RSUs and your mortgage: how lenders actually count vesting stock

If you work in tech, biotech, finance, or any company that pays in restricted stock units, RSU income can be the difference between qualifying for the house you want and not. Public-company RSUs routinely add $50k-$500k+ of qualifying income to a mortgage application. But the rules for how lenders count this income are inconsistent across the industry, and one specific scenario — the new-hire grant — is where most denials happen.

This is a guide, not legal or tax advice. Lender overlays vary wildly — if one underwriter says no, that doesn’t mean every underwriter says no.

How RSU income works in mortgage qualification

Lenders treat RSU income as variable compensation — same bucket as bonus and commission. To count toward your debt-to-income ratio, variable comp under Fannie Mae Selling Guide B3-3.1-09 (and Freddie Mac 5303) generally requires:

1. A 2-year history of receipt of the income, AND
2. A reasonable likelihood of continuance for at least 3 years past the closing date

Both halves matter. A 2-year history without continuance (e.g., your unvested grant runs out 18 months after closing) gets excluded. Continuance without history (e.g., your first vest tranche just landed) gets excluded.

On the URLA (1003), RSU income goes under “Other” income with type “RSU” or “Stock Options” — not under base or bonus. Getting that classification right on the loan officer’s end matters; if it’s entered as “Bonus,” AUS may treat it differently than the lender intends.

When both conditions are met, the underwriter calculates your qualifying income from your historical W-2 RSU figures and your forward vest schedule. The Fannie/Freddie text actually says “average of the last 24 months,” and if income is declining, use the trailing-12 figure. Most lenders then layer an overlay — not in the Selling Guide, but standard practice — that caps qualifying income at the lower of:

• 24-month average from W-2s / paystubs (or trailing-12 if declining)
• Forward 12-month vest schedule × current stock price × a haircut

This is conservative on purpose — the lender is hedging against a stock price drop, layoff, or grant non-renewal.

On W-2 box 14: most large public-company employers itemize vested RSU income as a box 14 line called RSU, RSUGN, or STK. Some employers don’t. If yours doesn’t, the dollar value is still inside box 1 (taxable wages) — you reconcile it from your final paystub of the year (look for an “imputed income,” “RSU vest,” or “stock release” YTD line) or from the broker’s release confirmations. Underwriters take both.

The new-hire-grant trap (the most common gotcha)

Here’s where most tech buyers run into trouble.

When you join a company, you typically get a new-hire grant: a large up-front equity award that vests over 4 years (with various schedules — cliffs, monthly, semi-annual). You may also get refresher grants annually after the first year, which are typically smaller individual grants but stack up over time.

The classification problem: many underwriters treat the new-hire grant as sign-on bonus rather than ongoing compensation. A sign-on bonus is one-time income and gets excluded from qualifying income entirely. To then count your RSUs, the underwriter wants to see ongoing income from your refresher grants — with the same 2-year history and 3-year continuation requirements.

Worked example: this trap in action

You join a public tech company in early 2025. New-hire grant: $400k total, vesting 25% per year over 4 years. Year 1 vest: $100k. Refresher grant issued at your year-1 review (early 2026): $80k spread over 4 years (~$20k/yr) starting on the refresher’s own vest schedule. You apply for a mortgage in early 2026 with one year of completed vest history.

Your 2025 W-2 RSU income (box 14 or paystub-reconciled): ~$100k — the new-hire grant’s year-1 tranche.

Optimistic underwriter: counts your 2025 RSU income as ongoing, projects forward 12 months. Forward vest = year-2 tranche of new-hire grant ($100k) plus first refresher tranche (~$20k starting later in 2026) = ~$120k at face. Apply 30% volatility haircut: $84k. Qualifying RSU income: ~$84k/yr.

Pessimistic (and common) underwriter: classifies the new-hire grant as one-time sign-on bonus; excludes the entire $100k from qualifying income. Looks at refreshers separately: zero history, zero qualifying income there. Qualifying RSU income: $0.

Same person, same employer, same vest schedule — two completely different mortgage outcomes depending on underwriter judgment. On a $200k base salary, that’s the difference between qualifying for ~$1.1M and ~$800k of house at typical jumbo DTIs.

Why underwriters classify it this way

The Fannie Mae Selling Guide doesn’t explicitly say “exclude new-hire grants.” The classification call is typically driven by:

• The underwriter’s training (some banks aggressively conservative)
• The grant letter language (does it say “sign-on equity grant” or “initial equity award” vs “annual equity award”)
• Whether subsequent refreshers have been issued and documented
• The lender’s overlay policy on tech compensation
• Your 1-year history is short enough that it gets scrutinized either way

There is no central rule that mandates this treatment. Different underwriters at different lenders will classify the SAME grant differently. This is the single biggest reason to lender-shop tech RSU mortgages.

How lenders actually calculate RSU income (when they do count it)

Once your RSU income clears the eligibility hurdle, the math:

Fannie Mae (DU)

Fannie Mae Selling Guide B3-3.1-09 governs variable comp. The general approach for RSUs:

• 24-month average of W-2 RSU income (box 14 if itemized, otherwise reconciled from paystub YTD)
• If the trailing-12 trend is DOWN (current year less than prior year), the trailing-12 figure governs — you don’t get to keep using the higher 24-mo average
• DU itself does NOT have a specific “new-hire grant” flag — the classification call is human underwriter judgment
• DU findings will flag “continuance” documentation when RSU income is a high share of total qualifying income; expect to produce a vest schedule that runs 3+ yrs past closing

Most lenders apply a stock price haircut in addition to the average. A common formula: lower of (a) 24-month average dollar amount, or (b) shares vesting in next 12 months × current price × 65-80% (volatility-dependent haircut). The haircut is overlay, not a Selling Guide rule — portfolio lenders sometimes waive it for mega-cap, low-volatility names.

Freddie Mac (LP / LPA)

Freddie Mac Selling Guide 5303 covers similar ground. Differences that matter in practice:

• LPA tends to be a touch more flexible on continuance documentation — an HR letter that says “equity grants are part of the borrower’s ongoing compensation” goes further on LPA than on DU
• Freddie LPA also leans on a 24-mo (or trailing-12 if declining) average; LPA does NOT have a meaningfully different look-back window, despite a common myth that it’s only 12 months
• Some Freddie correspondents accept smaller haircuts for large-cap, low-volatility names (AAPL/MSFT/GOOG/META) and are more willing to use a 30/60-day average price instead of recent close
• LPA findings sometimes specifically request a written grant continuation statement from the employer

Portfolio / non-QM lenders

For non-conventional loans (jumbo, bank-statement, asset-depletion), RSU rules vary entirely by lender overlay. Some specialize in tech comp:

• Higher RSU income proportions accepted
• Pre-IPO RSU income sometimes counted with strong company documentation
• More lenient on new-hire grant classification

These lenders typically charge a small rate premium (5-25 bps) for the underwriting flexibility.

Adjacent stock-comp situations underwriters treat differently

PSUs / MSUs / performance stock. These are stock awards where the share count itself depends on company or stock-price performance. Most underwriters treat PSU vest income more conservatively than RSU income because the share count is uncertain. Practical effect: they’ll often use the payout actually received in W-2 history but won’t project forward at target. If your comp is heavy on PSUs, lender-shop the same way you would on a new-hire grant.

Recent layoff or RIF at your employer. Mass layoffs, hiring freezes, or a public restructuring announcement can torpedo the “reasonable likelihood of continuance” argument even if you personally weren’t affected. Some underwriters will pull news coverage during conditions. If you’re mid-loan and your employer announces a RIF, expect to produce a fresh continuance letter and possibly take a deeper haircut.

Job change with a partial-year W-2. If you switched employers recently, your most-recent W-2 may have RSU income from the old employer that won’t continue. Underwriters separate this: old-employer RSUs come out of qualifying income; new-employer RSUs are evaluated on their own (very-short) history. This is the single hardest fact pattern to get qualified on.

Multi-year sign-on with cliff that already vested. If you’ve already cleared the 1-year cliff on a 4-year new-hire grant and have 2+ vest tranches in W-2 history, some underwriters will treat the remainder as ongoing comp instead of one-time bonus — the “already-vested 2 tranches” functions as your 2-year history. This is undocumented overlay-by-overlay; ask explicitly.

Public vs pre-IPO

Public-company RSUs are the easy case. Liquid, transparent pricing, well-defined haircut math.

Pre-IPO RSUs are vastly harder. Most conventional lenders don’t count them at all because there’s no liquidity event — the value is theoretical until the company goes public, gets acquired, or runs a tender offer. Even when counted, the haircut is often 50%+.

If your comp is heavily pre-IPO RSU-weighted:

• Don’t expect to qualify on RSU income at any agency lender
• A handful of private banks still count pre-IPO with strong docs — JPM Private Bank, Goldman PWM, BMO Family Office, Stifel Private Wealth, and a few specialty desks at Morgan Stanley. The bar is much higher than pre-2023: typically you need an existing banking/brokerage relationship, demonstrated tender or secondary history, and a 409A valuation backed by a recent priced round
• Recent tender/secondary documentation (price per share, dollar amount you sold, date) can unlock counting at lenders who otherwise won’t. The argument is “there’s a liquidity history, even if there’s no public market.” Save tender docs the moment you sell
• Double-trigger RSUs (vest only on liquidity event) are harder still — the “continuance” argument fails because there’s no scheduled future receipt
• Consider qualifying on base salary alone and right-sizing the purchase, or wait until the IPO/tender prints two W-2 cycles of RSU income

Documentation lenders will ask for

Be ready to produce:

• W-2s for the last 2 years — box 14 typically has an “RSU,” “RSUGN,” or “STK” line. If your employer doesn’t itemize, reconcile from final paystub YTD or broker release confirmations
• Most recent 30 days of paystubs showing year-to-date RSU income (and base, base/RSU split helps if box 14 is empty)
• Vest schedule from your broker (Fidelity, E*Trade, Charles Schwab, Morgan Stanley at Work, Carta) showing all granted but unvested shares with vest dates — needs to extend 3+ years past closing for the continuance test
• Grant letters / award certificates / grant agreements for the new-hire grant and every refresher. The exact term varies by employer (“award agreement” at AAPL, “grant notice” at GOOG, etc.) — ask HR for “all equity grant documents on file”
• Trade confirmations for any vested-share sales (rules out “you sold the underlying so it’s no longer comp” arguments)
• Verification of Employment (VOE / Form 1005) — the underwriter sends this directly to your employer; sometimes e-VOE through The Work Number. This is the formal employment- status check, separate from the continuance letter
• Employer continuance letter on company letterhead, signed by HR, explicitly stating that the borrower’s equity grants are part of ongoing compensation and are expected to vest as scheduled. The magic phrase “part of ongoing compensation” (not “sign-on”) matters
• Current stock price screenshot or printout (recent close)
• Most recent 1099-B if you’ve sold vested shares — documents the cost basis story for any large bank deposits the underwriter will ask about

If you’re self-employed/contractor with stock comp (rare but possible at some smaller startups paying in tokens or equity), the documentation requirements shift entirely — that’s a different file type.

Tactics that actually work

1. Lender-shop aggressively

The single biggest lever. Plan for 5-10 lenders, not 3, if RSU income is >30% of your qualifying income — the spread between best and worst desk is routinely 30-50% of qualifying income on the same file. Different underwriters classify your situation differently; the only way to find your “yes” is to ask several. The cost of shopping is your time and a single hard pull (FICO collapses all mortgage inquiries within a 14-45 day window into one).

Lenders worth considering for tech RSU borrowers:

• Big-bank private banks (JPMorgan Private Bank, Goldman PWM, Morgan Stanley Private Bank, BMO Family Office, Stifel) — if you’re already a wealth/brokerage client, the most flexible on grant classification and pre-IPO. Often the only path for pre-IPO files
• Tech-specialty mortgage brokers — brokers who focus on tech employees and know which wholesale channels at UWM, Rocket TPO, Pennymac TPO, etc. accept which RSU treatments. The good ones can pre-quiz the underwriter before submitting
• Non-bank jumbo specialists — SoFi, Better, Beeline, plus regional jumbo desks. Mixed bag on RSUs; ask explicitly
• Local credit unions in tech hubs — First Tech FCU (Bay Area, Seattle), BECU (Seattle), Star One CU (Bay Area), NYU FCU (NYC), Velocity CU (Austin) often have favorable tech-comp overlays and portfolio-loan flexibility
• Schwab Bank / Bank of America Merrill for Schwab/Merrill brokerage clients respectively — pledged-asset and tech-comp-aware programs

Bay Area / Seattle / NYC patterns. Underwriters in these markets see RSU files daily and the spread tends to be smaller than in less tech-dense markets. Conversely: a borrower with FAANG comp applying to a regional lender in a non-tech market often gets the deepest conservative haircut, because the local UW just doesn’t see files like yours often.

Avoid: any retail lender who can’t answer “how do you underwrite a 1-year-history new-hire grant” in 30 seconds. They’ll either overpromise and disappoint or underwrite conservatively and disappoint.

2. Time the application around your vest schedule

If you’re close to a major vest tranche, wait. An extra quarter of vest history can move you from “1 year history” to “1.25 year + projection,” which some underwriters accept. Crossing 2 calendar years (so two W-2s show RSU income) is the single biggest threshold and is worth waiting for if you can.

This is a real tactic, not wishful thinking — but it’s conditional on (a) the stock not dropping in the interim, and (b) your employer not announcing layoffs. Both can flip the math the wrong way.

3. Document refreshers the moment you get them

Every refresher grant adds future qualifying income. Save the grant letters in a folder labeled “mortgage docs.” When applying, present all refreshers with their letters — this helps reframe RSU income as “ongoing equity comp” rather than “one-time grant.”

4. Right-size on base salary if RSUs get excluded

If 2-3 lenders all classify your new-hire grant as bonus and reject the RSU income, you have two options:

• Keep shopping (lender 4 might say yes)
• Qualify on base salary alone and reduce your target purchase price

The math: $200k base + $200k RSU = $400k qualifying income unlocks about $1.6M house. Drop to $200k qualifying = roughly $800k house. That’s a real constraint but it’s also a perfectly fine house in most of the country.

5. Build a 2-year refresher history before applying

If you’re early in a job and not in a hurry, planning the mortgage timing around your refresher history can be the cleanest path. Two annual refreshers documented = “ongoing equity comp” by most underwriters’ lights, which dissolves the new-hire-grant classification problem.

6. Use the RSU Income Qualification calc

Plug your numbers in to see what each lender approach (Fannie DU, Freddie LP, conservative) yields for your specific vest schedule. Range estimate, not a guarantee.

Stock options and ESPP (briefly)

Non-qualified stock options (NSOs): counted only after exercise and sale — treated as a one-time event, not ongoing income.

Incentive stock options (ISOs): same treatment as NSOs for mortgage purposes. AMT considerations apply on the tax side but not on the mortgage side.

ESPP: rarely counted as income. Treated more like a savings program. Some lenders will count the discount portion at face value, but it’s small money relative to RSUs.

If a meaningful chunk of your comp is options or ESPP, plan to qualify primarily on salary + RSU.

Common mistakes

• Trusting one lender’s “no” — overlays vary; the next lender may say yes on the same file
• Not getting the new-hire grant letter language right — ask HR if a fresh letter can be issued describing the grant as “part of ongoing equity compensation” rather than “sign-on” or “initial.” HR usually won’t change the original document, but a clarifying letter often works
• Applying with 1 year of vest history when you could wait 6-12 months for a stronger file (assuming stock and employment cooperate)
• Choosing the lender with the lowest rate — if their underwriting kills your loan, the rate is irrelevant
• Forgetting refreshers exist — some borrowers don’t realize their annual refresher grants help; bring all the paperwork including the small ones
• Letting the LO file the URLA with RSU under “Bonus” — this is a real and recurring mistake. RSU goes under “Other” with type “RSU.” Bonus classification triggers different DU/LPA logic
• Not freezing The Work Number / Equifax employment record before applying — if your verified employment data shows base only and the LO submits an income figure that includes RSU, the variance triggers a condition and slows the file. Pull your TWN report before applying to know what the lender will see
• Not lender-shopping at all on a high-RSU file — you may be leaving $200k+ of borrowing power on the table

When to consult a professional

A loan officer who’s closed at least 50 RSU-heavy mortgages. Ask them up front: “How do you handle a new-hire grant for a borrower with 1 year of vest history?” If they don’t have a clear answer, find someone else.

For pre-IPO equity, a CPA familiar with tech compensation can also help you navigate the documentation and timing questions, especially around AMT exposure on options.

Tools you’ll use

• RSU Income Qualification calc — range estimate by lender approach
• Affordability calculator — what each level of qualifying income unlocks
• DTI Scenario Planner — including or excluding RSU income changes your DTI
• Mortgage Calculator — payment math on the resulting loan size
• Choosing a lender guide — how to shop overlays
• DTI explained — overall variable comp rules