RSUs and Mortgages: What Tech Workers Miss

If you work in tech, your offer letter probably looks something like this: a solid base salary, maybe a bonus, and a big chunk of restricted stock units, or RSUs, vesting over the next few years. Add it all up and your total compensation might be double your base pay.

So when it's time to buy a home, it's natural to assume a lender will look at that full number. If you earn $380,000 in total compensation, surely that's what you'll qualify on, right?

Not necessarily. And misunderstanding how lenders treat RSU income can cause two very different problems. You might shop in a price range you can't actually qualify for. Or, just as frustrating, you might assume you can't afford a home when you actually can.

Let's walk through how RSU income really works in mortgage qualification, why the answer can vary so much from one lender to another, and how to avoid the most common mistakes.

A Common Scenario

Picture a software engineer with a base salary of $180,000. On top of that, they receive about $200,000 per year in RSUs, bringing total compensation to $380,000.

On paper, that's a strong income. But a mortgage lender doesn't just take the number on a compensation statement at face value. Depending on the loan program, the lender's rules, and the history of those RSUs, this borrower's qualifying income could land anywhere from roughly $180,000 to something close to their full compensation.

That gap can mean hundreds of thousands of dollars in purchasing power. Understanding why it exists is the first step to planning your home purchase correctly.

Requirement 1: A History of Vesting

The first thing lenders typically want to see is a track record. Generally, you'll need a 12- to 24-month history of RSUs vesting from a publicly traded company.

Why does the history matter? Because lenders want evidence that RSU income is a stable, recurring part of your compensation rather than a one-time windfall. Industry guidance indicates that time-based awards typically need at least 12 months of history, while a two-year history is recommended for performance-based awards.

The "publicly traded" part is also important. Shares in a private, pre-IPO company don't have a public market price, so conventional lenders generally can't use them as qualifying income.

Also, be aware that not every RSU grant counts. Sign-on bonuses paid in restricted stock that vests over time are generally not eligible as qualifying income, because they're considered a one-time incentive rather than ongoing compensation.

Requirement 2: Continued Vesting in the Future

Lenders don't just look backward. They also want reasonable confidence that your RSU income will continue.

In many cases, that means your vesting schedule should show that awards are expected to continue for at least three more years. Lenders typically ask for documentation such as your vesting schedule, your RSU agreement, recent pay stubs, W-2s, and brokerage statements showing that previous vested shares were actually distributed to you.

If your grants are about to run out and no new awards are scheduled, a lender may be hesitant to count that income, even if you've received it for years.

The Surprise: Lenders Don't Use Today's Stock Price

This is the part that catches many tech workers off guard. Lenders generally don't value your RSUs at today's stock price.

Stock prices can swing dramatically, especially in tech. To reduce the impact of that volatility, conventional loan guidelines use an averaged price. Under Fannie Mae's approach, share-based RSU income is calculated using the 200-day moving average stock price multiplied by the vested shares received before taxes over the most recent 24 months, then divided by 24. Freddie Mac has also relied on an averaged price rather than the current market price.

This averaging works both ways. If your company's stock has dropped recently, the moving average may give you credit for a higher value than today's price. But if your stock has surged in recent months, the average may lag behind, and your qualifying income could be lower than your recent pay stubs suggest.

In other words, the RSU value you see in your brokerage app today may not be the number an underwriter uses.

Where AI Tools Get It Wrong

With so many people turning to AI chatbots for financial questions, it's worth addressing a specific source of confusion.

If you ask some AI tools how RSUs are treated in mortgage qualification, you may be told that RSU income is capped at 35% of your total qualifying income. That can sound like an official rule, but it isn't a Fannie Mae or Freddie Mac guideline.

That 35% limit is a lending overlay, meaning an extra rule that some banks add on top of the standard guidelines. It's typically applied to certain jumbo or portfolio loans that banks keep on their own balance sheets. It doesn't apply to conventional loans that follow Fannie Mae and Freddie Mac guidelines.

The difference can be enormous. Let's go back to our engineer earning $180,000 in base salary and $200,000 in RSUs.

Under a 35% cap, RSU income can make up no more than 35% of total qualifying income. That limits the borrower's qualifying income to roughly $277,000, with only about $97,000 of RSU income counted.

Under conventional guidelines without that overlay, the lender may count the full averaged RSU income, subject to the history, continuance, and 200-day moving average calculation. Depending on share prices, that could result in qualifying income much closer to the borrower's total compensation.

Same borrower. Same compensation. Potentially a six-figure difference in qualifying income.

Why Two Lenders Can Give You Different Answers

This is exactly why two lenders can look at the same compensation package and approve very different loan amounts. One lender might be using conventional guidelines. Another might be applying its own overlay. A third might offer a jumbo loan with a different calculation method altogether.

If you only talk to one lender, you might walk away thinking their answer is the only answer. In reality, it may simply reflect that lender's internal rules.

This matters even more in high-cost markets where many tech workers live. If your target price range pushes you into jumbo loan territory, you're more likely to run into bank-specific overlays. Understanding your options across different lenders becomes critical.

How to Prepare Before You Shop

If a significant portion of your income comes from RSUs, a little preparation can go a long way.

Start by gathering your documentation: your vesting schedules, RSU agreements, recent pay stubs, two years of W-2s, and brokerage statements showing past distributions. Having these ready will speed up the pre-approval process.

Next, understand your own vesting history. How long have you been receiving RSUs? Are they time-based or performance-based? Are future awards scheduled for at least the next few years?

Most importantly, don't guess and don't rely on generic AI answers. Work with a mortgage broker who can run your numbers across multiple lenders and loan programs. A broker can show you how different guidelines affect your qualifying income, so you can set a realistic budget before you start touring homes.

The Bottom Line

RSUs can be a powerful part of your mortgage qualification, but lenders don't simply use your total compensation. Most will require a 12- to 24-month vesting history from a publicly traded company and evidence that vesting will continue. Conventional guidelines value your shares using an averaged price rather than today's stock price. And the widely repeated 35% cap isn't a Fannie Mae or Freddie Mac rule. It's an overlay some banks apply to certain jumbo or portfolio loans.

Before you start house hunting, have a mortgage broker compare your options across multiple lenders. And if you'd like to see how financial personalities like Dave Ramsey and Suze Orman suggest setting your homeownership budget compared to what lenders will actually allow, watch the full video: How Much Home Can You Really Afford?

This article is for general educational purposes and is not lending or tax advice. Guidelines and lender overlays change, so consult a licensed mortgage professional about your specific situation.

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