A trailing primary residence program lets you exclude the payment and reserve requirement of the home you're leaving, as long as it has more than 30% equity and is listed for sale before the new loan closes. For many move-up buyers, that can mean a higher purchase price, no bridge loan, and an offer that isn't contingent on selling.
The rules in plain English
- The departing home needs more than 30% equity, typically verified by a BPO or a 2055 appraisal
- The home must be listed for sale before the new loan closes
- Its payment can then be excluded from DTI and reserve calculations
- Typical maximum DTI is about 43%, with a minimum credit score around 600 and limited-credit options
- Up to 80% LTV on loans to $2.5 million, with reduced LTV on loans up to $5 million
Using the old home's equity for your down payment
You can pull equity from the departing home with a cash-out refinance or HELOC and use it as your down payment. That new debt is also removed from DTI if the LTV or CLTV is below 70% after completion. Some lenders can close the cash-out refinance and the new purchase loan simultaneously.
Trailing residence vs. bridge loan
A bridge loan is short-term debt secured against your equity. A trailing residence program avoids that extra debt by changing how the departing home is counted, which is often cheaper when equity is strong. A bridge still makes sense when equity is thinner or you need cash faster. We compare both for your specific numbers.
A local example
A buyer with a paid-down home in Atascadero wants to move into a home in San Luis Obispo. Counting both housing payments would push their DTI past the limit. With the Atascadero home listed and enough equity, the old payment is excluded, so they qualify for the new home without waiting for the sale.
The trade-offs
Many of these portfolio programs are adjustable-rate, such as 3/1, 5/1, or 7/1 with a 30-year amortization and no prepayment penalty. You are also committing to sell the departing home — it has to be on the market.
See the full trailing residence loan page, or read about our bridge-and-reverse case study.
Programs, rates, and terms are subject to change. This is not a commitment to lend.