First, the equity math
Most move-up buyers fund their next down payment with equity from the current home. The rough math: your sale price, minus what you owe, minus selling costs (commission, title, state deed tax), equals the cash that shows up at closing. If you bought in Bloomington before the run-up in values, that number is probably bigger than you think. Brian will run it precisely before you list anything.
One caution: equity is not income. A lender qualifies you for the new mortgage on your current income and debts, not on the equity you expect to free up. That's why the sequencing strategy below matters more than the equity number itself.
Contingent vs. non-contingent offers
A contingent offer makes your purchase dependent on your current home selling. It protects you from carrying two mortgages, but it makes your offer weaker — sellers worry about falling sales, and in competitive situations they take the non-contingent offer even for slightly less money.
A non-contingent offer is clean and strong, but it means financing the purchase without the sale proceeds. The tools that make it possible:
- HELOC on your current home. Borrow against the equity you'll eventually use as the down payment, then pay it off at sale. Requires enough income to qualify with both payments (even briefly).
- Recast after closing. Put a lump sum toward the new mortgage after closing and re-amortize the payment down. Useful when the sale closes shortly after the purchase.
- Rent-back agreement. Negotiate a few weeks of occupancy after your sale closes, giving you breathing room between closing dates.
The Bloomington market rhythm
The Twin Cities spring market (March through May) and the fall window (September into early November) carry the most inventory and the most competition. If you're selling into a hot month and buying into a slower one, your leverage improves on the buy side. Brian and your realtor will read the specific micro-market — West Bloomington moves differently than Edina, and Normandale-area townhomes move differently than single-family ramblers near Hyland Lake.
Don't forget the payment jump
The most common surprise in a move-up purchase is not the down payment — it's the monthly payment increase from a larger loan amount at today's rates. Run the number honestly: taxes on the new home, insurance, and whether you keep, drop, or roll your current rate. If the payment jump is uncomfortable, there are alternatives: a larger down payment, a conventional loan with a shorter term, or in some cases waiting and stacking more equity.
Downsizing instead?
If your move-up is actually a right-size — the kids are gone and the rambler is too much house — read the HECM for Purchase guide. For buyers 62 and older, a reverse mortgage can fund part of the next home's purchase with no monthly principal and interest payment, which changes the downsizing math entirely.