How to Use RSU and Stock Option Income to Qualify for a Mortgage

Why RSU Income Is a Mortgage Superpower (If Your Lender Knows How to Use It)

If you work at Amazon, Microsoft, Meta, Google, or any tech company that pays in equity compensation, you likely have significant income that many lenders simply ignore. In my 20+ years of mortgage lending in the Seattle market, I have seen tech employees leave $150,000 to $300,000 in buying power on the table because their lender did not know how to document RSU income. Here is exactly how it works and how to maximize your qualification.

Types of Equity Compensation Lenders Can Count

Restricted Stock Units (RSUs)

RSUs are the most common equity compensation in Seattle's tech industry and the easiest for lenders to document. When RSUs vest, they convert to actual shares of company stock and show up as taxable income on your W-2 and pay stubs.

How lenders count it: Average the total RSU income from your past two tax returns (W-2 Box 1 includes vested RSUs). If you received $80,000 in vested RSUs in 2024 and $120,000 in 2025, your qualifying RSU income is $100,000/year ($8,333/month).

Stock Options (ISO and NSO)

Stock options are trickier because you choose when to exercise them. Lenders need to see a consistent 2-year history of exercising options to count this income.

• Non-Qualified Stock Options (NSOs): Taxed at exercise, shows on W-2 — easier to document
• Incentive Stock Options (ISOs): Not on W-2 until sold — harder to document, requires brokerage statements

Employee Stock Purchase Plans (ESPP)

ESPP income is generally not counted toward mortgage qualification because it is discretionary — you choose how much to contribute. However, the shares you have already purchased can count as assets for reserves.

Signing Bonuses and Cash Bonuses

One-time signing bonuses are not counted as recurring income. Annual performance bonuses can be counted if you have a 2-year history. Lenders average the past 24 months.

The Amazon Problem: Back-Loaded Vesting

Amazon's RSU vesting schedule is unique and causes more mortgage qualification headaches than any other company's compensation structure:

• Year 1: 5% vests
• Year 2: 15% vests
• Year 3: 40% vests (20% every 6 months)
• Year 4: 40% vests (20% every 6 months)

This means an Amazon employee in year 1-2 has very little RSU income on their tax returns, even though their total compensation package may be $300,000+. The income ramps dramatically in years 3-4.

How to Handle Amazon's Vesting

If you are in years 1-2 at Amazon, your options include:

• Use base salary only: Qualify on your $160,000-$185,000 base — still significant buying power
• Wait for year 3: Once you have two tax returns showing meaningful RSU income, your qualifying income jumps dramatically
• Document the full grant: Some portfolio/non-QM lenders will consider the total grant value and remaining vesting schedule as a compensating factor
• Combine with refresh grants: If you have received annual refresh grants, these show Amazon's commitment to ongoing equity compensation

Microsoft, Meta, and Google: Standard Vesting

These companies typically vest RSUs on a standard schedule (25% per year or monthly/quarterly over 4 years), making documentation straightforward:

• Microsoft: Quarterly vesting over 4 years. W-2 income is consistent year over year
• Meta: Quarterly vesting over 4 years. Stock price volatility can create income swings between tax years
• Google: Monthly vesting over 4 years. Most consistent RSU income of the major tech companies

With standard vesting, the 2-year average calculation is simple and most lenders handle it competently.

Documents You Need to Maximize RSU Qualification

Bring these to your lender to ensure every dollar of equity compensation is counted:

1. Past 2 years of W-2s: RSU income appears in Box 1 (and sometimes broken out in Box 12 or 14)
2. Past 2 years of tax returns (1040): Confirms the W-2 income and shows any additional stock sale proceeds
3. Most recent 30 days of pay stubs: Shows year-to-date RSU income and upcoming vest dates
4. Current equity award agreement: The document from your company showing your total grant, vesting schedule, and remaining unvested shares
5. Brokerage statements: From E*Trade, Fidelity, Schwab, or Morgan Stanley showing vested shares and transaction history
6. Offer letter or compensation summary: If you recently joined or received a refresh grant, this documents the total equity package

Having all six documents ready at the start of pre-approval accelerates the process significantly. Most delays happen when lenders request documents one at a time over weeks. Check our full mortgage documents checklist for everything else you need.

How RSU Income Affects Your Buying Power

Here is a real example of how RSU income changes the math:

Without RSU Income

• Base salary: $175,000/year ($14,583/month)
• Maximum housing payment (28% rule): $4,083/month
• Approximate buying power: $600,000-$650,000

With RSU Income Included

• Base salary: $175,000 + RSU average: $100,000 = $275,000/year ($22,917/month)
• Maximum housing payment (28% rule): $6,417/month
• Approximate buying power: $950,000-$1,050,000

That is $350,000-$400,000 in additional buying power — the difference between a condo in Capitol Hill and a house in Ballard or Fremont. In Bellevue's market where median prices exceed $1.1 million, RSU income is often the difference between qualifying and being denied.

Stock Price Volatility: What Lenders Worry About

The biggest challenge with RSU income is stock price fluctuation. If your company's stock dropped 30% between tax years, your W-2 income drops proportionally even though the same number of shares vested.

How lenders handle this:

• Declining income: If year 2 RSU income is lower than year 1, most lenders use the lower of the two years (not the average). This is conservative but protects against further decline
• Stable or increasing: If income is stable or growing, lenders use the 2-year average — the standard approach
• Significant decline (30%+): Some lenders may discount RSU income further or require a letter of explanation

This is why timing matters. If your company's stock has been stable or rising, it is an ideal time to lock in your pre-approval while the 2-year average is strong.

Pre-IPO and Private Company Stock

If you work at a pre-IPO startup, your equity compensation generally cannot be counted toward mortgage qualification because:

• There is no public market price to value the shares
• The shares have not vested into taxable income on your W-2
• There is no guarantee the company will go public

However, your unvested equity can be considered a compensating factor — it shows financial stability and future income potential. Some portfolio lenders will account for this when making qualification decisions outside standard guidelines.

Why Most Lenders Get This Wrong

The majority of mortgage lenders — especially banks and online lenders — are not equipped to handle tech compensation properly. Common mistakes I see:

• Ignoring RSU income entirely: "We only count base salary" — leaving hundreds of thousands on the table
• Requiring 3 years of history: The guideline is 2 years. Some lenders add extra requirements out of unfamiliarity
• Not understanding vesting schedules: Treating Amazon's back-loaded vesting the same as Microsoft's quarterly vesting
• Confusing gross vs. net: Using post-tax RSU value instead of the pre-tax W-2 amount

This is why working with a lender who specializes in tech employee mortgages matters. The difference is not marginal — it is often $200,000+ in buying power.

Next Steps for Tech Employees

If you are a tech employee considering a home purchase in the Seattle area or anywhere nationwide:

1. Gather your documents: W-2s, tax returns, equity award agreement, brokerage statements
2. Calculate your 2-year RSU average: Add up RSU income from both years, divide by 24 months
3. Run the numbers: Use our mortgage calculator with your total qualifying income (base + RSU average)
4. Get pre-approved: Schedule a consultation and I will calculate your exact buying power including all equity compensation

With Seattle home prices ranging from $600,000 to over $1.5 million depending on neighborhood, every dollar of qualifying income matters. Do not leave your RSU buying power on the table.