"Your Home Is Listed but Not Sold: How Much of the Equity Will a Lender Count, and Which Document Has to Arrive First?"

The sign has been in your front yard for eleven days. There were two showings over the weekend, a second look on Tuesday, and no offer yet. Then the home you have been waiting for comes on the market across town. The first thing you want to figure out is how much of the money tied up in your current home will count toward the new one.

While your current home is listed but not sold, a lender can count your equity as 90% of the listing price minus every lien on the home. Once you accept an offer, it becomes the sales price minus your selling costs and liens. If that money pays your down payment and closing costs, the settlement statement from your sale has to arrive before, or with, your new closing.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, licensed in fifteen states, NMLS #483943, through C2 Financial Corporation. The arithmetic below is something you can run at your own kitchen table before you call anybody.

The question of which to do first has its own article, deciding whether to buy first or sell first. This one stays on the number a lender will actually credit you, and the paper that proves it.

How does a lender count proceeds from a home that is listed but not sold?

Fannie Mae's Selling Guide, section B3-4.3-10, Anticipated Sales Proceeds, says that when your current home is listed for sale but has not sold, the lender may qualify you on the basis of the proceeds you expect from the sale. The guide then gives the lender a two-row table for estimating those proceeds. The row that applies depends on one question: has a sales price been established?

Sales price established?	How the estimated proceeds are figured
Yes	Sales Price – (Sales Costs + All Liens) = Estimated Proceeds
No	90% of Listing Price – All Liens = Estimated Proceeds

The two formulas in that table are Fannie Mae's wording, copied as they appear in the guide. "All liens" means every lien against the home. For most clients that is the first mortgage, plus a home equity line of credit or a second mortgage if there is one.

The second row carries a note. The guide says that "The 10% adjustment factor that is applied to the listing price must be changed depending on market conditions". So 90% is the figure written into the guide, and the guide requires the lender to change that adjustment when market conditions call for it. If your loan officer uses a number other than 90%, it is a fair question to ask what they are basing it on.

The equity count before you have an offer

With no offer in hand, the formula works from your listing price. It takes 10% off the listing price and then subtracts what you owe, and selling costs are not a separate line in this row. You already have both numbers you need: your listing price, and the payoff on everything secured by the home, which is on your most recent mortgage statement and your home equity line statement.

This early estimate can let you get approved for the next home while your current home is still on the market. Fannie Mae's automated underwriting system, which the guide calls DU, even has a named asset type for it. Section B3-4.4-01, DU Asset Verification, lists "Proceeds from Real Estate Property to be sold on or before closing" among the assets DU treats as liquid.

The equity count once you accept an offer

Once you sign a contract, you have a sales price, and the lender moves to the first row of the table. Now the count is your contract price, minus your sales costs, minus every lien. The 90% adjustment goes away, and your selling costs take its place. Your agent can give you an estimate of those costs, so you can run this version yourself.

The one document that has to arrive before your new closing

If the cash from your sale is paying your down payment and closing costs, B3-4.3-10 says the lender must verify the source of funds "by obtaining a copy of the settlement statement on the existing home before, or simultaneously with, the settlement on the new home, showing sufficient net cash proceeds to consummate the purchase of the new home".

The settlement statement is the closing paperwork from your sale, and it lists the price, the payoffs, the costs and the cash paid to you. So your sale has to close first, or at the same time as your new closing. The same section also says the lender must document the actual proceeds you received. The estimate is what gets you approved, and the settlement statement from the sale shows the cash you actually received.

The other two major rulebooks ask for the same proof under their own names. Freddie Mac's Guide, Section 5501.3, documents proceeds from selling your real property with "The Settlement/Closing Disclosure Statement or an alternative form required by law". For an FHA loan, HUD's Handbook 4000.1, section II.A.4.d, asks for "a fully executed Closing Disclosure or similar legal document". The FHA lender also confirms it was an arm's length sale, meaning one between unrelated parties, and that you are entitled to the proceeds.

Once your sale closes, please provide the complete, signed settlement statement from the sale of your current home, all pages, please. We will need it before your new closing, or at the same closing table, because it is the document that shows the cash actually reached you.

Your current mortgage payment while your home is for sale

Proceeds are one half of the file. The other half is your debt-to-income ratio, which compares your monthly debts to your income, and the guide to how debt-to-income ratios work explains it in full.

Fannie Mae's section B3-6-06, Qualifying Impact of Other Real Estate Owned, revised September 2, 2026, covers a current home that is pending sale but will not close before your new loan. In that case, the current payment and the proposed payment are both used to qualify you. Fannie Mae will not require the current payment to be counted if the file has the executed sales contract and confirmation that any financing contingencies have been cleared.

Freddie Mac's Section 5401.2 reads the same way, with one added option. If the contract has a financing contingency, the file needs evidence the contingency has been cleared, or a lender's commitment to the person buying your home.

So a signed contract does two jobs. It moves your proceeds to the more precise row of the formula, and once your buyer's financing contingency clears, it can take your current payment out of the ratio.

Three other ways the proceeds can be documented

A 1031 exchange. B3-4.3-10 says down payment money from a like-kind exchange, also called a 1031 exchange, is eligible if it is properly documented and complies with Internal Revenue Code Section 1031. It applies only when the property being sold was held for investment or business use, and never to a home you live in as your personal residence. Financing a 1031 replacement property you plan to live in later covers how the new loan treats that home.

An employer relocation buy-out. If your employer is paying off your existing mortgage as part of a relocation plan, the same Fannie Mae section says the lender must get a copy of the executed buy-out agreement. It also says that "A photocopy of a sales contract or a listing agreement is not considered an acceptable source of verification of proceeds from the sale".

A bridge loan or home equity line. If your new closing has to come before your sale, the down payment can come from borrowing against your current home instead. Fannie Mae's section B3-4.3-14, Bridge/Swing Loans, accepts a bridge loan as long as the new home is not also pledged as security for it. The lender also documents that you can carry the payments on the new home, the current home, the bridge loan and your other obligations. Using your equity to buy before you sell walks through the four ways to do it and when to set them up.

The steps, in order

1. Before you make an offer, please run the 90% formula on your current home with your listing price and your payoff figures, so you have your own estimate in hand.
2. Please provide your most recent mortgage statement, and your home equity line statement if you have one, all pages. That is how I confirm the "All Liens" part of the formula.
3. Once you accept an offer, please send me the full executed sales contract, so the estimate can move to the contract-price row.
4. Please ask your agent to tell you when your buyer's financing contingency is cleared, and send me that confirmation.
5. If the sale cash is paying your down payment, please set your two closings so your sale closes first, or at the same time as your new closing.
6. After your sale closes, please provide the complete, signed settlement statement, all pages, please.

Mistakes that change the number

Starting from the full listing price. The guide's estimate is 90% of the listing price, and the guide says that adjustment must change depending on market conditions. If your plan only works at 100%, it helps to find that out before you write an offer.

Leaving out the home equity line. The formula subtracts every lien. A line of credit with a balance on it comes off the top just like the first mortgage does.

Treating the signed contract as proof of the cash. The signed contract can help with your current payment, but only the settlement statement from the sale shows that the money reached you.

Scheduling the new closing first. If your down payment is coming from the sale, B3-4.3-10 asks for that settlement statement before or with the new closing. A purchase closing set for the day before your sale closes will not have it.

An illustration, so the arithmetic is visible

Numbers below are made up to show the mechanism. This is not a real client's file and it is not a quote.

Say your current home is listed at $500,000. You owe $210,000 on the first mortgage and $15,000 on a home equity line.

Listed, no offer yet

Listing price                          $500,000
90% of listing price                   $450,000
First mortgage                        -$210,000
Home equity line                       -$15,000
                                       --------
Estimated proceeds                     $225,000

Two weeks later you accept an offer at $490,000, and your agent estimates $31,000 in selling costs.

Under contract

Sales price                            $490,000
Sales costs                            -$31,000
First mortgage                        -$210,000
Home equity line                       -$15,000
                                       --------
Estimated proceeds                     $234,000

The contract figure came in higher than the listing estimate, even though the price was $10,000 below asking, because the formula stopped taking 10% off the top. Your sale then closes the morning of your new closing, and the settlement statement shows the net cash you actually received. That is the figure the lender documents, and it pays your down payment and closing costs that afternoon.

Your next steps

If you would like to see the new purchase with your own numbers, the rate tool is here, with no credit pull and no account. You can choose the rate option that works best for you and change it later. Getting pre-approved before you make an offer explains what goes into a letter built on reviewed documents, and what counts toward mortgage reserves covers the money you have left after closing.

Nothing here is a loan approval, a denial or a commitment to lend. The formula and documents above come from the agency guides cited, and your lender applies them to your own file.

Common questions

Can I buy a new home before my current home sells?

Yes, in many cases. Fannie Mae's Selling Guide section B3-4.3-10 lets a lender qualify you on the proceeds you expect from a home that is listed but not sold. If the sale cash is paying your down payment, the settlement statement from your sale has to arrive before or at the same time as your new closing. A bridge loan or home equity line is how clients close on the new home first.

How does a lender estimate proceeds from a home that has not sold?

Under Fannie Mae's section B3-4.3-10, if no sales price is established, the estimate is 90% of the listing price minus all liens on the home. The guide says that 10% adjustment must change depending on market conditions. Once a sales price is established, the estimate is the sales price minus your sales costs and all liens.

Do I need a signed contract on my current home to buy the next one?

Not to estimate your proceeds, because the 90% formula works from the listing price. A signed contract moves the estimate to the contract-price formula. With your buyer's financing contingency cleared, it also lets Fannie Mae and Freddie Mac leave your current payment out of your debt-to-income ratio.

What document proves my sale proceeds to the new lender?

The settlement statement from the sale of your current home. Freddie Mac's Section 5501.3 calls it the Settlement/Closing Disclosure Statement, and FHA's Handbook 4000.1 asks for a fully executed Closing Disclosure or similar legal document. If the proceeds pay your down payment and closing costs, Fannie Mae requires it before or at the same time as your new closing.

Does my current mortgage payment count against me while my home is for sale?

Under Fannie Mae's section B3-6-06, if your current home will not close before your new loan, both payments are used to qualify you. The current payment can be left out once the file has the executed sales contract and confirmation that any financing contingencies have been cleared.