How to use Restricted Stock ( RSU ) Income to Qualify for a Jumbo Mortgage
RSU income has become a popular source of income for employees of many companies, especially in the tech sector.
How is RSU Income Counted when Qualifying for a Jumbo Loan?
It depends on the investor, but I will lay out some guidelines for one of the most lenient investors. Some Jumbo mortgages will not count them at all.
The calculation is 65% of the aggregate gross RSU income is allowed to be counted as income. The gross amount is the average of what has been received over the past 2 years. So , for example if you received $200,000 in RSU for the past 2 years $130,000 would be added to your income for those years or $65,000 per year.
For this particular loan program the RSU does not have to be “cashed-in” as it does on many Jumbo loans. You simply have to show receipt for two years and evidence that the RSU income has not ceased.
What do I Need to Provide to Show my RSU income?
- Two years W-2’s, confirming receipt of RSU income
- Most recent paystub evidencing receipt of RSU income or a letter form the employer evidencing receipt
- Vesting Schedule and written statement from employer that the Restricted Stock Unit compensation has not ceased
How much of a Down-Payment do I need for a RSU Jumbo Mortgage?
For now you would need only 5% down-payment for a Jumbo mortgage using RSU income if you have a FICO score above 740. These loans will go up to $2 million. At 10% down you may have a FICO score down to 660.
What is RSU Income?
According to Investopedia – “A restricted stock unit (RSU) is compensation issued by an employer to an employee in the form of company stock. Restricted stock units are issued to an employee through a vesting plan and distribution schedule after achieving required performance milestones or upon remaining with their employer for a particular length of time.”
NOTE: Not all applicants will qualify. These Programs may have a higher interest rate, more points or more fees than other Programs requiring documentation. Minimum FICO, reserve, and other requirements apply. Programs may not be available in all states. Contact your Loan Officer for additional program guidelines, restrictions, and eligibility requirements. Rates, points, APRs and programs are subject to change at any time without notice.