverage existing equity for a new home’s down payment or other upfront costs. The choice depends on whether a borrower prefers a lump sum or flexible fund access.

Individuals with substantial liquid assets can use existing cash reserves to fund a new home purchase without additional financing. This method avoids interest payments and loan applications. However, it requires significant savings many homeowners may not have after other financial obligations.

Some buyers may qualify for a non-contingent mortgage on the new home, carrying two mortgage payments simultaneously. This strategy requires a strong financial profile, including a low debt-to-income ratio and sufficient reserves to manage both housing expenses until the first property sells. Lenders assess income, assets, and creditworthiness to ensure the borrower can handle this financial burden.

Navigating the Purchase Process

After assessing financial readiness and securing interim financing, navigate the real estate market strategically. One approach is a “sale of home contingency” offer on a new property. This offer makes the purchase conditional on your current home’s sale by a specified date. While providing a safety net, it can make your offer less attractive to sellers in competitive markets due to uncertainty and potential delays. Sellers may include a “kick-out clause,” allowing them to accept another offer if you cannot remove your contingency quickly.

If interim financing is secured, a buyer can present a non-contingent offer, which is more appealing to sellers. This demonstrates a stronger financial position and reduces seller risk, potentially giving the buyer an advantage in bidding wars. A non-contingent offer signifies the buyer has funds available to complete the purchase regardless of their current home’s sale status. This can expedite the transaction and make the offer more competitive.

Negotiating flexible closing dates for both the new home purchase and old home sale can align timelines. Buyers can request an extended closing period for their new home, allowing more time for their current property to sell. Sellers can negotiate a longer closing period for their existing home, ensuring sufficient time to move into their new residence. Staggered closings minimize carrying two mortgages or needing temporary housing.

Consider a rent-back agreement, where the seller rents their current home from the buyer for a short period after closing. This arrangement, typically lasting a few days to 60 days, allows the seller to receive sale proceeds before moving into their new property. Rent-back terms, including rental rate and duration, are formalized in a separate lease agreement. This provides a seamless transition, allowing sellers to avoid moving twice and ensuring access to sale funds for the new purchase.