Using an RSU for a down payment works only after the units vest and turn into shares the borrower owns. Vested shares are ordinary stock: the borrower sells them, the cash lands in a bank account, and the lender traces it with the brokerage statement. Unvested units do not count, however close the vest date is.
Can vested RSU shares fund a down payment?
Yes. Once restricted stock units vest, the employer delivers shares to the borrower's brokerage account, and from then on they are treated like any listed stock. The lender values them at market price on the statement and, for a down payment, usually wants to see them sold and the proceeds in a bank account.
The rules for listed stock on conventional loans are in the Fannie Mae Selling Guide topic on stocks, stock options, bonds and mutual funds. The lender documents the value with the most recent monthly or quarterly statement. If the stock is worth at least 20 percent more than the funds needed for the down payment and closing costs, proof of the sale is not required. Below that cushion, the borrower must show they actually received the cash.
With RSUs, the cushion is often thin, because the vest is one stock and its price can move fast. Expect to sell and show the deposit.
Why unvested RSU units do not count toward a down payment
Unvested units are a promise of future shares that the employer can cancel if the borrower leaves. The borrower does not own them yet, so a lender cannot count them. That is true even if the next vest is a week away and the grant is large.
Fannie Mae's Selling Guide topic on minimum reserve requirements lists non-vested restricted stock among the assets that are not acceptable. The equity plan website often shows the full grant value in one large number, which is easy for a borrower to mistake for money they have. Ask for the vesting schedule and count only what has already been released.
If a vest falls before the planned closing date, the borrower can sell those shares once they arrive. The file then uses the sale proceeds, not the grant.
Selling RSU shares: tax withholding and the net amount
The value of RSU shares at vesting is taxed as pay, and most employers withhold that tax by keeping back or selling part of the shares. The borrower receives fewer shares than the grant lists. When they sell what is left, the cash they receive is the figure that matters for the loan.
Worked example: one vest to one deposit
All figures are examples. A borrower has 400 units vest on May 15 at a price of 150 per share.
| Step | Shares | Value |
|---|---|---|
| Units vested | 400 | 60,000 |
| Shares withheld for taxes (example 35%) | 140 | 21,000 |
| Shares delivered to the brokerage account | 260 | 39,000 |
| Sold on May 20 at 146 per share | 260 | 37,960 |
| Transferred to checking on May 22 | 37,960 |
The borrower expected 60,000. They have 37,960 to put toward the purchase. The withholding rate is set by the employer and the borrower's tax situation, and the actual tax owed at filing can be higher or lower than what was withheld. If it is higher, the borrower owes more next spring, which is worth knowing before they spend every dollar on closing.
How do lenders source RSU sale proceeds?
Lenders source RSU proceeds by matching three records: the vest confirmation from the equity plan, the brokerage statement showing the shares and the sale, and the bank statement showing the incoming transfer. When the share counts, dates and amounts agree, the deposit is fully explained.
Documents to collect
- The vest or release confirmation, showing units vested and shares withheld.
- The brokerage statement covering the vest and the sale, all pages.
- The trade confirmation for the sale.
- The bank statement showing the transfer in, matched by date and amount.
The bank side is where an underwriter first sees the money, as a large credit on the checking statement. A bank statement analyzer helps spot and annotate it. TrueBankFlow flags large credits like this with their date and statement line, so the broker can attach the brokerage records to the right line before submission.
When keeping RSU shares beats selling them for the down payment
Selling is not always the best move. A borrower with enough cash for closing may do better holding vested shares as reserves, since lenders count stock for reserves without requiring a sale. Selling also locks in any gain since vesting, which can create a tax bill.
Fannie Mae allows 100 percent of the value of stocks for reserves with no liquidation required. Other programs set their own rules, and some discount stock. The guide to mortgage reserve requirements by loan type shows how many months each program asks for.
When to hold and when to sell
- Hold if checking and savings cover the down payment and closing costs, and the shares can cover reserves.
- Sell if the shares are needed at the closing table or are most of the borrower's net worth in one company.
- Compare with other sources before tapping retirement money. The trade-offs of a 401(k) withdrawal for a down payment are often worse than selling vested shares.
The tax side of any sale belongs with the borrower's tax adviser, not the loan file.