Buying a Home in Silicon Valley? How RSUs and Equity Compensation Affect Mortgage Qualification
Updated: Oct 26
What are restricted stock units?
Restricted stock units (RSUs) are employer compensation awards that generally provide shares or an equivalent cash payment once vesting conditions are met. A Silicon Valley compensation package may combine salary, bonuses, time-based RSUs, performance awards, and additional grants. Mortgage lenders may treat these components differently.
Vested versus unvested RSUs
Vested awards have met their vesting conditions and have been distributed. Depending on the loan program, documented distributions may count as income. Unvested awards have not yet met vesting conditions and generally cannot be treated as income already received. Future vesting schedules can help establish potential income continuity, but future grants are not guaranteed cash.
Can RSUs count as mortgage income?
Yes, subject to lender and loan-program rules. Under Fannie Mae restricted-stock guidelines, eligible stock generally must have vested and been distributed without restrictions, and shares must be publicly traded. An acceptable receipt history and evidence of likely continuation are important. Time-based awards generally require at least 12 months of receipt history with the current employer; performance-based awards generally require longer history, subject to specific exceptions. Sign-on bonuses paid as restricted stock are not eligible under these guidelines. Other programs may differ.
Why today's stock price may not be the qualifying value
An employee may value annual equity compensation using the current share price, but a lender may calculate eligible income differently. Fannie Mae guidelines for income paid in shares generally use the 200-day moving average stock price and eligible historical distributions. Cash-settled awards follow eligible cash distribution history. As a result, qualifying income may differ from an employer equity portal's total compensation estimate.
A simplified example
Imagine annual base salary of $220,000, a $30,000 target bonus, and an estimated $150,000 in RSUs: total estimated compensation is $400,000. The lender might instead determine that $20,000 of bonus and $100,000 of RSU income qualify, resulting in $340,000 of annual qualifying income. These numbers are hypothetical, not an approval estimate. Actual treatment depends on documentation and program rules.
RSUs as income versus assets
Eligible vested distributions may count toward qualifying income. Separately, vested and accessible shares held in a brokerage account may support down payment, closing costs, or reserves, subject to documentation and valuation rules. Do not assume the same shares qualify in multiple ways without lender review. Unvested equity is not the same as liquid funds.
Private-company equity
Equity awards in private technology companies may have estimated values but limited liquidity and transfer restrictions. Fannie Mae's standard restricted-stock income requirements generally require publicly traded stock. Do not assume private-company awards qualify as income or available down-payment funds; consult the lender about the specific loan program.
Job changes and equity compensation
Moving between technology employers can affect qualifying income history. A new role might bring higher salary, sign-on awards, and future RSUs, but a new grant does not automatically replace historical eligible distributions. A lender may review prior earnings, current employment, new vesting schedules, and program-specific rules.
Why jumbo loans matter
Higher-priced Silicon Valley purchases may require jumbo loans depending on the amount borrowed and conforming limits. Jumbo lenders may impose different documentation, historical-income, reserve, and concentration requirements. Buyers with substantial stock compensation should consult mortgage professionals experienced in evaluating technology-sector compensation.
The risk of relying on company stock
Approval is not the same as comfortable ownership. When salary, bonuses, and investments are tied to one employer, buyers face concentrated financial exposure. Stock values and employment can change. Evaluate whether mortgage payments, taxes, insurance, maintenance, and reserves remain manageable if equity compensation declines.
Documents to organize before preapproval
Gather recent pay statements, two years of W-2s, RSU grant and vesting schedules, historical distribution records, brokerage statements, employment documentation, cash and investment statements, and details of job changes. Your lender may request more based on the loan program.
Questions to ask your lender
Ask whether the program accepts RSU income, how much distribution history is required, how eligible stock value is calculated, whether vested shares may count toward funds or reserves, how a job change affects eligibility, what happens if stock prices fall, whether suitable jumbo programs exist, and whether a detailed underwriting review can occur before an offer.
Why this matters when making an offer
A strong offer should reflect verified borrowing capacity and available funds, not an estimate of net worth or total compensation. Buyers with substantial RSUs may benefit from an in-depth documentation review before choosing a price range and financing contingency strategy.
The bottom line
Equity compensation can strengthen a Silicon Valley buyer's financial position, but vested and unvested awards are not interchangeable, stock value is not automatically qualifying income, and lenders may treat the same compensation package differently. Prepare early and make decisions using lender-verified numbers.
Official reference
Fannie Mae Selling Guide B3-3.3-07, Restricted Stock Units and Restricted Stock Employment Income: https://selling-guide.fanniemae.com/sel/b3-3.3-07/restricted-stock-units-and-restricted-stock-employment-income. Verify current guidelines with your lender.
About the author
Nadia Kafaipour, REALTOR® | Real Brokerage Technologies, Inc. | California DRE #02205762 | (408) 348-9145 | homeswithnadia.com. General educational information, not mortgage lending, tax, investment, or financial advice. Qualification depends on the lender, loan program, borrower documentation, and current underwriting guidelines.
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