How Is the Departing Residence Handled During the Transition?

One of the most common questions from BBYS borrowers is how their current home — the one they are leaving — is treated during the period between buying the new home and selling the old one. The answer depends on the specific program structure, but here is a general overview.

The Departing Residence Payment

During the transition period, you own two properties. How the departing residence mortgage payment is handled for qualification purposes depends on the BBYS program:

• Equity advance model: The BBYS provider takes a lien position on the departing residence and in some structures covers or excludes the payment from your DTI, because the equity has effectively been advanced to you
• Bridge loan model: You may need to qualify carrying both payments, or the departing residence payment may be excluded if a signed listing agreement and sufficient equity are documented

Rental Income from Departing Residence

In some cases, if you rent out the departing residence during the transition period, a portion of that rental income may be used to offset the mortgage payment for DTI purposes. Documentation requirements vary.

After the Sale

When the departing residence sells, the proceeds are used to pay off any existing mortgage, repay the BBYS advance or bridge loan, and deliver remaining equity to you. This typically happens at the departing residence closing through the escrow process.

A holding checklist for the old home

• Insurance: tell your agent if the home will be vacant, staged, or rented. A standard policy may limit coverage for a vacant home, so confirm before you move out.
• Payments: keep the mortgage, property tax installments, and HOA dues current. Late payments can undermine the sale.
• Utilities: keep power, water and a modest temperature setting on so showings and inspections go smoothly.
• Yard and exterior: arrange upkeep so the listing photos and showings match the home’s best condition.
• Security: if you move out, consider a lockbox protocol with your agent and an occasional drive-by.

What the payoff looks like at the closing table (illustrative example, not a quote)

Assume the home sells for $1,100,000, the mortgage payoff is $500,000, and an advance or bridge of $100,000 must be repaid:

• $1,100,000 − $500,000 − $100,000 = $500,000 before selling costs
• Agent commissions, escrow, transfer tax where applicable, and prorations then come out of the $500,000

The payoff order follows the liens, and the escrow officer prepares a settlement statement showing each line. Review it with your agent before closing.

Staging and showings

If you have already moved, decide whether to leave some furniture for staging. Empty homes can look smaller in photos, while cluttered homes show poorly. Your agent can recommend a middle path, such as a limited staging package.

Staying in touch with your lender

If anything changes during the transition, such as a price reduction, a cancelled contract, or a new tenant, let us know promptly. Some structures depend on the listing remaining active, and a change that you consider minor may matter to the file. Keeping the paperwork current is easier than rebuilding it later.

Frequently asked questions

Who pays the old mortgage during the transition?

You remain the borrower on the old mortgage, even where a program adjusts how it is treated in qualifying. Keep paying it on time unless your program documents say otherwise.

Can I move back if the new home falls through?

This is a practical question for the program documents. Ask what happens to your obligations if the purchase does not close.

Should I make repairs before listing?

Focus on safety, visible wear, and anything a buyer inspection will flag. Your agent can prioritize what pays back.

Related guides

• How long you have to sell
• If your home does not sell in time
• Fees and costs
• Investment properties

Quick recap

• Tell your insurance agent when occupancy changes; vacant or rented homes can need different coverage.
• Keep the old mortgage, taxes, and HOA dues current throughout the transition.
• Expect sale proceeds to repay the old mortgage and any advance first.