How Can You Buy Before Selling Your Current North Texas Home?

You’ve found the house you want.

There’s just one problem.

You still own the house you’re living in.

For a lot of North Texas homeowners, this is one of the biggest obstacles to making a move. You may have plenty of equity in your current home, but that equity isn’t sitting in your checking account. And you may not want to sell your house, move twice, rent temporarily, or hope the right home happens to be available after your sale closes.

The good news is that selling first isn’t always your only option.

Depending on your income, equity, existing mortgage, available assets and the loan program you’re using, there may be several ways to purchase your next home before your current home sells.

I’m Gary Bourgeois, a mortgage advisor, Texas real estate agent and retired Army veteran here in North Texas. One of the things I tell clients is that the order in which you buy and sell matters.

Before you put a sign in the yard, it’s worth finding out what your options actually are.

Can You Buy Another House Before Selling Yours?

Yes, potentially.

The bigger question is whether you can qualify for the new home while you still own the current one — and where the money for the new purchase will come from.

Those are two separate issues.

For example, you might have $250,000 of equity in your current house and still have difficulty buying first if most of that money isn't accessible until the home sells.

On the other hand, another homeowner may have sufficient income, savings or accessible equity to purchase the next home without waiting.

That's why I don't think homeowners should automatically assume:

“We have to sell this house before we can buy another one.”

Let's run the numbers first.

Check Out My Video Here

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Option 1: Qualify While Carrying Both Homes

The simplest solution may also be the one people overlook.

Some borrowers can qualify for the new mortgage while they still own their existing home.

In that situation, you could potentially:

1. Buy the new house.
2. Move on your own schedule.
3. Prepare the old house for sale after you've moved.
4. Sell the old property.
5. Decide what to do with the proceeds after closing.

The catch is qualifying.

Depending on the circumstances and loan program, the mortgage payment on your existing home may need to be considered along with the proposed payment on the new home.

For conventional financing, for example, Fannie Mae generally requires both the current residence's housing payment and the proposed residence's payment to be considered when the current residence is pending sale but won't close before the new purchase. There are circumstances in which the existing payment may not have to be counted, including when certain requirements involving an executed sales contract and financing contingencies are met.

You can read the current Fannie Mae guidance here:

[Fannie Mae — Qualifying Impact of Other Real Estate Owned]

This is exactly why “Can I afford two mortgage payments?” and “Can I qualify to buy before I sell?” aren't necessarily the same question.

Let me run the actual scenario.

Option 2: Use a Bridge Loan

A bridge loan, sometimes called a swing loan, is specifically designed to help bridge the gap between your current house and the next one.

Fannie Mae defines a bridge loan as a short-term loan secured by the borrower's principal residence that can allow the proceeds to be used toward closing on a new home before the existing home is sold.

[Fannie Mae — Bridge/Swing Loans]

That sounds perfect, but there is an important catch:

You still have to qualify.

Under Fannie Mae guidelines, for example, a lender generally must document the borrower's ability to carry the payments associated with the new home, current home, bridge loan and other obligations.

A bridge loan can therefore solve an equity-access problem, but it doesn't automatically solve an income or debt-to-income problem.

That distinction matters.

Video: What is a Bridge Loan?

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Option 3: Access Equity From Your Current Home

Another possibility may be accessing equity in the current home through a home equity product.

A home equity loan generally provides a lump sum secured by the equity in your home. A HELOC, or home equity line of credit, works more like a revolving line of credit secured by the home.

The Consumer Financial Protection Bureau has a good explanation of the difference:

[Consumer Financial Protection Bureau — Home Equity Loan vs. HELOC]

These aren't automatically the right solution. Borrowing against your existing house creates another obligation, and rates, payments, fees, qualification requirements and timing all matter.

But if you're sitting on substantial equity, it may be one of the options worth evaluating before deciding you must sell first.

Important: Texas has specific home-equity laws and lending requirements, so don't assume a strategy you read about online will work exactly the same way here.

Option 4: Put Your Current Home Under Contract Before the New Purchase Closes

There's a middle ground between “sell first” and “buy first.”

You may be able to put your existing house on the market, get it under contract, and coordinate the purchase of the next home before the old transaction actually closes.

This can be especially important from a mortgage qualification standpoint.

For example, under current Fannie Mae guidance, when a borrower's existing principal residence is pending sale but won't close before the new purchase, the existing housing payment generally must be included in qualifying. However, Fannie Mae provides an exception when the lender has an executed sales contract for the existing residence and confirmation that financing contingencies have been cleared.

[Fannie Mae — Current Principal Residence Pending Sale]

That doesn't mean every borrower or every loan follows the exact same rules.

It does show why timing the two transactions correctly can make a significant difference.

This is where having your mortgage strategy and real estate strategy working together becomes particularly valuable.

Option 5: Use Your Own Liquid Assets and Replenish Them After the Sale

Some homeowners don't actually need to borrow against the old house.

They may have enough money in savings, investments or other eligible assets to make the new purchase and then replenish those funds after selling the previous home.

Whether this makes financial sense is a different question.

If you're considering selling investments, pulling money from retirement accounts or moving a significant amount of cash, I recommend involving your financial advisor or tax professional before making that decision.

My job is to show you what the mortgage looks like.

Your financial and tax professionals can help you evaluate what makes sense within your larger financial plan.

What About Making an Offer Contingent on Selling Your Current Home?

That's another option.

A buyer can potentially make an offer contingent upon selling an existing property.

But from a negotiating standpoint, sellers may prefer an offer without a home-sale contingency, particularly when they're comparing multiple offers.

That doesn't mean you should remove protections just to win a house.

It means we should determine whether there's a way to structure your financing so you know before making the offerwhat you're capable of doing.

Video: Before You List Your Home, Do This

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What If Most of My Money Is Tied Up in My Current House?

This is probably the situation I see homeowners worry about the most.

Imagine your North Texas home is worth $700,000 and you owe $350,000.

On paper, that's substantial equity.

But you can't walk into the closing on another property and simply tell the title company, “Don't worry. I've got $350,000 sitting in my house.”

We have to determine how you're going to access the funds needed for the new transaction and whether you qualify for the resulting obligations.

That's where strategies such as a bridge loan, home equity financing, sale coordination or using other eligible assets may come into the conversation.

There isn't one universal answer.

Should You Sell First or Buy First in North Texas?

I would look at five things:

1. How much equity is in your current home?

2. How much do you owe on the existing mortgage?

3. Can your income support both properties temporarily?

4. How much cash or other eligible assets do you have available?

5. How competitive is the market for the type of home you're trying to buy?

The answer can be completely different for two families living on the same street.

One may be better off selling first.

The other may be able to buy first, move comfortably and sell the previous house afterward.

The goal isn't to force a particular loan product.

The goal is to figure out the cleanest way to get from House A to House B.

A North Texas Example

Let's say you've owned a home in Allen, McKinney, Plano, Frisco, Prosper or another North Texas community for several years.

You've built significant equity, but now you need more space, want to downsize, are relocating within DFW or simply found a house that fits your family better.

You don't necessarily want to:

• sell your current home,
• move everything into storage,
• find temporary housing,
• move again,
• and hope the right house comes along.

Before doing that, let's determine whether you can structure the financing differently.

Sometimes the numbers say sell first.

Sometimes they say buying first is completely realistic.

I'd rather know before the moving boxes come out.

The First Call Shouldn't Be After You Find the House

This is one of those situations where planning ahead makes a tremendous difference.

If you think there's a reasonable chance you'll move in the next 6–12 months, we can look at the numbers now.

There's no obligation to buy tomorrow.

We can determine:

• an estimated price range for the next home,
• how your existing mortgage affects qualification,
• approximately how much equity you have,
• whether you need the proceeds from your sale,
• whether a bridge or equity strategy is worth exploring,
• and whether buying first or selling first makes more sense.

Then when the right house shows up, you aren't trying to build the plan while everyone else is waiting for your offer.

Thinking About Buying Before You Sell?

If you own a home in North Texas and want to move but aren't sure how to handle the timing, let's run the scenario.

Bring me four numbers:

What you think your current home is worth.
What you still owe.
What you think the next home will cost.
Approximately how much cash you want to use.

From there, we can start figuring out your options.

I'm Gary Bourgeois, a mortgage advisor, Texas real estate agent and retired Army veteran serving homebuyers and homeowners in North Texas and beyond.

You don't need to have everything figured out before you call.

That's what the planning is for.

Too easy.

I’m Gary Bourgeois, a retired Army E8, Purple Heart recipient and mortgage advisor with Barrett Financial Group. I help veterans and other homebuyers understand their options and make better-informed home-financing decisions.

Gary Bourgeois | Mortgage Advisor
NMLS #2074070
Barrett Financial Group, NMLS #181106
318-840-1221

This information is for educational purposes only. Loan availability, qualification requirements and lending guidelines vary by borrower, property, loan program and lender. Consult your mortgage professional regarding your specific situation.