Most tech employees are surprised to learn that mortgage lenders use a specific formula to calculate RSU income. The formula involves W-2 history, stock price averaging, and program-specific rules that vary by lender.
This guide walks through every step so you can estimate your qualifying income before you sit down with a lender. If you’re still wondering whether RSU income counts at all, start with our overview of which loan programs accept RSU income, then come back here for the math.
Why the Calculation Is More Complicated Than It Looks
RSUs are variable income. Unlike a fixed salary, lenders cannot simply use the current market value of your stock position. Stock prices move daily, vest schedules vary, and the number of shares you receive can change from grant to grant.
To account for this, lenders use smoothed, backward-looking calculations that prioritize stability over current value. Different loan programs use different methods, which means the same borrower can qualify for different amounts depending on which lender and program they choose.
Two main approaches exist: the 200-day moving average and the current stock price at 75%.
Method 1: The 200-Day Moving Average
This is the most common method used, and is the standard for Fannie Mae and Freddie Mac.
What the 200-Day Moving Average Is
The 200-day moving average (200-day MA) is the average of a stock’s closing price over the past 200 trading days. Fannie Mae and Freddie Mac use this to figure out short-term volatility and give a conservative, defensible number. You can find the 200-day MA on Yahoo Finance, Google Finance, or your brokerage platform under “Technical” or “Statistics.”
How the Projection Calculation Works
Start by finding the 200-day MA for your company’s stock. Multiply that by the number of shares vested over the prior 24 months and divide by 12. This gives you the estimated monthly RSU income.
Worked Example: Nvidia Employee
| Input | Value |
|---|---|
| Unvested shares remaining | 1,200 shares |
| Prior RSU Vesting | 600 shares (over 24 months) |
| NVDA 200-day MA | $110/share |
| Vesting Calc | 600 x $110 = $66,000 |
| Monthly projected RSU income | $66,000 / 24 = $2,750 |
Method 2: The Jumbo / Portfolio Lender Approach
Jumbo loans are portfolio products held by private investors, not sold to Fannie Mae or Freddie Mac. Each investor sets their own guidelines, making these the most flexible option for RSU income.
Common jumbo calculation approaches include: using the 200-MA as Fannie Mae and Freddie Mac or instead, taking the current share price at a 75% haircut.
This variability is exactly why working with us matters. JVM, with relationships across multiple jumbo investors, can identify which methodology fits your specific income profile before you apply. If one investor’s calculation method undervalues your RSU income, another may treat it more favorably.
Full Worked Example: Cisco Employee Buying in San Jose
| Borrower Profile | Detail |
|---|---|
| Employer | Cisco, San Jose |
| Base salary | $220,000/year |
| Prior RSU Vesting | 1,000 shares vested over 24 months |
| Current Stock Price at 75% | $100 (current price) x .75 = $75 |
| Vesting Calc | 1,000 x $75 = $75,000 |
| Monthly Projected RSU Income | $75,000 / 24 = $3,125 |
Conventional (Fannie Mae) Calculation
The two-year RSU average is ($95,000 + $105,000) ÷ 2 = $100,000 per year.monthly RSU calculation comes out to $3,125 per month. Total qualifying monthly income becomes $18,333 base ($220,000 (base) + $100,000 (RSU) = $320,000 per year, or $26,667 per month/12) plus $3,125, or $21,458 per month. At a 43% debt-to-income ratio, this supports approximately $11,4679,227 per month in total housing expense, which translates to roughly a $1.65M to $1.7545M to $1.5M mortgage depending on rates, taxes, and insurance.
Without RSU Income
Base salary only: $220,000 ÷ 12 = $18,333 per month. At 43% DTI, this supports roughly $1.05M to $1.1M in mortgage. RSU income added over $600,000 in purchasing power. In San Jose, where the median home price exceeds $1.3 million, that gap determines whether you can buy the home you want or settle for a smaller budget.
Common Calculation Mistakes to Avoid
Pulled a completed vesting schedule
It is important to pull a complete vesting schedule that shows the vest dates for each RSU over the last 24 months as well as the future vesting dates of all RSUs over the next 36 months.
Counting unvested RSUs at full projected value
Most lenders apply a 25% or greater haircut to projected income from unvested shares. Using the full value overstates your qualifying income.
Forgetting tax withholding
When RSUs vest, the full fair market value is taxable as ordinary income. Employers typically withhold at the federal supplemental rate of 22%, but for high earners in California, the actual combined rate can reach 45–54%. You may have more income on paper than cash in your account.
Ignoring a declining income trend
If Year 2 RSU income is lower than Year 1, don’t assume lenders will use the average. Some underwriters will use the lower figure exclusively or raise concerns about continuation.
Assuming both employers’ RSU income can be combined
If you changed jobs in the last two years, income from a prior employer you no longer work for typically cannot be counted toward your RSU qualifying income.
The Phantom Income Problem: RSU Taxes and Cash Flow
This is one of the least-discussed but most impactful issues for tech workers who use RSU income to qualify. When RSUs vest, the full fair market value is taxable as ordinary income immediately. Your employer withholds taxes at the point of vesting, but the standard supplemental withholding rate of 22% often falls short of the actual tax liability.
For a California tech worker in the highest brackets, the real combined federal plus state rate on RSU income can approach 50%. This creates a gap: you have more income on your W-2 than cash in your bank account. The IRS will collect the difference when you file your return.
Lenders may review your liquid assets to confirm you can cover outstanding tax liabilities while making mortgage payments. Before applying, work with a CPA to calculate your estimated current-year tax obligation, including any upcoming vest events. Knowing your actual after-tax cash position avoids surprises during underwriting.
Frequently Asked Questions
What if I only have one year of RSU income on my W-2?
Most lenders won’t count any RSU income until you show you have a 12 month history of vested RSUs.
Does today’s stock price affect my qualifying income?
For the 200 day-MA method, yes, but not as much. This is an average based over a larger period of time. For the current stock price at 75%, yes.
What if my company’s stock dropped significantly this year?
Underwriters will apply additional scrutiny. Depending on the industry and the severity of the drop, the income may not be able to be counted.
Can I use RSU income from two different employers?
Generally, only if both are publicly traded and you have a two-year history at each company. Income from a prior employer you no longer work for cannot be counted, because the continuation requirement can’t be met.
Why Work With JVM Lending for Your RSU Mortgage
The calculation method your lender uses directly affects how much home you can afford. JVM Lending works with multiple wholesale lenders and jumbo investors, each with different RSU income calculation methodologies. Our job is to match your specific compensation structure to the lender and program that maximizes your qualifying income.
If you’ve run the numbers and want to see how they translate into a real pre-approval, JVM’s team can walk you through it.
Want us to run the RSU income calculation for your specific situation? Contact JVM Lending for a free income analysis.
