Buying a New Home Before Selling Your Current One: What You Need to Know
A question I get asked all the time is whether someone can buy a new house before selling their current one. The answer is yes — you absolutely can. You can still get pre-approved, shop for homes, and even put an offer in on another property before your current home has sold. But before doing that, it’s really important to understand what your financing plan looks like and what the risks are if you don’t end up selling your home.
The biggest issue usually comes down to the down payment. In most cases, homeowners are planning to use the equity from their current home as the down payment for the next one. If you end up selling your home (and this means with no conditions, like a condition of financing or a home inspection) you can even close on your new house before your old one by “bridging” the down payment, which means the bank temporarily lenders you the down payment.
So what happens if you can’t sell your old house?
If your offer on the new house is not conditional on the sale of your current home, you need to understand exactly where the down payment is going to come from if your old house doesn’t sell?
Here are some potential options:
- Pull the down payment from savings
- Borrow money from family members either from their savings or home equity line of credit
The last resort, is a private mortgage to be able to close on the new home.
The important thing to understand is that these options should be discussed BEFORE making an offer — not after. In some cases you might not have the back up options available or might not be happy with the options.
Another factor that makes this conversation important is that every market behaves differently. There are markets where homes sell quickly and confidently buying before selling may make sense. There are other times where the market becomes less predictable, and homes that everyone expected to sell immediately end up sitting longer than anticipated. At the same time, some sellers may not want to accept an offer that is conditional on the sale of another property because it creates uncertainty for them.
That means there’s no universal right answer to whether you should buy first or sell first. The best strategy depends on your finances, your comfort level with risk, your timeline, and the current market conditions in your area.
For some homeowners, buying first gives them flexibility and allows them to find the right home without feeling rushed. For others, selling first provides more certainty and reduces financial pressure.
The key is simply understanding the full picture before making decisions.