Unlike a loan, a home equity sharing agreement provides cash today in exchange for a percentage of the home’s future appreciation, with no monthly payments or interest.
How it works
Current home value compounds forward at the assumed appreciation rate to project a future value. The investor’s percentage share applies to the total appreciation (future value minus current value) to find their payout.
What this does not include
This assumes a positive appreciation rate — if the home’s value declines instead, many equity sharing agreements also share in that downside, a scenario this calculator (using a single appreciation-rate input) can still model by entering a negative rate.
How to use this calculator
- Enter current home value, investor’s appreciation share, assumed appreciation rate, and agreement term.
Frequently asked questions
Is a home equity sharing agreement the same as a HELOC?
No — a HELOC is a loan with interest and required payments; an equity sharing agreement isn’t debt at all, with no monthly payments, settled only when the home is sold or the term ends.
What happens if the home loses value?
Depending on the specific agreement, the investor may also share in a decline in value, reducing (or potentially eliminating) the amount owed at settlement — terms vary by provider.
Why would a homeowner use equity sharing instead of a HELOC?
To access cash without taking on debt or monthly payments, useful for a homeowner who wants liquidity without adding to their debt-to-income ratio.
