Size the Loan Against Net Proceeds, Not the Sale Price
Program and regulatory figures verified September 19, 2026. Details change; confirm your scenario with us.
The most common mistake we see in Washington is a plan that works on the sale price and fails on what the sale actually produces.
Follow the money at the second closing
When the departing home sells, the proceeds are consumed in order, and a bridge loan sits near the end of the queue rather than the front.
- Real estate excise tax. State graduated REET plus any local REET, generally the seller's obligation.
- Existing mortgage payoff. Whatever remains on the first, plus accrued interest.
- Commissions and closing costs. Whatever your agreements provide for.
- The bridge loan payoff. What is left has to cover it.
If the arithmetic is done on the sale price rather than on what survives that sequence, the bridge can be sized larger than the sale can repay. In a state where the first line alone runs about 1.65% of the price, that gap is not theoretical.
The arithmetic, spelled out
Take the Seattle metro typical value of $727,359 for the month ending August 2026.
State REET is graduated, so the first $525,000 is taxed at 1.10%, which is $5,775. The remaining $202,359 is taxed at 1.28%, which is about $2,590. State total, roughly $8,365.
If the jurisdiction levies the full 0.50% local REET, add about $3,637. Combined, roughly $12,000.
That is about 1.65% of the sale price, and it is gone before the mortgage payoff is even calculated. Run your own figure on the calculator.
What it changes about the plan
Three things, in order of how often they matter.
It changes the size of the bridge. Size against a conservative net figure, not the list price and not a hopeful sale price. The point of the exercise is that the payoff works even if the sale lands at the lower end of your range.
It changes the down payment assumption. If the plan is to apply sale proceeds to the new loan and recast, the recast is funded by the net number too. A recast modelled on gross proceeds overstates how far the balance will drop.
It changes the comparison against renting. Converting the departing home to a rental defers the sale, and with it the excise tax. That is not a reason on its own to become a landlord, and the tax arrives whenever the sale eventually happens. But when the two structures are close, the timing of a five-figure cost belongs in the comparison. See the rental conversion page.
One thing this does not change
Underwriting. Your debt-to-income ratio counts the obligations you carry, and it does not adjust for what your sale will net. The two-payment test is the same in Washington as anywhere. See the qualifying page.
What net proceeds decide is whether the exit works, not whether the file approves. Both have to be true.
The offsetting Washington advantage
Financing costs no state transaction tax here. Recording a deed of trust is not a sale, so a bridge loan, a home equity line or a refinance triggers no excise tax at all.
So the Washington pattern is a cheap entry to the money and an expensive exit from the asset. Plan the exit number first and the financing becomes straightforward.
Your real estate agent handles the purchase itself and your closing agent calculates the excise tax on the actual transaction. We handle the financing: what you qualify for, how the equity gets used, and what the payment looks like on both houses.
Frequently asked questions
How much do I actually net from a Washington home sale?
Less than the sale price by excise tax, mortgage payoff, commissions and closing costs. Excise tax alone runs roughly 1.65% of the price where a 0.50% local REET applies: on a $727,359 sale that is about $8,365 state plus about $3,637 local, or roughly $12,000 before anything else is deducted.
Should I size a bridge loan on the sale price or net proceeds?
Net proceeds, and conservatively. A bridge is repaid at the departing home's closing after excise tax, the existing mortgage payoff, commissions and closing costs. Sizing against the gross price overstates the money available to repay it.
Does excise tax affect a recast?
Yes, indirectly. If the plan is to apply sale proceeds to the new loan and ask the servicer to recast, the amount applied is the net figure after excise tax and every other deduction. A recast modelled on gross proceeds overstates how far the balance will fall.
Does renting the house out avoid Washington excise tax?
It defers it rather than avoiding it. Excise tax is triggered by the sale, so postponing the sale postpones the tax, and it arrives whenever the sale eventually happens. Timing a five-figure cost is a fair input when two structures are otherwise close, but it is not a reason on its own to become a landlord.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Excise tax treatment, rent-cap exemptions, and county relief thresholds change and depend on your facts; your closing agent, your county assessor, your CPA or a Washington attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.