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.