How to Buy a House Before Selling Yours in Michigan

There are seven common ways to handle buying and selling a Michigan home at the same time. Five let you buy first: a bridge loan, a home equity line opened before you list, keeping the old home as a rental, buying with a larger loan and recasting, or a backup-offer program. The other two are the traditional routes: an offer with a home-sale contingency, or selling first. Which one fits depends on your equity, your income and how competitive the home you want is.

By David Keblaitis, NMLS #167980 · Cornerstone First Mortgage, LLC · Sources checked October 17, 2026

The options side by side

Ways to buy your next home before you sell your current one
Option	How it works	Best when	Watch out for
Bridge loan	How it worksA lender makes a short-term loan secured by the equity in your current home. The money goes toward buying the next home, and the bridge is paid off from your sale proceeds.	Best whenYou’ve found (or are about to find) the next home, you have solid equity, and you want to write an offer that doesn’t depend on selling first.	Watch out forIt can cost more than a standard long-term mortgage, so compare total costs, and until the old home is under contract lenders usually qualify you with both housing payments plus the bridge.
Home equity line (HELOC) opened before you list	How it worksYou open a line of credit on your current home while you still live there and haven’t listed it, draw on it for the next purchase, and pay it off when the old home sells. If you mainly need access to your equity rather than a full buy-before-you-sell plan, Cornerstone has HELOC options through its lending partners that can close in as few as seven days for qualified borrowers. Timing depends on title, the valuation and the lender.	Best whenYou’re planning months ahead and can set the line up before the house goes on the market, or you mainly need access to your equity rather than a full buy-before-you-sell plan.	Watch out forSome lenders won’t open a HELOC on a listed home, the rate is usually variable, the lender can freeze or reduce the line, and the balance generally must be paid off when you sell.
Offer with a home-sale contingency	How it worksYou write an offer that makes your purchase depend on your current home selling by an agreed deadline. No bridge or equity loan is involved, but you still need your regular mortgage financing and funds to close.	Best whenThe market is slow, sellers aren’t getting multiple offers, or you’re buying new construction with a long build.	Watch out forIn a multiple-offer situation, sellers often prefer offers that don’t depend on another sale, and some will ask for a kick-out clause that lets them keep marketing the home.
Sell first, then buy	How it worksYou sell the current home first, then use the proceeds for the next purchase, often with a short rent-back from your buyer or a temporary rental in between.	Best whenYou don’t have enough equity or income to carry two homes, or you want zero overlap risk.	Watch out forYou may move twice and pay for storage or a short-term rental, and you’ll be shopping on a deadline.
Keep the current home as a rental	How it worksYou keep the current home, lease it out, and qualify for the next mortgage with the expected rent counted against the old home’s payment.	Best whenThe old home would rent well, you want to keep it as an investment, and you can qualify with both properties.	Watch out forLenders only count part of the rent, and in Michigan renting the old home out ends the homestead exemption hold on it.
Buy with a larger loan, then recast	How it worksYou buy the next home with a larger mortgage (and whatever funds you have), then, after the old home sells, pay a lump sum toward the new loan and ask the servicer to recast the payment.	Best whenYou can qualify carrying both homes for a while and your new loan type allows a recast.	Watch out forNot every loan can be recast (FHA, VA and USDA loans generally can’t), and you still need funds to close on the next home.
Backup contract (Cornerstone’s Buy Before You Sell program)	How it worksBefore you buy, Cornerstone's Buy Before You Sell program can put a written backup purchase contract on your current home at a price agreed up front. You then list and sell on the open market. If the home hasn't sold within 180 days of closing on the new one, the backup buyer completes the purchase at the contract price. Because the sale of your current home is under contract before you close, lenders can leave its payment out of your qualifying debt, which is what makes a non-contingent offer possible for many families.	Best whenYou want a known floor under the sale and a cleaner offer, and your home meets the program’s property requirements.	Watch out forProgram terms, eligibility and any fees apply, and the backup price is set from a valuation and may be below what an open-market buyer would pay.

1. Bridge loan

How it works. A lender makes a short-term loan secured by the equity in your current home. The money goes toward buying the next home, and the bridge is paid off from your sale proceeds.

Best when. You’ve found (or are about to find) the next home, you have solid equity, and you want to write an offer that doesn’t depend on selling first.

Watch out for. It can cost more than a standard long-term mortgage, so compare total costs, and until the old home is under contract lenders usually qualify you with both housing payments plus the bridge.

Fannie Mae accepts a bridge (swing) loan as a source of funds for the next purchase, as long as it isn’t cross-collateralized against the new home and the lender documents that you can carry the payments on the new home, the current home and the bridge loan together.
Source: Fannie Mae Selling Guide B3-4.3-14, Bridge/Swing Loans (checked 2026-10-17)
Lenders count a bridge loan payment as debt when they qualify you. Fannie Mae waives that once the current home has an executed sales contract with financing contingencies cleared; Freddie Mac also accepts the buyer’s lender commitment in place of the cleared contingency.
Sources: Fannie Mae Selling Guide B3-6-05, Monthly Debt Obligations (2026-08-05); Freddie Mac Seller/Servicer Guide Section 5401.2 (effective 2026-08-05)
If your current home is under contract but won’t close before you buy, Fannie Mae has lenders qualify you with the housing payment on both homes. The current home’s payment can be left out once there is an executed sales contract and its financing contingencies have been cleared.
Source: Fannie Mae Selling Guide B3-6-06, Qualifying Impact of Other Real Estate Owned (2026-09-02)

This is the option this site is built around. See what lenders look at for a Michigan bridge loan or read bridge loan vs. HELOC.

2. Home equity line (HELOC) opened before you list

How it works. You open a line of credit on your current home while you still live there and haven’t listed it, draw on it for the next purchase, and pay it off when the old home sells. If you mainly need access to your equity rather than a full buy-before-you-sell plan, Cornerstone has HELOC options through its lending partners that can close in as few as seven days for qualified borrowers. Timing depends on title, the valuation and the lender.

Best when. You’re planning months ahead and can set the line up before the house goes on the market, or you mainly need access to your equity rather than a full buy-before-you-sell plan.

Watch out for. Some lenders won’t open a HELOC on a listed home, the rate is usually variable, the lender can freeze or reduce the line, and the balance generally must be paid off when you sell.

A home equity line of credit (HELOC) lets you borrow, spend and repay as you go using your home as collateral. It usually has a variable rate, the lender can freeze or reduce the line if your home’s value falls or your finances change, and it generally must be paid off in full when you sell the home.
Source: CFPB, What you should know about Home Equity Lines of Credit (2022-08)
Some lenders won’t open a new HELOC on a home that is listed for sale (Citizens Bank, for example, says its HELOC is not available for homes currently for sale), so it is safest to set one up before you list and to ask your lender about its rule.
Source: Citizens Bank HELOC disclosures (example lender policy) (checked 2026-10-17)
Freddie Mac treats proceeds from a loan secured by your own real estate, including a HELOC or a bridge loan, as eligible funds for closing, with proof the loan is secured by your property and that you received the money.
Source: Freddie Mac Seller/Servicer Guide Section 5501.3 (effective 2026-07-01)

3. Offer with a home-sale contingency

How it works. You write an offer that makes your purchase depend on your current home selling by an agreed deadline. No bridge or equity loan is involved, but you still need your regular mortgage financing and funds to close.

Best when. The market is slow, sellers aren’t getting multiple offers, or you’re buying new construction with a long build.

Watch out for. In a multiple-offer situation, sellers often prefer offers that don’t depend on another sale, and some will ask for a kick-out clause that lets them keep marketing the home.

Nationally in September 2026, homes received an average of 2.2 offers and 27% of sales were all cash, according to NAR’s REALTORS Confidence Index.
Source: NAR REALTORS Confidence Index, September 2026 survey (2026-10-13)

4. Sell first, then buy

How it works. You sell the current home first, then use the proceeds for the next purchase, often with a short rent-back from your buyer or a temporary rental in between.

Best when. You don’t have enough equity or income to carry two homes, or you want zero overlap risk.

Watch out for. You may move twice and pay for storage or a short-term rental, and you’ll be shopping on a deadline.

5. Keep the current home as a rental

How it works. You keep the current home, lease it out, and qualify for the next mortgage with the expected rent counted against the old home’s payment.

Best when. The old home would rent well, you want to keep it as an investment, and you can qualify with both properties.

Watch out for. Lenders only count part of the rent, and in Michigan renting the old home out ends the homestead exemption hold on it.

You can keep your current home as a rental and still buy the next one. Fannie Mae no longer accepts a lease for a departing residence: it documents the expected rent with an appraisal rent schedule (Form 1007) or at least three comparable rentals, counts 75% of that rent against the old home’s payment, lets any surplus offset only that payment, and adds any shortfall to your debts. Freddie Mac uses a signed lease plus proof of either two months’ rent or the security deposit and first month’s rent.
Sources: Fannie Mae Selling Guide B3-3.8-05, Rental Income: Departing Residence (2026-09-02); Freddie Mac Seller/Servicer Guide Section 5306.1 (effective 2026-04-12)
Renting the old home out ends the conditional rescission: the assessor denies it back to December 31 of the year before the lease.
Source: Michigan Treasury, Conditional Rescission of the Principal Residence Exemption (checked 2026-10-17)

6. Buy with a larger loan, then recast

How it works. You buy the next home with a larger mortgage (and whatever funds you have), then, after the old home sells, pay a lump sum toward the new loan and ask the servicer to recast the payment.

Best when. You can qualify carrying both homes for a while and your new loan type allows a recast.

Watch out for. Not every loan can be recast (FHA, VA and USDA loans generally can’t), and you still need funds to close on the next home.

A recast lets you pay a large lump sum toward your new mortgage (for example from your old home’s sale) and have the servicer recalculate the payment without changing the rate or term. Not every loan qualifies; FHA, VA and USDA loans generally can’t be recast.
Sources: Freedom Mortgage, What is a mortgage recast? (2026-05-27); PNC, What is a mortgage recast? (2025-04-01)
If your current home is under contract but won’t close before you buy, Fannie Mae has lenders qualify you with the housing payment on both homes. The current home’s payment can be left out once there is an executed sales contract and its financing contingencies have been cleared.
Source: Fannie Mae Selling Guide B3-6-06, Qualifying Impact of Other Real Estate Owned (2026-09-02)

7. Backup contract (Cornerstone’s Buy Before You Sell program)

How it works. Before you buy, Cornerstone's Buy Before You Sell program can put a written backup purchase contract on your current home at a price agreed up front. You then list and sell on the open market. If the home hasn't sold within 180 days of closing on the new one, the backup buyer completes the purchase at the contract price. Because the sale of your current home is under contract before you close, lenders can leave its payment out of your qualifying debt, which is what makes a non-contingent offer possible for many families.

Best when. You want a known floor under the sale and a cleaner offer, and your home meets the program’s property requirements.

Watch out for. Program terms, eligibility and any fees apply, and the backup price is set from a valuation and may be below what an open-market buyer would pay.

More on how these work: backup offers, explained.

Michigan rules that apply whichever option you pick

Owning two Michigan homes for a while doesn’t have to cost you the homestead (principal residence) exemption on the old one. With Treasury Form 4640 you can keep it for up to three years while the old home is for sale, not occupied, not leased and not used for business, once you have established your new Michigan principal residence. File by June 1 or November 1 of the first year and again each year by December 31.
Source: Michigan Treasury, Conditional Rescission of the Principal Residence Exemption (checked 2026-10-17)
Buying a Michigan home uncaps its taxable value: the year after the sale it resets to the state equalized value, so the new home’s property taxes can be noticeably higher than the seller paid.
Sources: Michigan Treasury, Transfer of Ownership (checked 2026-10-17); MCL 211.27a(3) (checked 2026-10-17)
When you sell, Michigan’s state real estate transfer tax is $3.75 for each $500 of value and the county tax is 55 cents for each $500 in counties under two million people (up to 75 cents in larger ones), and the seller pays both by law.
Sources: MCL 207.525 (State Real Estate Transfer Tax Act) (checked 2026-10-17); MCL 207.504 (county real estate transfer tax) (checked 2026-10-17); MCL 207.523 (seller is liable for the state tax) (checked 2026-10-17); MCL 207.502 (seller is liable for the county tax) (checked 2026-10-17)
MSHDA’s MI Home Loan is for first-time buyers (no home owned in the past three years) statewide and repeat buyers only in targeted areas. Outside targeted areas, anyone who has owned a principal residence in the last three years is not eligible. If you own a home now, have a participating lender check the new home’s address and your situation before you count on MSHDA.
Sources: MSHDA, MI Home Loan (checked 2026-10-17); MSHDA Targeted Areas flyer (2024-05-01)

Read the full Michigan buy-before-you-sell guide

Questions about buying before you sell

What is the easiest way to buy a house before selling yours?

If you have solid equity and enough income to carry both homes for a while, a bridge loan is usually the most direct route: it can be arranged when you are ready to buy and is repaid when the old home sells. If you are planning months ahead, a HELOC opened before you list can do the same job.

Can I buy a new house before selling mine without a bridge loan?

Yes. You can open a HELOC before you list, write an offer with a home-sale contingency, keep the old home as a rental, or buy with a larger loan and recast it after the sale. Each has trade-offs, shown in the comparison above.

Sources: CFPB, What you should know about Home Equity Lines of Credit (2022-08); Fannie Mae Selling Guide B3-3.8-05, Rental Income: Departing Residence (2026-09-02); Freddie Mac Seller/Servicer Guide Section 5306.1 (effective 2026-04-12); Freedom Mortgage, What is a mortgage recast? (2026-05-27); PNC, What is a mortgage recast? (2025-04-01)

Do lenders count my old mortgage when I buy before selling?

If your current home is under contract but won’t close before you buy, Fannie Mae has lenders qualify you with the housing payment on both homes. The current home’s payment can be left out once there is an executed sales contract and its financing contingencies have been cleared. Freddie Mac also lets lenders leave out the payment on a home that is pending sale when there is an executed sales contract; if that contract has a financing contingency, the file needs proof it was cleared or the buyer’s lender commitment.

Sources: Fannie Mae Selling Guide B3-6-06, Qualifying Impact of Other Real Estate Owned (2026-09-02); Freddie Mac Seller/Servicer Guide Section 5401.2 (effective 2026-08-05)

Can I keep my old house as a rental instead of selling it?

You can keep your current home as a rental and still buy the next one. Fannie Mae no longer accepts a lease for a departing residence: it documents the expected rent with an appraisal rent schedule (Form 1007) or at least three comparable rentals, counts 75% of that rent against the old home’s payment, lets any surplus offset only that payment, and adds any shortfall to your debts. Freddie Mac uses a signed lease plus proof of either two months’ rent or the security deposit and first month’s rent. In Michigan, leasing the old home also ends any conditional rescission of its homestead exemption.

Sources: Fannie Mae Selling Guide B3-3.8-05, Rental Income: Departing Residence (2026-09-02); Freddie Mac Seller/Servicer Guide Section 5306.1 (effective 2026-04-12); Michigan Treasury, Conditional Rescission of the Principal Residence Exemption (checked 2026-10-17)

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All loans are subject to credit approval, underwriting and property eligibility. Information on this site is educational and is not a commitment to lend, a loan approval or an offer of credit. Loan programs, terms and availability vary by lender and borrower and can change without notice. A bridge loan is short-term borrowing secured by your current home. Before you borrow, make sure you can carry the payments on both homes if your current home takes longer to sell than planned.