Three Ways to Buy a New Home While You Still Own Your Current One

One of the most common questions homeowners ask is: “How do I buy a new house if I haven’t sold my current home yet?” The good news is that this situation is extremely common, and there are three primary ways to make it work. The right option depends on your equity, income, timing, and risk tolerance. Below are the three most practical and commonly used strategies.

1. Buying With a Home Sale Contingency

The first option is purchasing your new home with a contingency that your current home must sell first. This is often called a “sale contingency.”

How it works
You submit an offer on the new home with a provision that the purchase is contingent on the successful sale of your existing property. Once your current home goes under contract, that contingency is removed and the purchase of the new home can proceed. While this approach sounds straightforward, many sellers are hesitant to accept “contingent upon the sale of other property” offers because their transaction becomes dependent on your home selling, effectively tying their outcome to a separate property they do not control. As a result, this strategy tends to work best when the seller is highly motivated, the property has been on the market for an extended period, or the seller has certain circumstances to where they are willing to wait on your home to sell.

Pros
• Minimal financial risk
• No need to qualify for two mortgages
• No need to come up with extra cash for a down payment
• Ideal if your equity is tied up in your current home

Cons
• Less attractive to sellers in competitive markets
• Some builders and sellers may not accept contingencies
• Timing can be unpredictable

Best use case
This works best in balanced or buyer-friendly markets, or when purchasing new construction where builders may be more flexible depending on inventory levels.

2. Qualifying for Two Mortgages and Buying First

The second option is qualifying financially to carry two mortgages at the same time. This allows you to buy your new home first, move in, and then list your old home after you close.

How it works
You qualify based on your income, credit, and debt-to-income ratio (DTI) to support both mortgage payments simultaneously. You also need to have the down payment available without relying on the sale of your current home. A key detail many buyers don’t realize your new mortgage payment does not begin until the second month after closing. In practice, this means you rarely have a month where you are making two full mortgage payments at the same time, assuming you list and sell your old home shortly after moving.

Pros
• Stronger, non-contingent offer
• Less stress around timing
• Ability to move first, then prepare your old home for sale
• Often ideal for competitive markets or new construction

Cons
• Must qualify for both payments
• Requires liquid funds for the down payment
• Temporary financial overlap if the old home takes longer to sell

Best use case
This is often the cleanest option for buyers with strong income, good credit, and savings available for a down payment.

3. Using a HELOC to Access Equity for the Down Payment

The third option is using a Home Equity Line of Credit (HELOC) on your current home to fund the down payment on the new home.

How it works
You open a HELOC against the equity in your existing home and use those funds for the down payment on the new purchase. After you sell your old home, the HELOC and any other mortgage obligations are paid off from the proceeds. An important financial consideration to consider is the HELOC payment counts toward your debt-to-income (DTI) ratio. Even if the payment is interest-only or relatively small, lenders must factor it into your qualifying numbers. This can impact how much home you qualify for.

Pros
• Allows you to buy before selling without large cash reserves
• Makes strong, non-contingent offers possible
• Flexible repayment once the old home sells

Cons
• HELOC payment affects DTI
• Interest rates are typically variable
• Adds temporary leverage and risk

Best use case
This strategy works well for homeowners with significant equity but limited liquid cash, assuming their income comfortably supports the temporary HELOC obligation to support debt-to-income (DTI) rations.

Choosing the Right Strategy:

There is no one-size-fits-all answer. The best option depends on:
• Your equity position
• Your income and DTI
• Market conditions
• Seller and builder flexibility
• Your personal comfort with risk and timing

This is why it is critical to coordinate your strategy between your OnDemand Realtor and your Clarity Home Lending lender before making any offers.