For many homeowners, buying a new home and selling their current home at the same time can feel like trying to solve two major problems at once.
You may find the perfect new home before your current property is sold. Or perhaps you want to purchase first so you can move without rushing to sell.
The good news is that buying a new home before selling your current one can be possible, but it requires careful planning. Your income, existing mortgage, available assets, debt obligations, equity, and the type of financing you use can all affect whether this strategy makes sense.
Here’s what homeowners should know before deciding whether to buy first or sell first.
Can You Buy a Home Before Selling Your Current Home?
Yes, some homeowners can qualify to purchase another property before selling their existing home.
The key question is whether you can qualify for the new mortgage while still carrying the financial obligations associated with your current home.
Your lender may consider factors such as:
- Your income
- Existing mortgage payment
- Proposed new mortgage payment
- Other monthly debts
- Credit profile
- Available assets
- Down payment
- Cash reserves
- Equity in your current home
- Expected proceeds from the sale
The specific requirements depend on the mortgage program and your individual financial circumstances.
Because mortgage lenders evaluate the entire financial picture, homeowners should discuss their situation with a lender before assuming they need to sell first.
Why Would Someone Buy Before Selling?
There are several reasons a homeowner may prefer to purchase the next property first.
You found the right home
Sometimes the biggest reason is simple: you found a home you don’t want to lose.
If you sell your current home first, you may have to find temporary housing while searching for another property.
Buying first can give you more flexibility when making the transition.
You want to avoid temporary housing
Selling first can create a gap between the sale of your existing property and the purchase of your next home.
That could mean staying with family, renting a property, or paying for temporary accommodations.
Buying first may allow you to coordinate the move more directly.
You need time to move
Some homeowners don’t want to rush through the moving process.
Buying first can potentially give you additional time to prepare your current property for sale, organize your belongings, and coordinate the move.
Your current home has significant equity
If you’ve owned your home for several years, you may have built substantial equity.
That equity could become an important part of your overall homebuying strategy, depending on how you access it and what financing options are available.
What Makes Buying Before Selling More Difficult?
The biggest challenge is that you may temporarily have two housing payments.
Imagine you currently have:
- Existing mortgage payment: $1,800 per month
- New mortgage payment: $2,500 per month
Until your current property sells, you may potentially need to handle both payments, in addition to other expenses such as property taxes, insurance, utilities, and maintenance.
That’s why qualifying for the new mortgage is only one part of the decision.
You also need to determine whether the temporary financial burden is comfortable for your budget.
How Does Your Existing Mortgage Affect the New Mortgage?
Your current mortgage doesn’t simply disappear because you intend to sell your home.
Until the property is sold and the existing mortgage is paid off, it may remain part of your financial obligations.
This is important when your lender evaluates your ability to qualify for the new loan.
Depending on the circumstances, there may be different ways lenders can account for the existing property, particularly when a sale is already pending.
Your loan officer can explain how your specific situation will be evaluated.
What If You Need the Equity From Your Current Home?
This is one of the biggest issues homeowners face when buying before selling.
You may have substantial equity in your current home, but equity isn’t the same thing as cash sitting in your bank account.
For example, imagine:
Current home value: $400,000
Existing mortgage balance: $200,000
Estimated equity: $200,000
That doesn’t necessarily mean you can immediately use the entire $200,000 toward your next purchase.
Selling expenses, closing costs, existing liens, and other transaction expenses can reduce the amount of money you ultimately receive.
You’ll want to estimate your net proceeds, rather than simply looking at your home’s estimated equity.
What Are Your Options for Buying Before Selling?
Depending on your financial situation, there are several potential strategies worth discussing with your mortgage professional.
1. Qualify While Keeping Your Current Home
Some homeowners may have enough income and assets to qualify for their next mortgage without selling their current property first.
This can provide the simplest transition because you don’t necessarily need to coordinate the two transactions as closely.
However, you need to make sure carrying both properties temporarily fits within your budget.
2. Make an Offer Contingent on Selling Your Current Home
Another possibility is making your purchase offer contingent on the sale of your existing property.
A home sale contingency can provide additional protection because your purchase may depend on successfully selling your current home.
However, sellers may be less likely to accept a contingent offer, particularly in a competitive market.
Your real estate agent can explain how this strategy may affect the strength of your offer.
3. Sell Your Current Home First
Selling first remains the most straightforward option for many homeowners.
Once your current home sells, you know how much money you have available for your next purchase and no longer have the existing mortgage payment.
The downside is that you may need temporary housing if you don’t find your next home immediately.
4. Explore a Bridge Loan
A bridge loan may allow a qualified homeowner to access short-term financing to help cover the transition between selling one property and purchasing another.
This type of financing isn’t appropriate for everyone and has its own requirements, costs, and risks.
If you’re considering a bridge loan, ask your mortgage professional whether it’s available and appropriate for your situation.
5. Explore Other Ways to Access Existing Home Equity
Depending on your circumstances, there may be other options for accessing equity from your current home.
These could include certain home equity financing options or other strategies.
However, adding debt against your existing property can affect your overall financial picture, so it’s important to understand the costs and repayment requirements before moving forward.
What If You Buy Before Selling and Your Home Doesn’t Sell Quickly?
This is one of the biggest risks of buying first.
You may expect your current property to sell within a few weeks, but the actual timeline can vary.
While waiting for the sale, you could potentially be responsible for:
- Two mortgage payments
- Two sets of property taxes
- Two homeowners insurance policies
- Utilities for two properties
- Maintenance on two properties
- Additional moving and storage costs
Before buying first, make sure you have a realistic plan for handling these expenses if the sale takes longer than expected.
How Much Cash Should You Have Before Buying First?
There’s no universal dollar amount that works for every homeowner.
Instead, consider how much money you’ll need for the entire transition.
Your budget may need to account for:
- Down payment
- Closing costs
- Prepaid taxes and insurance
- Moving expenses
- Home repairs
- Emergency reserves
- Temporary double housing costs
Having additional reserves can provide a financial cushion if your existing home takes longer to sell.
What Happens If You Find a Home Before Your Current Home Is Sold?
Don’t automatically assume you need to walk away from the opportunity.
Start by speaking with your mortgage professional.
They can review your income, existing debts, assets, current mortgage, and proposed purchase to determine what financing options may be available.
At the same time, talk with your real estate agent about the purchase contract and whether a sale contingency, extended closing, or another strategy could make sense.
The earlier you understand your options, the more prepared you’ll be if the right property becomes available.
Should You Buy First or Sell First?
There isn’t one answer that works for every homeowner.
Buying first may make sense if:
- You can comfortably qualify while carrying your current home
- You have sufficient cash reserves
- You have significant equity
- You found a property that fits your needs
- You want more flexibility during the move
- You have a clear plan for selling your existing home
Selling first may make more sense if:
- You need the sale proceeds for your next down payment
- Carrying two mortgages would strain your budget
- You have limited cash reserves
- Your current home may take longer to sell
- You want to know your exact purchasing budget before shopping
The best choice depends on your financial situation and the local housing market.
How to Prepare Before Buying Your Next Home
If you’re considering buying before selling, start planning before you make an offer.
Know your current home’s estimated value
Work with your real estate professional to get a realistic idea of what your current home could sell for.
Don’t base your plans solely on online estimates.
Estimate your net sale proceeds
Your home’s value isn’t necessarily the amount you’ll receive after selling.
Account for your mortgage payoff and applicable transaction expenses when estimating how much cash you’ll actually have available.
Review your current mortgage
Know your current balance, monthly payment, and other relevant loan details.
Get pre-approved for the next purchase
A pre-approval can help you understand what you may qualify for and what your potential payment could look like.
Build a backup plan
Ask yourself what happens if your current home doesn’t sell for 30, 60, or even 90 days.
Having a backup plan can prevent an unexpected delay from becoming a financial emergency.
Buying and Selling at the Same Time Requires Coordination
Buying one home while selling another involves more than simply getting two transactions approved.
You’ll potentially have:
- A mortgage lender
- A real estate agent for the purchase
- A real estate agent for the sale
- A title or closing company
- An appraiser
- An inspector
- A buyer for your existing home
- A seller for your new home
Communication between everyone involved can make the process much easier.
Your lender should understand your timeline and your plans for the existing property so they can help you evaluate the financing side of the transaction.
Final Thoughts
Buying a home before selling your current one can give you more flexibility, but it also introduces additional financial considerations.
The biggest question isn’t simply “Can I buy before I sell?”
It’s:
“Can I comfortably manage the transition if my current home doesn’t sell as quickly as expected?”
Understanding your income, existing mortgage, available assets, home equity, potential sale proceeds, and financing options can help you make a more informed decision.
If you’re thinking about moving to a new home but haven’t sold your current property yet, talk with a mortgage professional early. Understanding your options before you find your next home can make it much easier to move quickly when the right property comes along.
