Using RSUs and Company Stock for a Down Payment: Taxes, Lender Rules and Timing

For many Silicon Valley buyers, the down payment is sitting in company stock. Turning RSUs, ESPP shares or options into cash for a house raises three questions: how much tax you’ll really owe, what your lender will count, and when to sell. Here’s what the IRS, California’s EDD, Fannie Mae and the SEC say, as of October 2026. It’s general information, not tax advice, so run your numbers with a tax professional.

The withholding gap

When RSUs vest, employers usually withhold federal tax at a flat 22%, or 37% on supplemental wages above $1 million in a year. California’s flat rate on stock and bonuses is 10.23%. If you’re in a higher bracket, that isn’t enough: federal brackets run from 24% to 37%, and California’s 2026 withholding tables go from 11.33% up to 14.63% for higher incomes. The IRS says any shortfall is due when you file, and interest and penalties can apply. Before you spend vested shares on a house, set aside what you’ll still owe.

Selling shares for the down payment

• RSUs. The value at vesting is taxed as wages. If you hold the shares and sell later, the change in value after vesting is a capital gain or loss.
• ESPP. The discount can be up to 15%, on up to $25,000 of stock a year. Selling within two years of the grant date or one year of purchase makes the discount ordinary income.
• Nonqualified options. The spread at exercise is wages.
• Incentive stock options. Exercising doesn’t create regular income, but the spread counts toward the alternative minimum tax unless you sell in the same year.
• California. The state has no lower rate for capital gains; they’re taxed like other income, up to 13.3% on income over $1 million.

What your lender will count

• Stock as down payment. Under Fannie Mae’s rules, vested stock can be used for the down payment, closing costs and reserves if its value can be verified, net of any margin loan. If the stock is worth at least 20% more than the cash you need, you don’t have to prove you sold it; otherwise you document the sale proceeds.
• Vested options count at their current gain. Unvested options and shares don’t count.
• RSU income. To count RSUs as income, Fannie Mae generally wants at least 12 months of history with your current employer for time-based awards, and it averages the last 24 months of vested shares at a 200-day moving-average price. Sign-on awards don’t count. Freddie Mac switched to a 200-day average for loans dated on or after April 1, 2025.

Timing the sale

• Trading plans. If you sell through a Rule 10b5-1 plan, employees who aren’t officers or directors wait 30 days after adopting or changing a plan before trades start; officers and directors wait 90 to 120 days.
• IPO lock-ups. After an IPO, employees usually can’t sell for a set period, most often 180 days, and the SEC warns the price can drop when lock-ups end.
• Price swings. If the stock drops between your offer and closing, so does the cash you planned on. Decide how you’ll handle that before you write offers.

Run your numbers

Our Tech Equity Homebuying guide turns RSUs and options into a down payment estimate after tax, and the Mortgage Lab shows how points, buydowns and jumbo loans change the payment.

Buying with equity? Call the Boyenga Team at (408) 373-1660 or (650) 383-8606. Commissions are negotiable, and we offer bundled services, so ask us what’s included.