El Segundo is one of the densest concentrations of Fortune 500 RSU compensation in the country.
Between the aerospace cluster (SpaceX, Boeing, Northrop, Aerospace Corp, Raytheon), the entertainment companies (Mattel), AT&T’s LA headquarters operations, and the broader South Bay tech footprint, the buyers I work with regularly have 30 to 60% of their compensation tied up in vesting stock. That income shows up on their pay stubs as something different from base salary, and most mortgage professionals either ignore it, miscount it, or apply it incorrectly.
Done right, RSU income can be the difference between qualifying for the home you actually want and being told you only qualify for “what fits your base salary.” That answer is leaving real buying power on the table.
How RSU income is counted toward your mortgage.
Conventional underwriting guidelines (Fannie Mae and Freddie Mac) treat RSUs as variable income. Two conditions generally have to be met before any of it counts toward what you qualify for:
1. A two-year history of receiving them.
Documented on your last two years of W-2s and recent pay stubs. New hires with first-year RSU income can sometimes qualify with offer-letter and grant-document underwriting, but the standard rule is two years.
2. Reasonable expectation that they continue for at least three years after closing.
Verified through your vesting schedule. If your grant docs show stock continuing to vest three years out, that requirement is met. If you’re late in a grant cycle with nothing scheduled past two years, we have to work around it.
When both conditions are met, we typically use a 24-month average of vested RSU value, often with a 10% discount applied to a recent stock price to account for volatility. Lender approaches vary on the exact valuation method, and choosing the right lender for an RSU-heavy file matters.
RSUs play two different roles in your loan file. Don’t confuse them.
Your two-year average of vested RSUs, subject to the continuance rule, increases the loan amount you qualify for. This is where most of the leverage comes from for high-comp buyers.
Already-vested shares (held or sold) can fund your down payment, closing costs, and reserves once we document the source and any sale or transfer. Unvested future shares generally cannot, because you don’t own them yet.
Timing and structure are where the right advisor earns their keep.
Once we know the rules work in your favor, the real conversation begins:
- When to apply. If you have a large vest scheduled in the next 60 days, waiting can shift your 24-month income average meaningfully.
- Sell or hold vested shares. Selling strengthens your asset position for reserves and down payment. Holding bets on continued upside. Tax treatment varies. We model both.
- Loan structure for lumpy income. A standard 30-year fixed isn’t always the best fit for a buyer whose cash flow is highly variable across the year. Sometimes an ARM, an interest-only feature, or a recast strategy fits better.
- Lender selection. Not every lender treats RSU income the same way. The wrong lender choice can cut your qualifying income by 30% or more for the exact same file.
The three RSU mistakes I see again and again.
Treating RSUs as bonus income and discounting them heavily.
Lazy underwriting that ignores the two-year history and continuance documentation. The right approach uses the actual guideline calculation, not a guess.
Counting unvested future RSUs as assets.
You don’t own them yet. Underwriting will catch this and the file falls apart late in the process.
Ignoring the timing of vests and lockup windows.
If you can’t sell shares during a blackout window, your asset documentation has to account for that. Most advisors don’t ask.
This page is for educational purposes. RSU income treatment varies by lender, loan program, employer, and the specifics of your grant and vesting documentation. Stock prices and tax implications are individual. Daryn Fillis NMLS #1988371. Branch NMLS #2733710. NEO Home Loans powered by Better Mortgage Corporation. Equal Housing Opportunity.