Your Move‑Up Strategy: How to Use a Conventional Loan to Level Up Your Home

Last updated: October 2025

Quick Answer

You can use the equity in your current home, smart timing, and a conventional loan to move up—often while minimizing or eliminating PMI.

Salute Mortgage walks you through selling smart, structuring your purchase, and timing closings so you upgrade your home without paying unnecessary costs.

Why a conventional loan is ideal for a move‑up home loan strategy

A conventional loan offers flexibility, lower costs, and better terms than some other options. For a move‑up buyer:

• It lets you avoid FHA or VA mortgage insurance as long as you secure 20% down or equity
• You can apply your home equity toward your new down payment
• It often delivers better interest rates for creditworthy borrowers
• You maintain control and choice over timing, contingencies, and strategy

Using a conventional move‑up strategy, your goal is to leverage the equity you’ve gained to step into a more valuable home while avoiding additional carrying costs or insurance burdens.

Steps to using a conventional loan if you’re a move-up buyer

Step 1: Assess your current home’s equity and sales timing

Before you list or start shopping, you need clarity:

• Get a current appraisal or market valuation
• Subtract your outstanding mortgage balance to compute your net equity
• Factor in projected selling costs (agent commission, closing costs)
• Decide your timeline: Do you sell first, buy first (contingent), or coordinate closings?

Salute Mortgage can help you model your net proceeds after sale, estimate how much you can bring to your next home, and decide on the most strategic timing.

Step 2: Determine your target home budget and down payment needs

The equity from the sale becomes your down payment. To avoid PMI, aim to have at least 20% down or ensure that after that, your new loan’s LTV is 80% or less.

• If your home sells for $400,000 and your balance is $200,000, your gross equity is $200,000
• After costs (say 7%), you net $186,000
• That becomes available down payment or to reduce your new loan size
• If your next home costs $500,000, putting $186,000 down gives you a 37% down payment, well beyond the 20% threshold

Salute will run scenarios showing you how big a home you can afford while avoiding PMI altogether.

Step 3: Pre‑approval and bridging your transaction

Once you know your purchasing power, get pre-approved:

• Lock in the interest rate as early as possible
• Decide whether to use a sale‑contingency clause or a non‑contingent offer with bridge financing
• If you buy before selling, consider a temporary bridge loan or use a home equity line of credit (HELOC) to cover overlap costs
• Coordinate closings so funds flow smoothly and reduce the risk of carrying two mortgages

Salute helps you structure the timing so you don’t end up paying mortgage, taxes, and insurance on two homes for months.

Step 4: Choose your purchase strategy with conventional advantages

With a conventional loan as your funding tool, you can:

• Use equity for your down payment
• Avoid PMI by ensuring your loan amount stays under 80% LTV
• Use seller concessions to help cover closing costs
• Request early PMI removal if conditions improve
• Refinance later if needed

If you guard your purchase so you have a 20% or more equity cushion from Day 1, you won’t have to pay PMI.

Step 5: Coordinate appraisal, inspections, and closing logistics

Because move‑ups involve tight timing, every step must be aligned:

• Ensure your appraisal reflects anticipated upgrades or maintained condition
• Use negotiated inspection timelines that don’t delay closing
• Align sale closing and purchase closing—ideally back-to-back
• Use Salute Mortgage’s closing team to track document delivery and deadlines

Delays cost money and leverage. Salute ensures your timelines are realistic and your contracts buffer you for closing slips.

Potential pitfalls and how to avoid them

• Underestimating closing costs on both houses
  Salute builds full cost estimates for both sale and purchase to prevent surprises
• Home sale taking longer than expected
  Include contingencies or bridge finance support
• Drop in your current home’s value
  Be conservative in your valuation assumptions
• Crossed closing windows
  Plan buffer days for overlapping closings

Salute’s move‑up models incorporate “what-if” scenarios so you’re never caught off guard.

Example move‑up strategy in action

• Your current home: valued at $350,000
• Outstanding mortgage balance: $180,000
• Projected selling cost (7%): $24,500
• Net proceeds: $145,500
• New target home: $500,000
• Down payment from equity: $145,500 → your new mortgage = $354,500
• LTV = $354,500 ÷ $500,000 = 71% → no PMI required

With this structure, you’re buying a more expensive home without adding the extra cost of mortgage insurance. Salute Mortgage runs this model for you up front to confirm feasibility.

Why partner with Salute Mortgage for your move‑up

Salute is uniquely equipped to guide move-up buyers:

• We run both sale and purchase projections side by side
• We time closings so you avoid expensive overlap
• We help negotiate and structure your offer so you don’t pay PMI
• We prepare you with early cancellation of PMI or rate advantages down the road

With Salute, your move-up isn’t guesswork—it’s a calculated upgrade.

See how much you can qualify for in your move-up plan.