Bridge Financing vs a Line of Credit
Program and regulatory figures verified September 17, 2026. Details change; confirm your scenario with us.
This is the comparison every move-up buyer asks for. In Texas it has a shorter answer than the national articles suggest.
The comparison as it usually runs
| Line of credit | Bridge financing | |
|---|---|---|
| Shape | Revolving, draw as needed | Short-term, purpose-built |
| Exit | Open-ended | The sale of the departing home |
| Best when | You want flexibility over time | You need a defined amount for one transaction |
| Set-up | Often lighter | Underwritten around the sale |
Why the Texas answer is shorter
Because one side of the comparison can be unavailable. Fannie Mae states it plainly in B5-4.1-03: HCLTV ratios do not apply to Texas Section 50(a)(6) loans because subordinate HELOC financing is prohibited. If a Section 50(a)(6) loan is in place on your homestead, you are not adding a line of credit behind it.
Both options also sit under the same ceiling. Article XVI, Section 50(a)(6)(B) measures the new credit plus all other debt secured by the homestead against 80 percent of fair market value. Whichever instrument you choose, the room available is the same room.
The option that beats both
Qualifying without borrowing against the old house at all. If your income supports both payments, buy and recast after the sale. If it does not quite, rental income from the departing home under Fannie Mae B3-3.1-08 frequently closes the gap, documented with a fully executed current lease and a Form 1007 comparable rent schedule.
In Texas those two routes get used more than the borrowing routes, and the homestead rules are the reason. See all three structures.
Your real estate agent handles the purchase paperwork and the offer itself. We handle the money: what you qualify for, how the equity gets used, and what the payment looks like.
Frequently asked questions
Can I get a HELOC behind my mortgage in Texas?
Texas does permit home equity lines, but you cannot place a subordinate HELOC behind a Section 50(a)(6) home equity loan. Fannie Mae notes that HCLTV does not apply to those loans for exactly that reason. The stacking approach common in other states is not available once a 50(a)(6) loan is in place.
Which is better for buying before selling, a bridge or a line of credit?
Bridge financing is built for a single transaction with a defined exit, which fits a move-up purchase more naturally. A line of credit suits ongoing flexibility. In Texas the choice is often narrowed by law before preference enters into it, and a third route that avoids borrowing against the old house entirely is frequently better than either.
Is there a way to buy first without borrowing against my current home?
Two. Qualify carrying both payments and recast the new loan once the sale proceeds arrive, or rent the departing home and use that rental income to qualify. Both avoid the Texas homestead ceiling completely, which is why they are used so often here.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Texas homestead lending rules, property tax treatment, and loan limits change and depend on your facts; your real estate agent handles the purchase paperwork and your CPA or a Texas attorney handles legal and tax questions. Loans are subject to borrower and property qualification.