Restricted Stock Units (RSUs) are a type of compensation that many companies offer to their employees. RSUs are a form of equity compensation that gives employees a stake in the company they work for. If you own RSUs, you may be wondering if you can use them to qualify for a mortgage. The good news is that there are mortgage lenders that accept RSUs as income. In this article, we will explore mortgage lenders that accept RSUs and what you need to know to apply for a mortgage using RSUs as income.
What are RSUs?
RSUs are a form of equity compensation that companies use to reward their employees. When you receive RSUs, you do not own the stock outright. Instead, the company grants you a certain number of shares that vest over time. Once the shares vest, you can sell them or hold onto them as long-term investments.
Why do Mortgage Lenders Accept RSUs?
Mortgage lenders accept RSUs as income because they are a form of compensation that is tied to the performance of the company. This means that if the company is doing well, the value of the RSUs will increase, which makes the borrower a more attractive candidate for a mortgage. Mortgage lenders also accept RSUs because they are considered a stable source of income. Because RSUs vest over time, they provide a consistent stream of income that borrowers can use to make mortgage payments.
Which Mortgage Lenders Accept RSUs?
Not all mortgage lenders accept RSUs as income, but there are many that do. Some of the top mortgage lenders that accept RSUs include Bank of America, Wells Fargo, and JPMorgan Chase. These lenders have specific guidelines for how they use RSUs to qualify borrowers for mortgages, so it is important to do your research before applying.
How Do You Qualify for a Mortgage Using RSUs?
Qualifying for a mortgage using RSUs is similar to qualifying for a mortgage using traditional income sources. To qualify, you will need to provide documentation of your RSUs and how they vest over time. You will also need to show that you have a consistent stream of income from your RSUs that you can use to make mortgage payments. In addition, you will need to meet the lender’s credit and income requirements.
What Documentation Do You Need?
When you apply for a mortgage using RSUs as income, you will need to provide documentation of your RSUs. This includes your RSU agreement, which shows the number of RSUs you have, when they vest, and their current value. You will also need to provide documentation of your vesting schedule, which shows when your RSUs will vest and become available to you. Finally, you will need to provide documentation of your income, including your most recent pay stubs and tax returns.
What Are the Pros and Cons of Using RSUs as Income?
Like any form of income, using RSUs as income has its pros and cons. The main advantage of using RSUs as income is that they are a stable source of income that can be used to make mortgage payments. Because RSUs vest over time, they provide a consistent stream of income that borrowers can rely on. The main disadvantage of using RSUs as income is that they are tied to the performance of the company. If the company is not doing well, the value of the RSUs may decrease, which could impact the borrower’s ability to make mortgage payments.
Conclusion
If you own RSUs and are looking to buy a home, there are mortgage lenders that accept RSUs as income. To qualify for a mortgage using RSUs, you will need to provide documentation of your RSUs and meet the lender’s credit and income requirements. While using RSUs as income has its pros and cons, they can be a valuable source of income for borrowers who are looking to buy a home.