RSU & Equity Compensation Mortgage Qualification
Most lenders mishandle RSU and equity income: they either exclude it entirely or calculate it incorrectly. Dan knows the exact Fannie Mae and Freddie Mac documentation requirements and places these files with lenders who follow the guidelines.
Get Pre-ApprovedTypes of Equity Compensation Dan Handles
Restricted Stock Units (RSUs)
Counted as qualifying income when a two-year history of vesting exists or the vesting schedule shows continued grants for at least three years. Calculated as a two-year average of W-2-reported RSU income.
Non-Qualified Stock Options (NQSOs)
Income recognized at exercise. Requires a two-year history of exercise and documentation that options will continue to be available. Calculated based on the average income from exercises over the history period.
Incentive Stock Options (ISOs)
Typically treated as capital gains rather than ordinary income. The qualification approach depends on how and when the options are exercised and how they appear on tax returns. Dan reviews the actual tax documentation before giving a qualification opinion.
Annual & Performance Bonuses
Bonuses require a two-year history and documentation of likelihood to continue (typically an offer letter, employment contract, or most recent award statement). Calculated as a two-year average. Declining bonus income is treated conservatively.
Oil & Gas Royalty Income
A Bakersfield-specific income type. Royalty income from mineral rights or working interests can be used when documented on Schedule E for two years and supported by evidence of continued production. Dan reviews lease agreements and production statements.
Business Distribution Income
K-1 income from partnership interests or S-corp distributions requires a two-year history on tax returns. The analysis includes addback of depreciation and other paper deductions to arrive at usable cash flow.
Why Most Lenders Get This Wrong
RSU and equity income is not complicated in the guidelines. It has specific rules that are clearly documented in Fannie Mae's Selling Guide. The problem is that most loan officers process W-2 and tax return income routinely and have rarely built an RSU file from scratch. When they encounter it, they default to declining it rather than doing the work.
As a former underwriter, I've seen both sides. I know what the reviewer needs to see to count RSU income, and I build the file that way before it is submitted. Clean documentation, correct calculation, vesting schedule in the file, and the right lender selected based on their overlay posture. That's the difference between a decline and an approval.
Common RSU Qualification Checklist
RSU Mortgage FAQs
Related Resources for Executives & High-Earners
RSU or Equity Compensation Income to Qualify?
Dan structures these files correctly the first time. Call (661) 342-9381 or start your pre-approval online.