How to use the co-owner home buyout calculator
- Enter the home value both owners agree on and the current mortgage balance.
- Enter the ownership share of the person leaving, as a percent.
- In the advanced options, enter credits for extra money either owner put in, the costs of the buyout and who pays them.
- Read the payment to the person leaving, the new loan if that payment is financed, and the loan as a share of the value.
Formula
equity = home value - mortgage balance
payment = equity x share of the person leaving + credits to them - credits to the other owner - costs they pay
new loan = mortgage balance + payment; loan share = new loan / home value
The person staying keeps the rest of the equity, so the payment plus their equity afterward equals the equity before the buyout, before costs they pay themselves.
An even split
A home valued at $400,000 with a $240,000 mortgage has $160,000 of equity. A 50% share is $80,000. With $3,000 of costs split by ownership, $1,500 is charged to the person leaving, so the payment is $78,500.
If the person staying finances it, the new loan is $240,000 + $78,500 = $318,500, which is 79.63% of the value. They are left with $81,500 of equity and pay $1,500 of the costs. If the person leaving pays all the costs the payment is $77,000, and if the other owner pays them it is $80,000.
Why the numbers are not always half
Owners often put in unequal amounts, for example a larger deposit, a big repair, or years of extra payments. A credit adds that amount to the payment to the owner who paid. How credits are worked out, and whether they are owed at all, depends on your agreement and on local law, so use the boxes for amounts you have both agreed to.
The new loan is a plain total. A lender will decide how much it will lend and at what rate. To see a payment on the new loan, use the Mortgage Calculator; to compare with selling and splitting the proceeds, the Home Sale Proceeds Calculator; and for borrowing on equity, the Home Equity Loan Calculator.
Not advice
This is arithmetic on figures you provide. It is not legal, tax or lending advice, and it does not know about transfer taxes, gift rules, capital gains, who is named on the loan or the terms of your agreement. Ask a professional before you sign anything.
Assumptions and limits
- The home value is agreed by both owners, for example from an appraisal, and the mortgage balance is the amount owed now.
- Ownership shares are of the equity only; the whole mortgage stays with the person staying.
- Credits are amounts you enter and are not checked against any rule.
- A negative equity gives a negative payment, shown in brackets, meaning the person leaving would owe money.
- The figures are not rounded until they are shown, and the tests compare 60 cases with exact fractions.
Frequently asked questions
What does a negative payment mean?
The mortgage is more than the home is worth, so there is no equity to share. The figure shows a share of the shortfall in brackets.
Is the new loan the same as the payment?
No. It is the old mortgage balance plus the payment, since the buyout is paid by borrowing more against the home.
Who usually pays the costs?
It varies and is part of your agreement. The page lets you choose either owner or a split by ownership.
Does the page include taxes?
No. Taxes and fees on a transfer differ by place and by situation.