Should You Sell Your Current Home Before Buying a Bigger Home?

You’re ready for a bigger home, but you’re stuck in a catch-22. If you sell first, you might end up scrambling to find temporary housing while your family lives out of boxes. If you buy first, you could be stuck carrying two mortgages while your current home sits on the market longer than expected.

Meanwhile, the market does not wait for you to decide. Interest rates are shifting, inventory is changing, and every day you delay could mean missing the perfect home or watching your current home’s value fluctuate. .

This guide will help you evaluate your risk tolerance to let you know when to stay out of the home buying process. Here are the factors to consider and questions to walk through so you feel confident when you are selling your current home to move into a bigger one.

Advantages of Selling Your Current Home First

There are several advantages is selling your current house before you start the buying process of your next one. This option is usually preferred by people who want financial stability and don’t mind finding temporary housing.

Here are a few reasons to consider the sell-first approach:

• You have financial clarity: With the profits of your home sale in the bank, you will know exactly how much equity you have available for your next purchase. You can decide on your next down payment and set aside funds for moving expenses. 
• You are in a stronger negotiating position: Cash or near-cash offers are usually more desirable to sellers. They don’t have to worry about financing falling through and can set an aggressive closing date. 
• You won’t have to offer a home sale contingency: Sellers also prefer buyers without home sale contingencies because there is less risk that the deal will fall through or get delayed.
• You avoid dual mortgage payments: You can eliminate the financial strain of carrying two mortgage payments simultaneously if you are waiting for one house to sell. 
• You can enjoy a simplified financing process: Your mortgage lender can pre-approve you based on actual proceeds rather than estimated home values.
• There is no market timing pressure: You can take time to find the right property after you sell, as long as you are comfortable in your temporary housing situation. 

It takes more than a month to sell a house, with the average sale time ranging from 13 days to 69 days depending on the location and market. Offers with mortgages will take longer to close on average than cash deals. Keep this information in mind as you look at the calendar year and plan your sale and home purchase.

Advantages of a Home Purchase Before Selling 

While selling your home first can give you a clear picture of your down payment and budget, there are some advantages to purchasing your next home before you sell.

Here are a few reasons some homeowners do this. 

• You can avoid missing your dream home: Waiting to sell could mean losing homes to other buyers. In a competitive market, you might have to place multiple offers and enter bidding wars. Buying first allows you to act when you find a home you love. 
• There is an easy transition from one house to another: You can avoid short-term housing and double moves by seamlessly transitioning from one house to the next. This stability is particularly valuable if you have school-age children.
• You have better home staging opportunities: According to the National Association of Realtors (NAR), 35% of buyer’s agents say that home staging increased the dollar value offered, while 30% of seller’s agents say the sale time was faster. A vacant home is ready for staging. 
• You can take advantage of a favorable market: This allows you to enter the housing market on your terms, when the time is right, not after you sell your home. 
• You can renovate your new home: Take your time updating the floors and repainting before you move in. This also gives you time to make repairs to your previous property before you sell it.

You also might be able to appeal to buyers by promoting an assumable mortgage. Some buyers might be eager and able to take on your favorable interest rate.

Housing Market Conditions and Their Impact on Your Decision

Each seller has their own preferences for whether they buy first or sell first. However, if you aren’t sure which route to take, evaluate the real estate market in your area.

If you live in a competitive market for buyers, you might be able to purchase your next home and feel confident that your current house will sell quickly. However, other market trends might make you want to sell your house first.

Interest Rate Environment

Interest rates have held steady at 6.5% to 7% over the past few years and are expected to remain stable through the rest of 2025. Real estate analysts estimate there is a 2.6% chance the Federal Reserve would cut interest rates this summer. 

Interest rate stability makes it easier to predict your monthly mortgage payments. You can decide whether you can afford to handle two mortgages at the same time by buying your next house first. 

“Selling your home before buying a larger home depends on your financial ability to carry both homes at the same time,” says Mike Constantine at the REMAX Alliance in Trinity, Florida. “If you aren’t sure you can handle this financial responsibility, talk to your lender and ask them to calculate your debt-to-income ratio. This will give you an idea for your budget.”

Inventory Trends

Housing inventory continues to climb across the country, reaching 1.08 million active listings in January 2025, up from less than 350,000 listings in January 2022. More inventory means buyers have more options to choose from and don’t have to be as aggressive with bidding on homes. 

Increased inventory means you might be able to take a slower approach to your home search. You can wait to find your dream home, which is good, but the downside is that your current home might take longer to sell. 

Inventory trends are also regional. States like Florida, Texas, and Colorado have seen surges in available inventory, while other states like New York, New Jersey, and Illinois have lower levels. Consider your current market and where you are moving to as a way to determine your best course of action. 

Price Reduction Trends

One of the most interesting trends in the current housing market is the number of price reductions occurring nationally. In June 2025, 20.6% of home listings had at least one price reduction. This is the highest percentage of reductions since 2016. 

This data is also regional. Denver had the highest percentage of price reductions, with 34% of listings having a price cut. 

Price reduction trends are often considered good news for buyers. It means they can find properties for lower prices and can negotiate aggressively with homeowners who are motivated to sell. However, this usually isn’t good news for sellers. If you are trying to sell, it means your home might sit for longer on the market, creating financial stress if you have already bought another property. 

Talk to your real estate agent if you want to sell your home quickly. Make sure they are using relevant comparative properties to price your house fairly. This decreases your chances of needing a reduction after you list.

New Construction Opportunities

The United States approved approximately 1.5 million new housing units in 2024 to keep up with buyer demand. This is great news for buyers who want a new home and who want to get a good deal on their property.

Many construction companies offer buyer incentives like low interest rates, covered closing costs, and other deals to attract customers. When interest rates are high, you might get a good deal by working with a home builder. This would also make it more affordable to buy before you sell your current home. 

However, like all real estate trends, new construction inventory is regional. Idaho leads the nation in housing construction, followed by North Carolina, South Carolina, Utah, and Arizona. Your desired state or city might have ample new-build houses available or could still be facing an inventory crunch.

Financing Options to Buy a New House Before Selling

There are several options for homeowners to finance the purchase of their new house while covering the costs of their current one. Here are a few ways to crunch the numbers and create a financial plan that works for you.

Bridge Loans

A bridge loan is a form of short-term financing that usually lasts less than a year. The interest rates are higher than standard loans, but you could pay off a bridge loan quickly if your home sells fast. 

This loan is designed to create a bridge between your current and new house. You will use the loan to purchase your next house and then pay off the loan when your current one sells. This could be a good option if you want a streamlined moving experience or want to renovate a property for a few months before moving in. 

“I believe a buy-before-you-sell option is the best bet,” says Megan Kilmer, a Realtor at Dream Catch Properties in Capitola, California. “Either with a bridge loan or using a third party to get you into contract to leverage the purchase.”

Home Equity Lines of Credit (HELOCs)

A HELOC is a lower-cost alternative compared to bridge financing. You will take into your existing home equity and pay back the loan alongside your current mortgage. When you sell your house, you will pay off both the home loan and the home equity line of credit. 

You can also look into a home equity loan instead of a HELOC. This allows you to secure a loan based on the value of your property. 

Most lenders will only issue a HELOC that is 85% of your loan-to-value ratio or less. For example, if your house is worth $500,000 and you have $100,000 remaining on your mortgage, then your equity is $400,000. Your HELOC could be up to $340,000.

The viability of this financing option depends on your equity. If your home equity is low, taking out a loan related to it might not get you far in the real estate purchase process.

Cash-Out Refinancing

A cash-out refinance allows you to pull equity from your house by refinancing your existing mortgage. The main benefit of this option is that you don’t have to pay anything back. You receive cash that can be used to buy your new house and take on a higher mortgage payment for as long as you own the existing one. 

The main drawback is that it could increase your mortgage if you took out a loan with favorable rates. Jumping from a 3% interest rate to a 7% level could create a higher debt-to-income ratio than you expect. However, this could be worth the cost if the mortgage is only necessary for a few months until your home sells.

80/10/10 Piggyback Loans

This option allows you to buy your new house with a 10% down payment without having to pay private mortgage insurance (PMI). The buyer puts 10% down, the lender issues a home loan for 80% of the home’s value, and then they issue a home equity loan for the remaining 10%. 

Most buyers have to pay PMI if their down payment is less than 20% of the home’s value. The 80/10/10 loan skips that. If the new house you are looking to buy costs $500,000, then you would only need to put $50,000 down.

Asset-Based Portfolio Loans

This option may be ideal for high-net-worth individuals. They can leverage their existing investments and secure a loan with favorable terms. This allows them to make cash offers on homes because they can use the loan instead of going through the mortgage process.

Asset-backed portfolio loans prevent people from taking on two mortgages at the same time. When the old house sells, the owner can pay back most (if not all) of the loan.

Rent-Back Agreement on Your Old House

A rent-back agreement allows the homeowner to sell their old house and then pay rent to the new owner until they buy their next property. Instead of finding temporary housing, they simply remain in the house. The former owner may also be responsible for utilities while they live in their house and have to pay a security deposit, just like other rentals. 

There are other ways to use the real estate transaction to have a favorable timeline that doesn’t require complicated loans. Homeowners can ask for delayed closings to give them more time to search for houses or ask for concessions that make moving easier. These additions are easier to ask for in a seller’s market when several buyers want your house and are willing to accommodate you in the short run to get it.

Tax Implications of Buying a House Before Selling

You may need to evaluate the tax implications of purchasing a new house before selling your existing one. Talk to a financial advisor about any potential issues you need to be aware of. You can also consult your real estate agent. Here are a few things to review.  

• Capital Gains Tax: If you are selling your primary residence, you may qualify for a capital gains tax exclusion of $250,000 for singles and $500,000 for couples filing jointly. This tax is only on the profits of your sale, so if you bought your house for $300,000 and sold it for $500,000, then the exclusion could eliminate your tax burden. 
• 1031 Exchange: You might also be able to use a 1031 Exchange to reduce your capital gains tax, especially if you have an investment property. This is when you use the profits of one home sale to cover the cost of another. 
• Mortgage Interest Deductions: There might be some benefits to paying two mortgages. You might be able to deduct the interest paid on both of your home loans throughout the year. This could lead to surprising savings at tax time. You can also deduct the buy-down points during your first year of filing after buying your new house.
• Bridge Loan Interest: You also might be able to deduct the interest from loans used to purchase your new house. This could make a bridge option better than taking out a line of credit. 

Along with evaluating the local market, consider how different options will affect you financially. This goes beyond taking out a second mortgage or tapping into your current home’s equity. You need to know that you won’t face an unwanted tax bill at the start of the new year.

Find a Real Estate Agent to Give You Good Advice

It’s not easy to decide to buy a new house before selling your current one. Not everyone can take on two mortgages, and an aggressive seller’s market can leave you worried about temporary living situations. However, if you have a clear view of your finances, timeline, and moving goals, you can make the right decision. 

Turn to FastExpert to find an agent to sell your current property and help you find a new one. A trusted Realtor will allow you to go at your own pace and help you buy a new house on your timeline. 

Look for Realtors who provide local market expertise while maintaining fiduciary responsibility to guide clients toward financially sound decisions that align with their personal goals. Try FastExpert today.