Gift of Equity Calculator

Your details

The fair market value from a professional appraisal - not the listing price.
The price the buyer and seller have agreed on - typically below the appraised value.
Any mortgage the seller still owes on the property. The sale price must cover this for the deal to close.
Extra cash the buyer contributes on top of the equity gift.
Annual interest rate for the buyer's mortgage.
%
Duration of the buyer's mortgage.
Married couples can each give the annual exclusion ($18,000 each = $36,000 combined per recipient) without filing a gift tax return.
IRS annual exclusion per donor per recipient. This is $18,000 for 2024. Update if the limit changes.
USD
Currency
Gift of EquityNo PMI needed
$80,000

Difference between appraised value and sale price - counts as down payment.

Gift as % of Appraised Value20%
Total Down Payment$80,000
Effective Down Payment %20%
Loan Amount$320,000
Loan-to-Value (LTV)80%
Est. Monthly Payment (P&I)$2,075.51
Potentially Taxable Gift$62,000
Seller Net Proceeds$320,000
PMI StatusPMI likely avoided (20%+ effective down payment)
80% %
No PMI<80Low PMI80-90High LTV90+

Gift of equity: $80,000 (20.0% of appraised value).

  • Your effective down payment of 20.0% clears the 20% threshold, so private mortgage insurance (PMI) is likely not required - typically saving $50-$200 per month.
  • The gift exceeds the annual exclusion by $62,000. The giftor(s) must file IRS Form 709, but actual gift tax is rarely owed because the excess simply reduces the lifetime exemption (over $13.6 million in 2024).
  • Every lender requires a signed gift letter from the seller confirming no repayment is expected - without it, the gift cannot be used as a down payment.

Next stepYour LTV is at or below 80%. Get your gift letter drafted and have a mortgage professional confirm the terms with your lender.

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