Executive Summary
Can I use RSUs or stock options for a home down payment?
Yes. Vested RSUs and exercised stock options can fund a down payment. Mortgage lenders count vested equity (shares you own) as assets—they will request brokerage statements showing the balance. Unvested equity may be considered as potential future income, but lenders often discount it or require a 2-year history of vesting. When you sell shares to fund the down payment, plan for taxes: RSUs sold at vesting are already taxed as wages; additional gains are capital gains. Selling a large block in one year can push you into a higher bracket—consider spreading sales or timing with lower-income years.
Tech employees with equity compensation often accumulate significant wealth in company stock—and a common goal is using that wealth to buy a home. Whether you have RSUs, ISOs, or NSOs, the path from equity to a down payment involves tax planning, mortgage underwriting rules, and documentation. Getting it wrong can mean a larger tax bill, a delayed closing, or a rejected loan.
The bottom line: Vested equity is a powerful asset for home buying. You can sell shares to fund a down payment, and lenders will count them as assets (and sometimes as income). But selling a large block in one year can trigger six-figure tax bills. Plan the timing of sales, document everything for underwriting, and understand how lenders view your equity.
Critical Warning: Do not assume the full value of your unvested equity will count toward mortgage qualification. Lenders are conservative—they may discount unvested equity, require a long vesting history, or treat it as supplemental income subject to a 2-year average. Always get a pre-approval with your specific lender and equity structure.
How Mortgage Lenders View Equity Compensation
Vested Equity = Assets
Vested RSUs and shares from exercised options that you hold in a brokerage account are assets. Lenders will request:
- Brokerage statements (typically 2 months) showing the account balance
- Proof of ownership (e.g., shares are in your name, not restricted)
- Liquidity (can you sell and access the funds within the loan timeline?)
If you have $200,000 in vested company stock, a lender will typically count it toward your down payment and reserves (months of PITI in reserve). Some lenders require you to sell shares and hold the cash for 60 days (seasoning) before using it; others allow the shares as assets if you can document that you will sell at closing.
Unvested Equity = Potential Income
Unvested RSUs and unexercised options are not assets—they are future income. Lenders may treat them as:
- Supplemental income (subject to a 2-year average, similar to bonuses)
- Discounted (e.g., 50% of projected value, or only if you have 2+ years of vesting history)
- Excluded (some lenders do not count unvested equity at all)
Action: Ask your lender how they treat unvested equity. Some tech lenders (e.g., First Republic, before its acquisition; specialized credit unions) have more favorable policies for tech employees. Others may require a larger down payment or additional reserves if you rely on unvested equity for income.
Base Salary + Bonus + Equity
For income qualification (debt-to-income ratio), lenders typically use:
- Base salary: Full amount
- Bonus: 2-year average (if consistent)
- Overtime: 2-year average
- RSU vesting: Often 2-year average of vesting income
- Stock options: Varies—some lenders use exercise gains as income; others exclude
Your DTI (monthly debt ÷ monthly income) must usually stay under 43–50% depending on the loan program. If your base salary is $150,000 and you have $200,000 in vested stock, the stock alone does not increase your qualifying income—it increases your assets. But if you have a history of vesting $80,000/year, a lender may add that to your income (averaged over 2 years).
Tax Implications of Selling Equity for a Down Payment
RSUs: Already Taxed at Vesting
When RSUs vest, you owe ordinary income tax on the FMV at vesting (reported on your W-2). If you sell immediately (sell-to-cover), you receive the net shares. If you hold and sell later, any appreciation beyond the vesting FMV is taxed as capital gains (short-term or long-term depending on holding period).
Example: 1,000 RSUs vest at $50/share = $50,000 ordinary income (already on W-2). You hold and sell at $60/share = $60,000 proceeds. Your cost basis is $50,000, so you have $10,000 in capital gains (taxed at 0%, 15%, or 20% for long-term, plus state).
Planning: For long-term capital gains treatment, hold vested shares for more than 1 year before selling. If you need to sell sooner, short-term gains are taxed at ordinary income rates.
Stock Options: Exercise + Sell
ISOs: If you exercise and hold, you may trigger AMT (see our AMT Planning Guide). If you exercise and sell in the same year (disqualifying disposition), you have ordinary income. For a down payment, many employees exercise and sell—accepting ordinary income in exchange for liquidity.
NSOs: Exercise and sell triggers ordinary income on the spread (exercise price to FMV). The gain from FMV to sale price is capital gain (short- or long-term).
Planning: If you have a low-income year (e.g., between jobs, sabbatical), consider exercising and selling then to lock in a lower marginal rate. See our Year-End Tax Planning Guide.
Large Stock Sales: Bracket Management
Selling $300,000 in stock in one year can push you into the 37% federal bracket (plus state, plus NIIT if applicable). Spreading sales across 2–3 years can keep you in a lower bracket.
Example: Single filer, $200,000 base salary. Selling $300,000 in gains in one year adds $300,000 to income → top of 37% bracket. Selling $100,000 per year over 3 years may keep you in the 32% or 35% bracket for the incremental income, saving thousands in tax.
Documentation for Mortgage Underwriting
| Document | Purpose |
|---|---|
| Brokerage statements (2 months) | Prove vested asset balance |
| Grant agreements / award letters | Show vesting schedule, grant type |
| W-2s (2 years) | Document equity income (RSU vesting, NSO exercise) |
| Tax returns (2 years) | Full income picture |
| Pay stubs (recent) | Current income |
| Vesting schedule | If using unvested equity for income qualification |
| Letter from employer | Confirm employment, salary, equity structure (if requested) |
Pro tip: If you are selling shares to fund the down payment, do it before applying or early in the process. Lenders prefer to see the cash in your account (seasoned) rather than a plan to sell at closing. Some lenders allow a "bridge" if you have a signed contract to sell—but policies vary.
Gift Letters and Family Assistance
If a family member (e.g., parent) gives you money for a down payment—including money they received from selling their own equity—lenders typically require a gift letter stating:
- The amount of the gift
- That it is a gift, not a loan (no expectation of repayment)
- The donor's relationship to you
- The source of funds (e.g., "proceeds from sale of stock")
Important: The gift must be irrevocable. If the donor expects repayment, it is a loan, and the lender will treat it as debt (affecting your DTI). Gift letters are standard—your lender will provide a template.
Tax note: The donor may need to file a gift tax return (Form 709) if the gift exceeds the annual exclusion ($19,000 per recipient in 2024; $20,000 in 2025). Gifts above the exclusion use the lifetime exemption ($13.61M in 2024). For most down payment gifts, no tax is due—but the donor should consult a tax advisor.
Timing Strategies
| Strategy | When to Use |
|---|---|
| Sell vested RSUs after 1 year | You want long-term capital gains rates (0/15/20%) instead of ordinary income |
| Exercise and sell NSOs in a low-income year | You have a gap year, sabbatical, or lower bonus |
| Spread sales over 2–3 years | You have a large position and want to manage brackets |
| Sell before applying | You want cash seasoned in your account for underwriting |
| Coordinate with vesting | Sell at vesting (sell-to-cover) to avoid holding concentration risk |
Key Takeaways
- Vested equity = assets. Lenders count it. Unvested equity = potential income, often discounted.
- Plan for taxes. Selling a large block in one year can trigger a big tax bill. Spread sales or time with low-income years.
- Document everything. Brokerage statements, grant agreements, W-2s, tax returns. Lenders will ask.
- Season your down payment. Sell early so cash is in your account for 60+ days if your lender requires it.
- Gift letters. If family helps, use a proper gift letter. No repayment expectation.
Disclaimer: This guide discusses general principles only. Tax and mortgage rules vary by situation. This content is for educational purposes and does not constitute tax, legal, or financial advice. Consult a qualified tax professional and a mortgage advisor before making decisions. The authors accept no liability for actions taken based on this content.
Primary Sources
| Source | Type | URL |
|---|---|---|
| Fannie Mae Selling Guide | Industry Standard | selling-guide.fanniemae.com |
| Freddie Mac Seller/Servicer Guide | Industry Standard | guide.freddiemac.com |
| IRS Publication 523 | Official Guidance | irs.gov/publications/p523 |
Last Updated: March 2026 | Research Team: VestingStrategy