Compute the gift of equity when a family member sells below market value.
Please do not make financial decisions based on these results.
What is the Gift of Equity Calculator?
Compute the gift of equity when a family member sells below market value. To use the Gift of Equity Calculator, enter appraised market value, sale price, loan amount; it returns gift of equity, equity as share of value, loan to value on appraised value, and shows them instantly as you type.
How property prices are estimated
Most property prices come from comparing a home with similar homes that sold recently. Price per square foot turns each sale into one comparable number, so homes of different sizes can be compared. Start with the home value calculator for a quick estimate and price per square foot calculator to work out the number from a sale.
Before you make or accept an offer
An asking price is the seller’s opinion; the sale price is what a buyer pays. Look at what comparable homes actually sold for, how long they were listed and how far the final price was from the asking price. The what to offer calculator turns that into a suggested offer, and the earnest money calculator shows the deposit that goes with it.
For a home you plan to renovate and resell, work backwards from the after-repair value with the ARV calculator.
Check the loan side too
A price is only affordable if the loan works. Use the mortgage calculator for the monthly cost and the loan-to-value calculator to see how much equity you would start with.
How to use the Gift of Equity Calculator
- Enter your numbers. Start with Appraised market value ($), Sale price ($), Loan amount ($). Use figures from a lender quote or your tax bill where you have them, and keep the term and rate realistic. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Gift of equity, and the cards below show Equity as share of value, Loan to value on appraised value. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Gift of Equity Calculator using the default values shown in the calculator above:
Inputs
| Appraised market value ($) | 450,000 |
|---|---|
| Sale price ($) | 390,000 |
| Loan amount ($) | 351,000 |
Results
| Gift of equity | $60,000.00 |
|---|---|
| Equity as share of value | 13.33% |
| Loan to value on appraised value | 78% |
With these inputs the calculator returns Gift of equity: $60,000.00. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Appraised market value ($) from 450,000 to 540,000 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Gift of equity | $60,000.00 | $150,000.00 | +150% |
| Equity as share of value | 13.33% | 27.78% | +108.3% |
| Loan to value on appraised value | 78% | 65% | -16.7% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Gift of Equity Calculator reports Gift of equity, equity as share of value and loan to value on appraised value. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
How does a gift of equity help the buyer?
It acts as part or all of the down payment.
What is included in a monthly mortgage payment?
Principal and interest, plus property tax, homeowners insurance, PMI if your down payment is under 20%, and HOA fees if they apply.
How much house can I afford?
A common rule is to keep housing costs under about 28% of gross income and total debt under 36%. The House Affordability Calculator applies those limits to your numbers.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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