How the Home Downsizing Calculator Works
If you’re thinking about selling your home and buying a smaller one, this downsizing calculator can help you estimate the cash you might have left after the move. It calculates how the equity in your current home might reduce the payments on your new one, and even whether you might live mortgage-free.
Enter your current home value and remaining mortgage balance, then input the price of your downsized home and your planned down payment. The Home Downsizing Calculator will show rough estimates for:
- Your potential net proceeds from selling your current home
- Your approximate buying costs for the downsized home
- Your new loan amount if the down payment doesn’t cover the purchase
- Any remaining cash you may have after downsizing
Selling and buying costs are built in
To keep this calculator simple, it uses typical national averages for selling and buying costs:
- Selling costs: 8% (6% for combined Realtor fees and 2% closing costs)
- Buying costs: 3% for closing costs, inspections, and fees
The most important input to experiment with is your down payment percentage. The closer it is to 100%, the closer you are to eliminating your monthly mortgage payment.
Get a free home value estimate
If you’re unsure what your home is worth, use HomeLight’s free Home Value Estimator to get a quick ballpark figure before running your numbers. You can also check the prices of smaller homes in your buying area using our home search tool. Select a city or town and filter by square feet.
Note: Your exact costs will vary depending on location, home preparation and selling costs, buying and loan fees, and other factors like mortgage interest rates. Consult with real estate and loan professionals for more personalized estimates.
How Much Is Your Home Worth Now?
Home values have rapidly increased in recent years. How much is your current home worth now? Get a ballpark estimate from HomeLight’s free Home Value Estimator.
What Your Results Mean
Once you enter your information, you’ll see the three main outputs for proceeds, buying costs, and an estimate of how much cash you might still have after applying your down payment.
In today’s market, there are some equity-rich homeowners looking to downsize to a mortgage-free home and avoid today’s higher interest rates. Even if buying mortgage-free isn’t realistic, applying your sale proceeds can help you reduce your loan balance and your monthly payments.
Mortgage-Free Example Scenario
Let’s say your current home is worth $500,000, and you still owe $150,000 on your mortgage. You expect to spend about 8% in selling costs (agent commission and closing fees), which comes to roughly $40,000. That leaves you with about $310,000 in net proceeds.
If you buy a smaller home priced at $300,000 and make a 100% down payment, your total buying costs — including a typical 3% in fees — would be about $309,000. That means you’d have roughly $1,000 left over after downsizing — and no new mortgage.
If, instead, you decide to make a lower down payment on your new house, you might have a smaller mortgage balance and additional funds leftover. For many homeowners, this extra cash represents new freedom: it can help you retire more comfortably, travel, or make a major purchase like an RV.
Compare Different Scenarios: Try adjusting your inputs to see how different moves could affect your bottom line. The calculator updates instantly, making it easy to explore what a mortgage-free future could look like for you.
When Downsizing May Not Strengthen Your Finances
Many homeowners who purchased or refinanced during the pandemic now have historically low mortgage rates and significant equity built by years of rising home values. Selling strategically allows you to turn that paper equity into real financial flexibility.
However, if your downsize move involves a new mortgage at a substantially higher interest rate, buying a smaller house may not have as many advantages.
That’s because the low pandemic-era interest rates have created a lock-in effect. More than half of homeowners in the U.S. hold rates below 4%, creating a phenomenon economists call “golden handcuffs.” This is why many downsizing homeowners prefer to avoid a new, higher-rate mortgage altogether by selling and paying cash for a smaller home.
Common Scenarios Where Downsizing Makes Sense
You might use this calculator if you’re:
- Planning for retirement and stretching income further.
- Living in a large home that feels too big.
- Reducing maintenance and upkeep costs.
- Moving closer to family or to a lower-cost area.
In each case, the Home Downsizing Calculator can help you quickly estimate how much home you can afford without taking on new debt.
Pros and Cons of Downsizing Your Home
Downsizing can open the door to financial freedom, but it also comes with trade-offs worth thinking through.
- Pros: Lower monthly costs, less maintenance, the potential to live mortgage-free, and greater peace of mind for your loved ones.
- Cons: You may need to give up space, familiar neighbors and neighborhoods, certain amenities, and in some markets or 55+ communities, smaller homes may not appreciate as quickly as larger ones.
If your goal is to simplify life and strengthen your financial foundation, the calculator results can help you visualize those benefits in real numbers. Keep in mind the Home Downsizing Calculator is just a first step. It’s best to consult with a financial advisor to see what works best for your situation.
Buy a smaller house first, and only move once
Another benefit of downsizing from an equity-rich home is the possibility of buying your smaller house before you sell your current property. Modern bridge loan programs like HomeLight’s Buy Before You Sell make the downsizing process smoother from start to finish.
This innovative solution unlocks your equity so you can make a strong, non-contingent offer on your smaller home and only make one move. Watch the short video below to learn more.
Next Steps: Talk With a Top Agent
Once you’ve used the Home Downsizing Calculator to get a sense of your potential proceeds, you can get customized advice by consulting with a top-performing local agent. The right agent can help you:
- Determine your home’s current market value
- Weigh selling options and timing
- Identify downsized properties that fit your lifestyle and budget
HomeLight’s free Agent Match platform analyzes more than 27 million transactions and thousands of reviews to connect you with experienced local agents who specialize in downsizing and retirement moves.
Here are some additional downsizing resources from HomeLight: