Finance

Instant, private, and free

Gift of Equity Calculator.

Calculate a gift of equity and loan-to-value percentage.

On-device calculationNo signup

Set your values

Results update as you type.

02 / ANSWER

Appraised value

Sale price

Mortgage balance

Gift of equity

$0.00

Loan-to-value

0.00%

FAQs

How does the gift of equity calculator work?

Enter the requested values to see a deterministic result. Assumptions are explicit and no live market or tax data is fetched.

Use Cases

Family property sale

When parents or relatives sell a home to a family member below market value, this calculator helps estimate the gifted equity and the resulting LTV for the buyer's mortgage.

Example: Parents sell a $400,000 home to their child for $320,000, gifting $80,000 in equity.

Down payment assistance

Buyers can use gifted equity to meet down payment requirements without needing cash, making homeownership more accessible.

Example: A buyer with a 10% down payment requirement can use gifted equity to cover the entire down payment.

Frequently Asked Questions

What is a gift of equity?: A gift of equity is when a home seller sells a property to a buyer for less than its appraised market value. The difference between the appraised value and the sale price is considered gifted equity, which can be used as the buyer's down payment or toward closing costs.
How is the loan-to-value (LTV) ratio calculated?: The LTV ratio is calculated by dividing the loan amount by the appraised value of the property. For example, if the appraised value is $300,000 and the loan amount is $240,000, the LTV is 80%. A lower LTV often results in better loan terms.
Can gifted equity be used as a down payment?: Yes, gifted equity can be used as a down payment. Since the equity is gifted by the seller, it can cover part or all of the required down payment, potentially allowing the buyer to avoid a separate cash down payment, depending on the lender's requirements.

Tips & Common Mistakes

Tips

Enter the appraised value and the actual sale price to see the gifted equity amount.
Use the resulting LTV to understand how much you may need to borrow and potential mortgage insurance requirements.
Check with your lender to confirm if gifted equity is accepted for your loan type and if any documentation is needed.
Remember that gifted equity may have tax implications; consult a tax professional for advice.

Common Mistakes to Avoid

Using the purchase price instead of the appraised value when calculating LTV, which can misstate the ratio.
Forgetting to account for closing costs that may reduce the net gifted equity available.
Assuming all lenders accept gifted equity; some loan programs have specific rules or limits.

Last updated: August 13, 2026

Use Cases

Family property sale

When parents or relatives sell a home to a family member below market value, this calculator helps estimate the gifted equity and the resulting LTV for the buyer's mortgage.

Example: Parents sell a $400,000 home to their child for $320,000, gifting $80,000 in equity.

Down payment assistance

Buyers can use gifted equity to meet down payment requirements without needing cash, making homeownership more accessible.

Example: A buyer with a 10% down payment requirement can use gifted equity to cover the entire down payment.

Frequently Asked Questions

What is a gift of equity?

A gift of equity is when a home seller sells a property to a buyer for less than its appraised market value. The difference between the appraised value and the sale price is considered gifted equity, which can be used as the buyer's down payment or toward closing costs.

How is the loan-to-value (LTV) ratio calculated?

The LTV ratio is calculated by dividing the loan amount by the appraised value of the property. For example, if the appraised value is $300,000 and the loan amount is $240,000, the LTV is 80%. A lower LTV often results in better loan terms.

Can gifted equity be used as a down payment?

Yes, gifted equity can be used as a down payment. Since the equity is gifted by the seller, it can cover part or all of the required down payment, potentially allowing the buyer to avoid a separate cash down payment, depending on the lender's requirements.

Tips & Common Mistakes

Tips

Enter the appraised value and the actual sale price to see the gifted equity amount.
Use the resulting LTV to understand how much you may need to borrow and potential mortgage insurance requirements.
Check with your lender to confirm if gifted equity is accepted for your loan type and if any documentation is needed.
Remember that gifted equity may have tax implications; consult a tax professional for advice.

Common Mistakes to Avoid

Using the purchase price instead of the appraised value when calculating LTV, which can misstate the ratio.
Forgetting to account for closing costs that may reduce the net gifted equity available.
Assuming all lenders accept gifted equity; some loan programs have specific rules or limits.

Finance

Instant, private, and free

Gift of Equity Calculator.

Calculate a gift of equity and loan-to-value percentage.

On-device calculationNo signup

Set your values

Results update as you type.

02 / ANSWER

Appraised value

Sale price

Mortgage balance

Gift of equity

$0.00

Loan-to-value

0.00%

FAQs

How does the gift of equity calculator work?

Enter the requested values to see a deterministic result. Assumptions are explicit and no live market or tax data is fetched.

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Use Cases

Family property sale

When parents or relatives sell a home to a family member below market value, this calculator helps estimate the gifted equity and the resulting LTV for the buyer's mortgage.

Example: Parents sell a $400,000 home to their child for $320,000, gifting $80,000 in equity.

Down payment assistance

Buyers can use gifted equity to meet down payment requirements without needing cash, making homeownership more accessible.

Example: A buyer with a 10% down payment requirement can use gifted equity to cover the entire down payment.

Frequently Asked Questions

What is a gift of equity?: A gift of equity is when a home seller sells a property to a buyer for less than its appraised market value. The difference between the appraised value and the sale price is considered gifted equity, which can be used as the buyer's down payment or toward closing costs.
How is the loan-to-value (LTV) ratio calculated?: The LTV ratio is calculated by dividing the loan amount by the appraised value of the property. For example, if the appraised value is $300,000 and the loan amount is $240,000, the LTV is 80%. A lower LTV often results in better loan terms.
Can gifted equity be used as a down payment?: Yes, gifted equity can be used as a down payment. Since the equity is gifted by the seller, it can cover part or all of the required down payment, potentially allowing the buyer to avoid a separate cash down payment, depending on the lender's requirements.

Tips & Common Mistakes

Tips

Enter the appraised value and the actual sale price to see the gifted equity amount.
Use the resulting LTV to understand how much you may need to borrow and potential mortgage insurance requirements.
Check with your lender to confirm if gifted equity is accepted for your loan type and if any documentation is needed.
Remember that gifted equity may have tax implications; consult a tax professional for advice.

Common Mistakes to Avoid

Using the purchase price instead of the appraised value when calculating LTV, which can misstate the ratio.
Forgetting to account for closing costs that may reduce the net gifted equity available.
Assuming all lenders accept gifted equity; some loan programs have specific rules or limits.

Last updated: August 13, 2026