Home Equity Sharing Calculator

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Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

Current home value: Your estimate of what the home could sell for today before selling costs.

Cash received from sharing agreement: The gross cash amount offered before starting fees are deducted.

Investor share of future home value: The percent of the future home value used to estimate the settlement payment in this generic model.

Main yearly home value change: The yearly percent increase or decrease used to grow the current home value into an estimated future value.

Main time until settlement: The number of years until you expect to sell, refinance, or buy out the investor share.

Net cash after starting fees: Cash received minus the origination fee and other starting costs.

Estimated settlement minus net cash received: The main settlement payment minus net cash after starting fees. A negative value means the estimated settlement is less than the net cash received.

Scenario rate spread: The number of percentage points added to and subtracted from your main yearly home value change for the table.

Mistake: Using the after-fee deposit for Cash received from sharing agreement.
Fix: Enter the gross Cash received from sharing agreement, then use Origination fee and Other starting costs for deductions.

Mistake: Treating Investor share of future home value as a percent of only the gain in home value.
Fix: Use the percent that applies to future home value in this calculator, or adjust your input only if your agreement uses a different basis.

Mistake: Entering Main yearly home value change as 0.03 for 3 percent.
Fix: Enter 3 in Main yearly home value change for 3% per year, or -2 for a 2% yearly drop.

Mistake: Leaving Mortgage balance today outdated when reviewing Current home equity before sharing.
Fix: Update Mortgage balance today with your current payoff estimate if you want the equity number to be useful.

Mistake: Reading Highest settlement in scenario table as a guaranteed maximum.
Fix: Treat Highest settlement in scenario table as a stress test from the rates and years you selected, not a contract cap.

Mistake: Setting Scenario rate spread or Scenario time spread to zero and expecting a wide comparison.
Fix: Increase Scenario rate spread or Scenario time spread if you want the scenario table to show more than the main case.

• This is a provider-neutral estimate. Real home equity sharing contracts can use different formulas, caps, discounts, minimum returns, appraisal rules, repair credits, or sale-cost rules.
• The main settlement payment assumes the investor share is a percent of the future home value, plus any Settlement fee added at the end.
• Future home value uses one constant yearly rate. Actual home prices can rise and fall unevenly.
• Starting fees lower Net cash after starting fees, but they do not lower the investor share unless your actual agreement says they do.
• The scenario table only tests the displayed rate and year combinations. It is not a forecast and is not a guaranteed best or worst case.
• Mortgage balance today is used only for Current home equity before sharing. The calculator does not model mortgage paydown, interest, refinancing, taxes, insurance, or selling costs.
• Negative Current home equity before sharing and negative Estimated settlement minus net cash received are allowed because those signed values can happen with the entered numbers.

Generic contract model

The calculator models a simple home equity sharing agreement where the settlement payment equals a user-entered share of the estimated future home value, plus any fixed closeout fee. Some real agreements use a share of appreciation or other contract terms, so compare this estimate with your actual documents [1].

Core formulas

current_home_equity_before_sharing = home_value - mortgage_balance

net_cash_after_starting_fees = cash_received - (cash_received * origination_fee_percent / 100) - transaction_costs

future_home_value = home_value * (1 + annual_home_value_change / 100) ^ years_until_settlement

main_settlement_payment = (investor_share_percent / 100 * future_home_value) + closeout_fee

estimated_cost_over_net_cash = main_settlement_payment - net_cash_after_starting_fees

Scenario table

The table tests one lower rate, the main rate, and one higher rate. It also tests one shorter time, the main time, and one longer time. The shorter time is floored at 1 year. Duplicate labels can be removed for display when a spread is 0.

scenario_rates = [main_rate - rate_step, main_rate, main_rate + rate_step]

scenario_years = [max(1, main_years - year_step), main_years, main_years + year_step]

scenario_settlement = (investor_share_percent / 100 * home_value * (1 + scenario_rate / 100) ^ scenario_year) + closeout_fee

Highest settlement in scenario table is the largest displayed scenario settlement. Lowest settlement in scenario table is the smallest displayed scenario settlement.

Mini example

For a $500,000 home, $75,000 cash received, 20% investor share, 3% yearly home value change, and 10 years until settlement, the future home value is $500,000 * 1.03 ^ 10 = $671,958.19. The main settlement payment is 20% of that value, or $134,391.64. If the origination fee is 3% and other starting costs are $0, net cash after starting fees is $72,750, so estimated settlement minus net cash received is $61,641.64.

Input handling

Money inputs accept commas and spaces, such as 500,000. Required money, percent, and year inputs must be numeric. Investor share of future home value must be from 0 to 100. Years until settlement must be greater than 0. Scenario rates must stay above -100% so the compounding factor is positive.