Lenders let the gift of equity count as all or part of the down payment. Gifts above the annual gift-tax exclusion ($19,000 per recipient in 2026) require the giver to file Form 709, though tax is rarely owed because of the lifetime exemption.
How to use the Gift of Equity Calculator
- Market (appraised) value
- Sales price
- Required down payment
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the home’s appraised market value, the agreed sale price and the down payment percentage the lender requires.
Tips
- Get a written loan estimate and compare the APR, not just the interest rate.
- Include property tax, insurance, HOA fees and maintenance in your monthly budget.
- A larger down payment lowers the payment and can remove mortgage insurance.
- Rates change daily – use a current quote for the most accurate result.
Common mistakes to avoid
- Looking only at the monthly payment instead of the total cost of the loan.
- Forgetting closing costs and fees.
- Assuming home prices always rise.
Inputs explained
| Field | What to enter |
|---|---|
| Market (appraised) value | Amount in your currency |
| Sales price | Amount in your currency |
| Required down payment | In % |
What each result means
- Gift of equity = [Market (appraised) value] – [Sales price]
- Gift as a share of market value = [Gift of equity]÷[Market (appraised) value]×100
- Down payment required (on market value) = [Market (appraised) value]×[Required down payment]÷100
- Extra cash needed for the down payment = max([Market (appraised) value]×[Required down payment]÷100 – [Gift of equity], 0)
- Loan amount = [Sales price] – max([Market (appraised) value]×[Required down payment]÷100 – [Gift of equity], 0)
Example values
How the main result changes when Market changes and everything else stays at the example values above:
| Market (appraised) value | Gift of equity |
|---|---|
| 200,000 | -140,000 |
| 300,000 | -40,000 |
| 400,000 | 60,000 |
| 500,000 | 160,000 |
| 600,000 | 260,000 |
| 800,000 | 460,000 |
Formula
Gift of equity = market value − sale priceDown payment covered = gift ÷ required down paymentWorked example
Inputs — Market (appraised) value: $400,000; Sales price: $340,000; Required down payment: 20 %.
Results — Gift of equity = $60,000.00; Gift as a share of market value = 15 %; Down payment required (on market value) = $80,000.00; Extra cash needed for the down payment = $20,000.00; Loan amount = $320,000.00.
Frequently asked questions
What is a gift of equity?
Selling a home to a relative below market value; the difference is a gift.
Can a gift of equity be my down payment?
Yes – most loan programs accept it.
Is a gift of equity taxable?
The giver may need to file a gift tax return if it exceeds the annual exclusion.
What formula does the Gift of Equity Calculator use?
Gift of equity = market value − sale price.