Buying a Home With RSUs in Silicon Valley: What Lenders Count

RSUs can pay for your down payment and help you qualify for a bigger loan, but lenders only count shares you own today, and they count RSU income only once you have a track record. Our take: set your price range from what a lender will count, not from your total compensation.

Vested shares are a down payment. Unvested shares are not.

A lender counts what you actually own. You usually lose unvested RSUs if you leave your job, so lenders don't count them, however large the grant looks.

Once shares vest and land in your brokerage account, they're yours. Some lenders will count vested shares you haven't sold as savings. Still, our advice is to sell what you need for the down payment. A stock can fall a long way between your offer and closing day, and that risk shouldn't sit in your down payment.

What the lender will ask for:

• Brokerage statements showing the vest, the sale and the cash, usually for the last two months.
• A clear trail from your brokerage account to the account you'll close from. Lenders ask where every large deposit came from, so avoid moving money around.
• Savings left over after closing. In our experience, jumbo lenders often want enough for several months of mortgage payments. Ask how yours counts shares you haven't sold.

How lenders count RSU income

Using RSUs to qualify for the loan is a separate question, and the answer starts with the size of your loan. In Santa Clara, San Mateo, Alameda and Contra Costa counties, buying a single-family home, townhouse or condo for more than about $1.56M with 20% down takes a jumbo loan (a 2026 mortgage above about $1.25M). Jumbo lenders write their own rules, which we cover in the next section. For smaller loans, many lenders follow standard rules set by Fannie Mae.

Under the standard rules, RSU income counts only after shares have vested and been paid out to you. RSUs that vest on a set schedule count after a year of vesting at your current job. Grants tied to performance targets usually need two years. Sign-on stock bonuses don't count, however long they take to vest.

The lender values your past vests at the stock's recent average price, counting the shares sold for taxes too. If the stock has fallen, the income it counts falls with it, even for shares that vested at a higher price. And if your RSUs come from a one-time grant rather than regular refresh grants, that grant has to keep vesting for at least three more years to count.

These rules changed this year, so ask your lender whether it's using the latest version. In our view, they're friendlier than the two-year rule of thumb many buyers have heard: a year of steady vesting at your current company can count.

Does a jumbo loan change the math?

It can. Jumbo lenders don't have to follow the standard rules. Each writes its own, and in our experience they differ in three places:

1. How much history. Some want a year of vesting, like the standard rules. Others want two years.
2. How long it lasts. A grant that finishes vesting soon may not count at all.
3. How they average. Methods vary, so the same pay can turn into different income on paper.

Our take: compare lenders on how they count RSUs, not just on rate, and find out what each one will count before you set a price range. If you joined recently or your refresh grants are new, the income a lender counts may be well below your total compensation.

One more risk we plan for: when your salary, your RSU income and your down payment all come from one employer, one piece of bad company news can hit all three at once. We'd set your budget from a conservative income figure and keep more savings than the lender requires.

Vest-day withholding: why fewer shares reach your account

When RSUs vest, their value counts as pay, and your employer withholds tax, usually by selling some of the shares. Many employers use flat rates:

• Federal: 22%.
• California: 10.23%, the state's flat rate for bonuses and stock options. In our experience, many employers use it for RSU vests too.

Social Security (until you pass its yearly cap), Medicare and California disability insurance come out too.

Withholding is a prepayment, not your final bill. If your income puts you in a higher federal or California tax bracket than those flat rates, you may owe more at tax time, sometimes a lot more. Our take: plan for that gap on both returns, and run the numbers with your tax professional before you put cash into a down payment.

Timing your purchase around vests

• Sell at or soon after vest. The shares' value on vest day is already taxed as pay, so selling right away adds little extra tax. Holding them longer for tax reasons puts your down payment at the mercy of the stock price.
• Build the paper trail early. We'd move the cash into the account you'll close from at least two statements before you apply, since lenders usually look at two months of statements.
• Know your next vest date. If a large vest lands while you're in escrow, tell your lender ahead of time so it's documented properly.
• Don't count on shares you can't sell yet. Pre-IPO shares and shares in a lockup usually can't be sold freely, so lenders generally won't count them as cash. Under the standard rules, stock pay counts as income only once the company's stock is publicly traded. Make offers on what you can document today.

What this means for buyers

Here's what we'd do before touring seriously:

1. Get pre-approved by a lender that works with stock pay often, and get its RSU rules and full document list in writing. Compare at least two.
2. Sell the shares you'll need for the down payment, then let the cash sit through two statements. That's our risk call, not a lender rule.
3. Set aside money for federal and California tax you may owe beyond what was withheld at vest.
4. Build your price range from the income a lender will count and the cash you can document, not from your total compensation.

If you also need the equity in your current home, see how Buy Before You Sell lines up the sale and the purchase.

In our experience, terms can matter as much as price. On one San Carlos purchase, the listing agent said an offer had already been accepted; we won on terms, not price, including same-day delivery of the deposit. A clean, fully documented offer is one of those terms, whether you're buying in Cupertino, Mountain View or Sunnyvale. See more client results or our buying plan.