Gift Of Equity

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Finance

Gift Of Equity is a fast, free finance calculator. Enter Property Fair Market Value, Existing Mortgage and Down Payment Provided to get an instant, accurate result — complete with the formula, a step-by-step worked example, and answers to common questions, all on one page and private to your browser.

Formula

Gift of Equity = Property Value - Mortgage - Cash Down Payment
  • Non-cash contribution from seller
  • Counted as down payment for lending
  • May have gift tax implications

Home Purchase

Inputs
  • Property Fair Market Value: 500000 $
  • Existing Mortgage: 350000 $
  • Down Payment Provided: 75000 $

$500k property - $350k mortgage - $75k cash = $75k gift of equity

Frequently asked questions

What is gift of equity?
When seller reduces sales price (or buyer contributes equity) instead of paying down payment - frees up buyer cash.
Are there tax implications?
May trigger gift tax if over annual exclusion ($18,000/2024). Consult tax advisor.