I bought my first home last year; it's my primary (and only) residence. I intend to pay off the mortgage in 5 or 10 years, then sell the house and buy a bigger one. The new one would cost 2 to 3 times as much as my existing home, so I'd have to get a mortgage to buy it.
For a down payment on this second mortgage, I could simply continue living in my current home until I've saved up 20% for the new one. But this could take awhile.
A faster option would be to sell my current home and use the proceeds as the downpayment. But if I sell the home to get the cash, then of course I'd have no place to live until I close on the new home. And that could take months.
I'm wondering... Would a mortgage lender accept my current home in lieu of a cash down payment? The estimated value of the home could be used as a "pending" down payment, and when the home is eventually sold, the final sales price would be used as the actual down payment. Does this ever happen? If not, what is typical for this situation?