A bridge (or swing) loan is an acceptable source of funds provided the following requirements are met:
The bridge loan cannot be cross-collateralized against the new property.
The lender must document the borrower’s ability to successfully carry the payments for the new home, the current home, the bridge loan, and other obligations.
Fannie Mae does not have a specified limitation on the term of bridge loans. See B3-6-05, Monthly Debt Obligations, for more information about how to treat the resulting contingent liability.