Gift of Equity Calculator

Formula

The formula to calculate the Gift of Equity is:

\[ \text{GOE} = \text{MV} - \text{SP} \]

Where:

$ \text{GOE} $ is the Gift of Equity ($)
$ \text{MV} $ is the Market Value of the home ($)
$ \text{SP} $ is the Sale Price of the home ($)

What is a Gift of Equity?

A gift of equity is defined as the difference between the sale price and market value of a home that is sold to a family member or close relationship at a discount. This gift can help the buyer with the down payment and closing costs, making it easier for them to qualify for a mortgage.

Example Calculation

Let's assume the following values:

Market Value (MV) = $300,000
Sale Price (SP) = $250,000

Using the formula to calculate the Gift of Equity:

\[ \text{GOE} = 300,000 - 250,000 = 50,000 \text{ dollars} \]

The Gift of Equity is $50,000.