Do you know how much of last year's vested stock your lender will actually count? For a public-company employee whose package is a base salary plus an annual restricted stock unit grant, that single underwriting decision moves the maximum purchase price Measure ULA jumbo buyers further than a quarter-point of interest rate ever will.
Restricted stock units are ordinary income the moment they vest — they appear on your W-2, they are withheld against, and they pay your bills. Underwriting nevertheless treats them the way it treats bonus and commission income: as variable earnings that must clear a history test, a continuance test, and a valuation convention before any of it reaches your qualifying figure.
What follows is the mechanics — what agency rules require, where individual investors add their own restrictions, and what the gap between the two is worth in dollars of purchase price.
What Counts As RSU Income
Fannie Mae addresses restricted stock and restricted stock units in the other-sources-of-income portion of its Selling Guide, at section B3-3.3-07 (Restricted Stock Units and Restricted Stock Employment Income, updated March 4, 2026), and Freddie Mac covers the same ground in Guide Section 5303.4. Both agencies treat vested, distributed equity as usable income only when a specific set of conditions is satisfied, and both revise these sections periodically, so confirm the current edition with your loan officer before building a budget around it.
The conditions are structural rather than discretionary, which is good news — you can check most of them yourself from your grant agreements and your last two W-2s. The core requirements include but are not limited to:
- Time-based or performance-based vesting, treated differently. Units that vest on the passage of time and continued employment need a 12-month history from the current employer. Performance-based units — contingent on a revenue or milestone target — are eligible too, but Fannie Mae recommends a two-year history and accepts no less than 12 months only when other strengths in the file offset the shorter record. Anything requiring a discretionary board determination is out.
- A publicly traded employer. The stock has to trade on a nationally recognized U.S. exchange, which is what keeps a price discoverable and a valuation defensible.
- Vested and distributed shares only. Income is measured by what actually reached your brokerage account, not by the paper value of the outstanding grant.
- A documented history. At least 12 months of vests from the current employer for time-based awards (two years recommended for performance-based), evidenced by W-2s, paystubs, the vesting schedule, and brokerage statements that agree with one another.
- Documented continuance, where it applies. A one-time time-based award must show, from the vesting schedule, that vesting continues for at least three years from the note date. Recurring awards and performance-based awards need no continuance proof under Fannie Mae's rule unless the lender has reason to believe the income will stop; Freddie Mac and most jumbo investors want three years on all of them.
Miss any one of these and the income does not become harder to use — it becomes unusable under agency rules, and the conversation moves to a portfolio lender. That is the most common surprise for engineers who assumed a $320,000 total-compensation number would be read as $320,000.
The Vesting History Test
The history test asks a narrow question: have you received this income long enough that averaging it means something? Under Fannie Mae's rule the answer is 12 months from your current employer for time-based awards, and a recommended two years for performance-based awards, with 12 months the floor when other factors offset the shorter record. Freddie Mac asks for one year on time-based and two years on performance-based awards. Most jumbo investors, as the overlay section below shows, want two or three years regardless. In every case the clock is measured by actual vest events rather than by the date the grant was signed.
A four-year grant with a one-year cliff therefore produces its first usable vest twelve months into the job, and the qualifying clock starts there rather than on the hire date. An engineer three years into a public-company role has a usable history under any rulebook; one fourteen months in has the agency's 12-month history only if a vest actually occurred at month twelve, and does not have the two years most jumbo programs ask for, no matter how large the first vest was.
Lenders count vest events, not grant dates. A four-year grant with a one-year cliff produces its first usable vest at month twelve, so the agency's 12-month history means roughly two years of employment, and a jumbo investor's two-year history means three.
Note that the history does not have to come from a single grant. Overlapping annual refresh grants are normal at large employers, and underwriting looks at the shares that vested across the averaging window rather than tracing each tranche back to its origin.
A job change usually resets the clock. Even a lateral move between two public companies leaves the new grant with no vest history, and underwriters will exclude that income until 12 months of vests exist at the new employer — two years under most jumbo overlays — while the base salary from the very same job transfers without friction.
The Continuance Test
Averaging past vests tells the lender what you earned; the continuance test asks whether you will keep earning it. Fannie Mae draws the line by award type: a one-time time-based award must show vesting continuing for at least three years from the note date, documented from the schedule of units you have already been granted, while recurring time-based awards and performance-based awards need no continuance verification unless the lender has reason to believe the income will stop. Freddie Mac asks for three years of likely continuance on both types, and most jumbo investors do the same, so plan on proving it.
This is stricter than it first appears, because it cannot be satisfied by the reasonable expectation of future refresh grants. Only units already awarded and still unvested count toward the three years, which is why a borrower deep into a four-year grant with no recent refresh can pass the history test and fail continuance in the same file.
Continuance is proven only with units already granted and still unvested; expected refresh grants do not count. Fannie Mae requires the three-year showing only for one-time awards, while Freddie Mac and jumbo investors require it for all of them.
The practical fix is documentation rather than argument. A current vesting-schedule printout from your equity platform, showing grant date, units, and scheduled vest dates through the next three years, is what closes this condition.
The Public-Company Requirement And Pre-IPO Equity
Agency rules require stock traded on a nationally recognized U.S. exchange, and this requirement does more work than any other on the list. It is the reason a startup employee with a paper-wealthy equity position is, for qualifying purposes, a borrower with only a salary.
Most private-company RSUs are double-trigger: they satisfy a time condition and a liquidity condition, and they distribute nothing until both are met. No distribution means no W-2 income, no vest history, and nothing to average.
If your equity is pre-IPO, plan the purchase around your salary and your cash. Private-company paper does not qualify as income, and it generally cannot be pledged the way marketable securities can.
A recently public employer is a middle case worth raising early. Whether vests that occurred before the listing count toward the history requirement is a question to put to your underwriter in writing before you write an offer, because treatment varies by investor and is not worth assuming.
How Underwriters Value The Shares
Here is where two files with identical vest histories produce different qualifying income. The number of shares that vested is a fact; the price applied to them is a policy choice.
Both agencies fix the price by formula rather than by the price on each vest date. Fannie Mae multiplies the stock's 200-day moving average price by the total number of shares distributed at vest, pre-tax, in the most recent 24 months, and divides by 24 to reach a monthly figure; cash-settled awards use the cash actually distributed over the same window. Freddie Mac uses the same 200-day simple moving average. A stock that vested at $180 and whose 200-day average now sits near $120 therefore delivers roughly a third less qualifying income than the W-2 suggests, even though the W-2 figure was accurate on the day it was earned.
Shares are valued at the 200-day moving average price times the shares that vested in the last 24 months, divided by 24 — not the price on your vest date. A stock whose 200-day average is down a third from where it vested cuts qualifying income by roughly a third.
The reverse case is treated asymmetrically, as variable income usually is. A stock that has appreciated sharply is valued at the 200-day average, not the spike, and a steeply rising vest history is averaged over the window rather than annualized at the higher recent figure.
Keep in mind that a declining trend triggers its own scrutiny. When the most recent twelve months produced materially less vested value than the prior twelve, underwriters typically use the lower recent figure instead of the 24-month average, and they will ask for a written explanation of why the decline is not a signal about your continued employment.
Gross Value At Vest, Not The Shares You Kept
Most vests settle with a sell-to-cover, in which the employer sells a portion of the shares to satisfy withholding and delivers the remainder. The withheld portion is still your income.
Underwriting counts the gross number of shares that vested, pre-tax, as reported on your W-2 and itemized on your paystub, not the net shares that landed in the brokerage account. This distinction routinely swings the qualifying figure by a third or more, and borrowers who compute their own numbers from brokerage deposits tend to understate themselves badly.
Underwriters count the gross vest value on your W-2, not the net shares left after sell-to-cover withholding. Borrowers who tally brokerage deposits instead routinely understate their own qualifying income.
The corollary is that your paystub matters as much as your W-2. Ask your payroll team which earnings code carries the vest value, because a lender who cannot isolate it from base salary on the paystub will request a written verification of employment that breaks it out.
Income Or Assets, Not Both
Vested shares sitting in your brokerage account can play one of two roles in a file: they can support qualifying income, or they can serve as down payment and reserves. They cannot do both.
This is the decision most worth modeling before you apply, particularly for a borrower with a large accumulated position and a modest salary. Running the file both ways — income-heavy with a smaller down payment, asset-heavy with a larger one — often produces a materially different answer, and a good loan officer will do that math on request.
The same shares cannot be counted twice. Vested stock supports either qualifying income or down payment and reserves, so model the file both ways before you apply and take the version that buys more house.
Note also that unvested units are neither. They document continuance, but they are not an asset you own and not income you have received, so they never enter the reserves calculation.
How Much Of Your Qualifying Income Can Be RSUs?
Agency guidance sets no explicit percentage cap. If the units are time-based, the history is documented, and continuance is proven, the averaged vest value is simply added to base salary and the total is what the automated underwriting system evaluates.
Investor overlays are where the caps appear, and they appear frequently on larger loans. Many jumbo programs limit equity income to somewhere in the range of twenty-five to fifty percent of total qualifying income, and some non-delegated investors decline RSU income altogether.
The cap bites hardest on exactly the borrower it targets — the senior engineer or product leader whose annual grant has grown to rival the salary. For that profile, the difference between an uncapped agency calculation and a thirty-percent overlay is not a rounding error, as the worked example below shows.
Where Investor Overlays Begin
Agency rules are a floor, not a ceiling. A loan that satisfies Fannie Mae's Selling Guide is eligible for delivery to Fannie Mae; it is not automatically acceptable to the correspondent investor, the jumbo aggregator, or the bank holding the loan in portfolio.
Overlays are the additional conditions each of those parties layers on top, and they are not published in any single place. The practical move is to ask your loan officer one direct question: which of these requirements is agency, and which is your investor?
Overlays you should expect to encounter on equity income include but are not limited to:
- A two- or three-year history instead of twelve months. Common on jumbo, and it quietly excludes anyone who changed employers recently.
- A percentage cap. Equity income limited to a share of the total, with the excess simply dropped from the calculation.
- A stricter valuation. A longer trailing average, an explicit percentage haircut, or a requirement to use the lowest of several reference prices.
- A longer continuance requirement. Occasionally paired with a demand for an employer letter confirming the grant program is not being wound down.
- Share-retention conditions. Some portfolio programs want evidence that you have historically held rather than liquidated, on the theory that a holder carries ongoing assets.
| Underwriting question | Agency rules | Typical jumbo or portfolio overlay |
|---|---|---|
| Vesting history required | 12 months from the current employer (time-based); two years recommended, 12-month floor (performance-based) | Often two or three years |
| Continuance | Three years from the note date for a one-time award; none required for recurring or performance-based awards absent a red flag | Three years for all awards, sometimes with an employer letter |
| Eligible unit type | Time-based and performance-based | Often time-based only, occasionally excluded entirely |
| Employer | Publicly traded on a U.S. exchange | Same, sometimes limited to seasoned public companies |
| Share valuation | 200-day moving average price × shares vested in the last 24 months ÷ 24 | Longer trailing averages or an explicit haircut |
| Cap on equity share of income | No explicit percentage cap | Commonly 25 to 50 percent of qualifying income |
| Unvested units | Documentation of continuance only | Same, and occasionally the basis for an asset calculation |
Agency rules set a floor, not a ceiling. Jumbo investors commonly add a two- or three-year history, a cap limiting equity to roughly 25 to 50 percent of qualifying income, and a longer trailing average for pricing shares.
All of these are negotiable in one direction only — by shopping lenders, not by arguing with an underwriter. Two banks quoting the same rate can produce purchase prices a hundred thousand dollars apart from the identical income documents.
Jumbo And Portfolio Treatment
Jumbo underwriting is generally more conservative on the income side and more flexible on the asset side, which suits an equity-compensated borrower in a specific way. Where an agency file simply averages your vests, a private bank may underwrite around a securities-backed line or an asset-utilization calculation that converts holdings into an imputed monthly income stream.
Asset-based approaches are worth understanding because they sidestep the continuance problem entirely. They do not ask whether your grants will keep vesting; they ask what you already hold, which is a far easier question for a borrower whose refresh grants are uncertain.
The tradeoffs are real, and they include pricing, relationship-deposit requirements, and in some cases a pledge of the securities themselves. Borrowers who go this route are reaching for the same category of solution that self-employed borrowers use when standard documentation does not capture actual cash flow — the logic behind bank statement loan programs for 1099 and K-1 income.
Worked Example: $200,000 Base And $120,000 In Vests
Consider a software engineer in Los Angeles with a $200,000 base salary, shares that vested in the most recent twelve months worth $120,000 at the stock's 200-day moving average price, and $96,000 for the twelve months before that. Assume $600 in other monthly debt, twenty percent down, and — for illustration only, not as a quote — a 6.5 percent note rate on a thirty-year fixed loan.
Assume as well property taxes at 1.25 percent of purchase price and $200 a month for insurance, reasonable placeholders for Los Angeles County rather than a substitute for actual figures; the way California reassesses at sale is covered in our explainer on the California supplemental property tax bill. The debt-to-income ceiling used here is a conservative 43 percent, though Fannie Mae's automated underwriting will approve to 50 percent in the right file.
Under Fannie Mae's formula — the 200-day moving average price times the shares vested in the last 24 months, divided by 24 — the two years average to $108,000, or $9,000 a month, for qualifying income of $25,667 a month. A jumbo investor requiring a three-year average — where the third year back produced only $60,000 because the borrower was still inside the cliff — and capping equity income at thirty percent of the total arrives at $87,600, or $7,300 a month, for qualifying income of $23,967.
| Line item | Agency calculation | Jumbo overlay calculation |
|---|---|---|
| Base salary | $200,000 | $200,000 |
| RSU averaging window | 24 months | 36 months |
| Averaged RSU value | $108,000 | $92,000 |
| Equity cap applied | None | 30 percent of total, or $87,600 |
| Qualifying income, monthly | $25,667 | $23,967 |
| Housing budget at 43 percent DTI, after $600 other debt | $10,437 | $9,706 |
| Supported purchase price | About $1,678,000 | About $1,559,000 |
| Loan amount at 20 percent down | About $1,342,000 | About $1,247,000 |
Run both through the same payment math and the agency calculation supports roughly $1.68 million in purchase price against roughly $1.56 million for the jumbo calculation. That is about $120,000 of house and roughly $96,000 of loan amount, produced entirely by two policy choices applied to the same vest history.
There is a wrinkle worth naming. At either price with twenty percent down, the loan exceeds the FHFA high-cost ceiling that applies to Los Angeles County, so this borrower is shopping jumbo programs regardless of what the Selling Guide would have allowed.
That is precisely the point: the borrower most dependent on RSU income is usually buying above the agency limit, which means the overlay set, not the agency rulebook, is what actually governs the file. Our California mortgage guide covers the loan-limit and high-balance mechanics in more detail.
Buyers in this position sometimes solve the problem sideways. Purchasing with cash from a large vested position and then recovering it through delayed financing can be stronger in a competitive market than a financed offer, which is one reason all-cash offers are common in the Los Angeles technology corridor.
Documents To Assemble Before You Apply
Nothing on this list is exotic, but assembling it before the file opens shortens underwriting materially. Ask for all of it at once rather than one item at a time:
- Two years of W-2s. The vest value is embedded in Box 1, which is exactly why the paystub breakdown matters.
- Recent paystubs with year-to-date detail. Ideally showing the earnings code carrying vest value separately from base salary.
- The full vesting schedule. Grant dates, units granted, units vested, and every scheduled future vest date.
- Brokerage or equity-platform statements. Evidence that shares were actually distributed, matched to the vest dates.
- The grant agreement. The document proving that vesting is time-based rather than performance-contingent.
- A written verification of employment. Frequently requested when the paystub does not isolate equity income cleanly.
All of these serve one purpose: letting an underwriter reconcile three independent sources — payroll, the equity platform, and your tax returns — to the same number. Discrepancies among them are the most common reason a conditional approval turns into a request for re-underwriting late in escrow.
Timing Around Your Vest Calendar
Because the calculation is a trailing average of completed vests, the date you apply changes the answer. Applying the week after a large vest posts can add a full quarter of value to the trailing twelve months.
The same logic cuts the other way for a borrower nearing the end of a grant with no refresh announced. Each month that passes shrinks the unvested schedule, and continuance is the test that fails first.
Be aware that rate locks and vest calendars do not coordinate themselves. If your income documentation will strengthen materially in six weeks, that is a conversation to have with your loan officer before you lock rather than after.
Setting A Realistic Budget
The honest summary is that your qualifying income is a function of your lender's credit policy as much as your compensation. Two underwriters reading the same W-2s can land $120,000 apart on purchase price, and the only way to learn which one you are working with is to ask the specific questions above before you make an offer.
Start by modeling the range rather than a single number, then pressure-test it against what your target market actually costs — our home affordability map is a reasonable starting point for that comparison. Take your grant agreement and vesting schedule to two or three lenders, including at least one portfolio or private-bank program, and ask each to state the RSU calculation in writing.
Remember that published rate averages, such as Freddie Mac's Primary Mortgage Market Survey, describe the national market and not your file. Your rate depends on credit, loan-to-value, loan size, occupancy, and term — and your qualifying income depends on whose rulebook the person underwriting it is using.
This article is for informational purposes and is not financial or mortgage advice. Consult a licensed professional in your jurisdiction.