Using Stock Options to Buy a Home in Seattle (2026)

Stock Options and Mortgage Qualification: What Seattle Tech Employees Need to Know

If you work at Amazon, Microsoft, Meta, or another major tech employer in the Seattle metro area, there's a good chance your stock options are worth more than your base salary — possibly much more. Yet when you sit down with a traditional lender, you may hear that your options "don't count" toward mortgage qualification.

That's not entirely true. It's also not entirely false. The reality is nuanced, and understanding it can unlock significant buying power — especially in a market like Seattle or Bellevue where median home prices routinely push $900,000 or higher.

As a mortgage advisor who specializes in tech-employee home loans, I work through stock option income scenarios regularly. Here's a clear breakdown of how it actually works.

The Three Types of Equity Comp Lenders Treat Differently

Before we get into qualification mechanics, you need to know which type of equity compensation you hold — because lenders treat each one differently.

1. Non-Qualified Stock Options (NQSOs)

NQSOs are the most common type at large Seattle-area tech companies. When you exercise an NQSO, the spread between the strike price and the market price is taxed as ordinary income and shows up on your W-2. That's actually helpful for mortgage purposes — it creates a paper trail lenders can verify.

2. Incentive Stock Options (ISOs)

ISOs are more tax-advantaged but trickier for mortgage qualification. The gain from exercising ISOs often doesn't appear as ordinary income on your W-2, which means it's harder for underwriters to count it as recurring income. However, it may still be usable as an asset.

3. RSUs (Restricted Stock Units)

RSUs aren't options — they're grants of actual shares that vest over time. I've covered how RSU income works for mortgage approval at Amazon and Microsoft in a separate post. If you hold RSUs alongside options, that post is essential reading.

Can Stock Options Count as Income?

Yes — under certain conditions. Fannie Mae and Freddie Mac guidelines allow lenders to count stock option income if it meets all of the following criteria:

• Two-year history of receiving the income. You must have exercised options and received proceeds in at least the two most recent tax years (shown on your federal tax returns).
• Reasonable expectation of continuance. The lender must document that the options are likely to continue for at least three more years. This typically requires a copy of your current option grant agreement showing unvested shares still pending.
• Consistent or increasing amounts. If your option income was $120,000 last year and $40,000 the year before, many underwriters will average the two — not use the higher number. Erratic amounts hurt you.

If your stock option income meets all three criteria, a lender can average your last two years of option proceeds and count that figure as monthly income alongside your base salary. For many Seattle tech employees, this can add $5,000–$15,000+ per month in qualifying income — dramatically increasing the loan amount you can access.

When Stock Options Count as Assets Instead

If your options are vested but you haven't exercised them yet, they may be usable as assets rather than income. Specifically, lenders can count the net value of vested, exercisable options (market price minus strike price, after estimated taxes) toward:

• Down payment reserves
• Closing cost reserves
• Post-closing reserve requirements (which matter a lot for jumbo loans)

For a jumbo loan in Seattle — which applies to most purchases over $806,500 in King County in 2026 — lenders often require 6–12 months of reserves. Vested stock options can satisfy that reserve requirement without you having to liquidate them at closing.

The key documentation: your brokerage or equity compensation platform (Fidelity NetBenefits, Schwab Equity Award Center, E*Trade) must produce a statement showing the current market value, strike price, number of vested shares, and expiration date. Your loan officer will then apply a standard haircut (usually 25–30% for taxes) to arrive at a net usable asset figure.

NQSOs vs. ISOs: Which Is Easier to Use?

For mortgage purposes, NQSOs are generally easier. Because the spread on exercise is reported as W-2 income, underwriters have a clean paper trail. ISOs are more complex — the gain may only appear on your alternative minimum tax (AMT) calculation, not on your ordinary income line, making it harder for an underwriter to categorize and count it.

If you hold ISOs, you'll want to work with a loan officer who is familiar with equity compensation structure and can present the income to underwriting in the correct format. A standard bank loan officer who processes vanilla W-2 applications every day will likely just decline to count it at all — leaving significant qualifying income on the table.

The Documentation Checklist for Option Income

If you plan to use stock option income to qualify, gather these documents before you apply:

1. Federal tax returns (1040s) for the past two years, including all schedules
2. W-2s for the past two years
3. Current equity compensation grant agreement showing unvested option balance
4. Most recent brokerage statement showing vested option positions
5. Exercise history report from your equity platform (downloadable from NetBenefits or Schwab)
6. Most recent pay stub (showing base salary and any YTD bonus)

Having these ready before you start the pre-approval process will prevent delays and ensure the underwriter has everything needed to count your option income correctly.

A Real-World Seattle Scenario

Here's a simplified example. Suppose you're a senior software engineer at a Seattle-based tech company earning $180,000 base salary. Over the past two years, you've exercised NQSOs generating $95,000 in 2024 and $110,000 in 2025 — both reported on your W-2.

A lender can average those two years: ($95,000 + $110,000) ÷ 2 = $102,500 per year, or about $8,542/month in additional income. Combined with your base salary (~$15,000/month), your qualifying income becomes roughly $23,500/month. At a standard 43% DTI, that supports a monthly mortgage payment of approximately $10,100 — enough to qualify for a loan in the $1.5M range depending on other debts and rates.

Without counting the option income, your qualifying payment would be closer to $6,450/month — a meaningful gap in a market like Bellevue or Kirkland.

What About Unexercised Options?

Unvested options cannot be counted as income or assets — period. They represent future potential compensation, not current value. Lenders cannot underwrite on hypothetical future vesting. If your unvested option tranche is a large part of your wealth picture, that's worth discussing with your financial advisor, but it won't move the needle on your mortgage application today.

Why Working With a Local Washington Specialist Matters

Most national lenders and big-bank loan officers process cookie-cutter W-2 applications. Stock option income — especially ISOs, large NQSO proceeds that vary year to year, or options held alongside RSUs and bonus income — requires an underwriter who actually knows what they're looking at. Mistakes in how income is calculated or presented can result in a denial that should have been an approval.

As someone who focuses specifically on mortgage solutions for Seattle-area tech employees, I know how to document equity compensation correctly, which loan programs offer the most flexibility, and how to structure your application so your income picture is as strong as possible.

If you're also navigating a concurrent financial complexity — like buying a home before selling your current one — check out my guide on bridge loans in Seattle and Washington State to understand how that fits into the picture.

Ready to Find Out What You Qualify For?

If you work in tech and want to understand exactly how your stock options, RSUs, base salary, and bonus income combine to support a mortgage in Seattle, Bellevue, Kirkland, Redmond, or anywhere in Washington State — let's talk. I'll review your full compensation picture and give you a clear number before you ever start touring homes.

Schedule a free consultation at jdonion.com or call me directly. NMLS #344326 | Licensed in Washington State.