Buy Before You Sell in Silicon Valley: Bridge Loans, HELOCs and Contingent Offers

If you own a home and want to buy the next one, there are three basic paths: sell first, buy first, or tie the two together with a contingent offer or matched closings. Each changes what you can qualify for, how you fund the down payment and how strong your offer looks. Here’s how they work in California, with the lending rules that decide most of it. This is general information; your lender, your tax advisor and the current contract forms have the final word.

The three paths

• Sell first. You carry one mortgage and use the sale money for the down payment. The catch is where you live in between, which a rent-back or a short-term rental can cover.
• Buy first. You can make a clean, non-contingent offer, but you need a way to fund the down payment and to qualify while you still own the old home.
• Contingent or matched closings. Your purchase depends on selling your home, or the two escrows are timed to close together. It avoids two homes at once but gives the seller less certainty.

Qualifying while you still own your current home

For conventional loans sold to Fannie Mae, its Selling Guide, updated September 2, 2026, sets the rules:

• Both payments count until the old home sells, unless the lender has an executed sales contract for it and confirmation that the buyer’s financing contingencies are cleared.
• A bridge loan’s payment counts too, with the same exception.
• Keeping the old home as a rental can help: 75% of its documented market rent can offset that home’s own payment, but not other debts. Under the September 2026 rules, a lease agreement isn’t accepted for this, and owners with less than a year of landlord experience need six months of that home’s payments in reserve.
• The debt-to-income limit is up to 50% for loans approved through Fannie Mae’s automated system.

Many Silicon Valley purchases need jumbo loans above the conforming limits, and those follow each lender’s own rules, so get a written pre-approval that spells out how your current home is treated. See 2026 loan limits and our Mortgage Lab.

Bridge loans

• What they are. Federal lending rules describe a bridge loan as a temporary loan of 12 months or less, such as one used to buy a new home before selling the current one.
• How they’re secured. They are usually secured by equity in the current home. Fannie Mae doesn’t allow a bridge loan used toward a purchase to be secured by the new home, and the lender must show you can carry the new home, the current home, the bridge loan and your other debts.
• The risk. If the old home sells late or for less than planned, you carry two homes and the bridge loan longer. Rates, fees and terms vary by lender, so compare written quotes.

A home equity line of credit

• How it works. A HELOC on your current home can fund a down payment. According to the federal Consumer Financial Protection Bureau, rates are usually variable, closing costs and fees may apply, and the lender can freeze or reduce the line if your home’s value falls.
• When you sell. The CFPB says you are generally required to pay off a HELOC in full when you sell, so weigh the setup costs if a sale is close.
• Timing. Lender policies on homes that are listed for sale vary, and some won’t open a line on one. If a HELOC is part of your plan, talk with lenders before you list, and answer every application question accurately.

Contingent offers in California

• The contingency. The California Association of REALTORS® purchase agreement lets a buyer make the purchase contingent on selling their current home, using C.A.R.’s Form COP.
• The default terms. In the version of the form we reviewed, the buyer has 17 days to get their home into escrow unless the parties write in another number. The seller can keep marketing for back-up offers and, after accepting one, give notice; the buyer then has 3 days to remove the contingency and show funds to close, or the seller may cancel. An optional “delayed right” keeps the seller from sending that notice for a set period.
• The seller’s version. C.A.R.’s Form SPRP lets a seller make their sale depend on finding a replacement home.
• Check the current form. Your agent will use the current C.A.R. forms, and every time period is negotiable.

Rent-backs

If you sell first and need time to move, C.A.R. points to separate occupancy agreements: Form SIP when the seller stays less than 30 days after closing, and Form RLAS for 30 days or more. C.A.R. also tells buyers to ask their lender how the seller’s stay affects the buyer’s loan.

Paying for prep before you sell

According to Compass, its Concierge program pays for pre-listing work such as staging, painting, flooring and landscaping, with nothing due until closing. Compass says repayment is due when the home sells, when the Compass listing agreement ends or 12 months after the start, that fees or interest may apply depending on the state, that terms vary by market and that eligibility isn’t guaranteed. The loans come from a licensed third-party lender; Compass says it is not a lender. Our Prep Lab builds a prep budget and countdown.

Taxes to ask about

• The home sale exclusion. According to the IRS, you can generally exclude up to $250,000 of gain, or $500,000 on a joint return, if you owned and lived in the home at least two of the last five years.
• If you rent out the old home. The IRS says depreciation allowed for rental use can’t be excluded later, so renting first can change the tax on the eventual sale.
• Prop 19. Homeowners 55 and older can move their property tax base to a replacement home in California, bought within two years before or after the sale. See our Prop 19 guide.

Ask a CPA or the county assessor before you choose a path for tax reasons.

Run your numbers

Our Leverage Lab and Budget Lab help you test what you can carry, the Offer Lab helps shape the offer, and the Seller Playbook and Buyer Playbook walk through each side.

Planning a move-up? Call the Boyenga Team at (408) 373-1660 or (650) 383-8606. Commissions are negotiable, and we offer bundled services, so ask us what’s included.