When applying for a mortgage, few types of pay are as confusing or as valuable as RSU income. For many borrowers, restricted stock units make up a large part of their earnings, but they often don’t know how lenders look at this income.
Understanding how to review and calculate RSU income helps make sure a loan application shows a borrower’s true financial picture. With the right steps, both borrowers and lenders can handle RSU documents with confidence.
Main takeaways from this article:
- Only vested RSUs count as income for a mortgage. Borrowers must show proof through pay stubs, W-2s, and vesting schedules.
- To calculate RSU income, total the vested shares in the required time period and use the fair market value at vesting, not today’s stock price.
- Time-based and performance-based RSUs follow different rules. Performance-based RSUs usually need a longer history because they are less predictable.
- Underwriters must check that RSU income is stable and will continue for at least three years.
- Tools like IncomeXpert help automate RSU reviews, apply agency rules correctly, and reduce calculation errors.
What is RSU income, and why does it matter for underwriting?
RSU income is the money a borrower receives when their employer-granted restricted stock units vest and turn into actual shares. Lenders only count vested RSU income because it is income the borrower has already earned, not something they might get in the future.
When RSUs vest, the borrower becomes the owner of the shares, and the value is reported as regular wage income. Unvested RSUs cannot be used for mortgage approval because the borrower may never receive them if they leave the job or if performance goals aren’t met.
For a mortgage, lenders must see that RSU income is stable and likely to continue for at least three more years.
RSUs are becoming more common. RSUs are now one of the most frequently granted forms of long-term compensation at public companies.
Learn more about complex income scenariosRSU income is just one of many advanced income types underwriters must evaluate correctly. If your team needs more support in understanding tricky income cases, these educational resources can help build clarity and confidence. |
How to identify RSU income in borrower documentation
To verify RSU income, underwriters must review documents that show how many shares have vested, when they vested, and how much they were worth.
Documents to request
- Year-end and recent pay stubs showing RSU income
- W-2 forms that list RSU income as supplemental wages
- Employer RSU award letters and plan documents
- Brokerage statements showing vested shares
- Vesting schedules showing past and future vesting dates
These documents help confirm both the amount earned and whether future RSUs are expected.
What RSU income looks like in documentation
On pay stubs, RSU income may appear as:
- “Stock award”
- “Equity compensation”
- “Supplemental income”
On W-2 forms, vested RSU income appears in Box 1 (wages) and sometimes in Box 14 with a special code.
Brokerage statements show how many shares vested and their fair market value (FMV) at the time they vested. FMV is essential for calculating qualifying income.
Vesting schedules show when shares have vested in the past and when future shares are expected to vest. This helps underwriters determine the stability and continuance of RSU income.
Red flags to check upfront
- No RSU vesting in the required 12–24 month history
- Pay stubs, W-2s, and equity statements that don’t match
- Big jumps in RSU income without clear documentation
- A private company without clear FMV details, making valuation difficult
How to verify vesting history and continuance
To use RSU income for a mortgage, underwriters must confirm that past vesting has been steady and that future vesting is expected to continue.
1. Determine vesting type
Time-based RSUs: These vest on a set schedule as long as the borrower stays employed. Lenders usually need at least 12 months of vesting history.
Performance-based RSUs: These vest only if certain company or individual goals are met. Because they are less predictable, most agencies require 24 months of vesting history.
You can find the vesting type in the employer’s RSU plan or award letter.
2. Verify vesting history
For time-based RSUs, underwriters need documentation showing at least 12 months of consistent restricted stock units vesting. For performance-based RSUs, a 24-month history is typically required.
What to know about vesting history:
- If vesting happens quarterly or irregularly, total all vested shares within the required time period to determine yearly income.
- Note any changes in how often shares vest or how many shares are awarded. A big shift may affect stability.
3. Verify continuance
Future vesting must be supported by employer documentation showing upcoming vesting dates and expected share amounts.
RSU income should not be used if:
- Vesting is ending with no new grants planned
- Award sizes are dropping significantly
- Future vesting will be much lower than past vesting
- The employer has changed or plans to change the RSU program
Underwriters must be confident that the income will continue for at least three years after closing.
How to calculate RSU income step-by-step
Calculating RSU income correctly helps lenders follow agency rules and understand a borrower’s true income.
1. Total the vested shares in the qualifying period
Find all the shares that vested during the qualifying period:
- 12 months for time-based RSUs
- 24 months for performance-based RSUs
Use brokerage statements and employer documents to confirm the exact number of vested shares.
2. Identify the fair market value at vesting
Find the fair market value (FMV) of each share on the day it vested.
- Do NOT use today’s stock price.
- FMV at vesting is the taxable value and the amount used for mortgage calculations.
This information appears on equity statements or brokerage reports.
3. Calculate gross RSU income
Multiply the number of vested shares by their FMV at vesting to get the total RSU income for the period.
Then convert it to monthly income:
- Time-based RSUs:
Total vested income from the last 12 months ÷ 12 - Performance-based RSUs:
Total vested income from the last 24 months ÷ 24
4. Review tax withholding correctly
Always use the gross value of vested RSUs, not the net amount after taxes. Employers often sell some shares to cover taxes, but the qualifying income must be based on the full vested value before withholding.
Research shows employers often use standard tax withholding rates for equity awards, which may not reflect the borrower’s real tax rate. This makes using the gross amount even more important.
5. Apply agency logic to determine the qualifying amount
After calculating the income, check whether the RSU history is stable. Underwriters may need to lower the income or remove it if:
- Vesting amounts are decreasing
- Future awards are smaller
- The employer is ending or changing grant programs
Agencies typically require that RSU income be stable or increasing for it to count.
Quick tip: If RSU income is decreasing year-over-year, agencies may require using the lower, more recent amount or may disallow the income altogether. |
See how Blueprint handles equity-based incomeWhether reviewing time-based or performance-based RSUs, Blueprint shows exactly how automated income analysis applies agency rules, flags exceptions, and prevents inconsistencies across your team. |
How to determine mortgage qualification: Key factors
Lenders must check whether RSU income is stable enough to use for a mortgage. This means looking at income trends, the employer’s strength, and the quality of the borrower’s documents.
1. Identify trends
Look at how the borrower’s RSU income has changed over time.
- Increasing income: Usually acceptable with good documentation
- Stable income: Ideal for qualification
- Decreasing income: May require using a lower amount or may not count
- Highly variable income: May require a longer history or may be excluded
A clear and steady pattern supports income stability.
2. Evaluate employer risk
The company’s health affects future RSU awards. Underwriters should consider:
- Whether the company is public or private
- The stability of the industry
- The company’s financial performance
- Any recent changes to RSU programs
If the employer is new, private, or financially uncertain, more documentation may be needed.
3. Identify documentation gaps
Missing or inconsistent documents can prevent accurate RSU income analysis. Common problems include:
- Missing FMV values for vesting dates
- Incomplete vesting records
- Paystubs and W-2s that don’t match
- No future vesting schedule
These issues must be fixed before RSU income can be used for qualification.
How RSU income is taxed for underwriting purposes
RSU income is taxed as regular wage income when the shares vest. This affects how the income shows up on paystubs, W-2s, and other documents used in underwriting.
How RSU income appears on borrower documents
On W-2s, vested RSU income is included in Box 1 (wages) for the year it vested. It may also appear in Box 14 with a special code.
On pay stubs, RSU income usually appears under “supplemental income,” “equity compensation,” or “stock award.” This amount is shown before taxes are taken out.
What tax details matter for underwriting
Underwriters should check that taxes were properly withheld when the RSUs vested. This confirms the income was processed correctly by the employer.
If the borrower makes estimated tax payments because of RSU income, those payments should not be counted as ongoing monthly debts when calculating DTI.
What tax details do not affect qualifying income
- Capital gains from selling the shares later do not count as income for mortgage approval.
- Whether the borrower keeps or sells the shares does not change the qualifying income.
Only the value of the RSUs at vesting is used for mortgage calculations.
Make RSU reviews easier and more accurateStop relying on manual worksheets and fragmented equity statements. IncomeXpert automates RSU analysis, enforces guideline logic, and gives you audit-ready documentation for every income decision. |
Use IncomeXpert to simplify RSU analysis
RSU income can be valuable, but it is often confusing to review. By focusing on vested shares, using the correct fair-market value at vesting, and understanding the borrower’s vesting schedule, underwriters can get a clearer picture of a borrower’s real financial strength.
The right tools make this process easier. IncomeXpert automatically applies agency rules, flags mistakes, and creates audit-ready worksheets that keep your team consistent and protected from risk.
If your team wants more accuracy, fewer errors, and faster reviews, IncomeXpert can help.
Request a demo to see how Blueprint simplifies RSU income analysis.
FAQs about RSU income
What counts as RSU income for underwriting?
Only vested RSUs count as income. This means the shares must already belong to the borrower and appear on a pay stub, W-2, or equity statement. Unvested shares don’t count because the borrower has not actually received them yet, and they are not guaranteed to vest in the future.
Are unvested RSUs ever allowed?
No. Unvested RSUs cannot be used as qualifying income because the borrower does not own them yet. They may never vest if job conditions or performance goals aren’t met. Underwriters can only use RSU income that has already vested and been paid out, either as shares or cash.
Why is FMV at vesting required?
FMV (fair market value) at vesting is required because it shows the actual taxable value the borrower received when the RSUs vested. This is the amount reported to the IRS and reflects real income. Using FMV ensures underwriters calculate income based on the true value—not future or past stock prices.
How do RSUs differ from stock options for qualification?
RSUs count as income only when they vest and become the borrower’s property. Stock options, however, do not count as income because the borrower must choose to exercise them and pay for the shares. Options may never be used, so they are not considered stable or guaranteed income.
How do agencies view declining RSU income?
If RSU income declines from year to year, underwriters must find out why. Agencies require using the lower year’s income and may need extra documentation to show that future vesting will continue. Declining patterns raise concerns about income stability and may limit how much RSU income can be used.