learntech equity homebuyingrsus, espp and stock options
Buying with RSUs and stock options
For many Silicon Valley buyers, the down payment starts as equity compensation. Here’s how vesting, withholding and lender rules work, and a calculator that turns shares into the cash you can actually put down.
RSU calculatorHow each is taxedWhat lenders count
- federal withholding at vest22%37% on supplemental pay over $1M
- california flat rate10.23%for bonuses and stock options
- rsu income history12 monthsFannie Mae, time-based awards
- ipo lock-up180 daystypical, per the SEC
rsu calculator
From shares to down payment
Withholding at vest can fall short of what you’ll owe at your bracket. This shows the gap, and the cash that’s really yours to put down.
cash toward the down payment
how each is taxed
RSUs, ESPP and options
Each kind of equity is taxed at a different moment, which decides how much cash you’ll have and when.
rsusrestricted stock units
Taxed as pay when they vest
The value at vest counts as wages, and your employer withholds by selling or holding back shares.
- Federal withholding is usually a flat 22%, or 37% once supplemental pay passes $1 million in the year
- California withholds 10.23% on bonuses and stock options, plus 1.3% SDI on all wages
- Medicare (1.45%) applies to all wages; Social Security (6.2%) stops at the $184,500 wage base in 2026
- If your bracket is higher than the withholding rate, the difference is due when you file
esppemployee stock purchase plans
Up to 15% off, up to $25,000 a year
You buy company stock at a discount through payroll.
- The price can be as low as 85% of the stock’s value
- Purchases are capped at $25,000 of stock a year, valued at the offering date
- Hold more than 2 years from the offering date and 1 year from purchase for a qualifying sale; otherwise the discount is taxed as wages
- Your employer reports purchases on Form 3922
nsosnon-qualified stock options
Taxed as wages when you exercise
The spread between the stock’s value and your exercise price is ordinary income.
- Taxed at exercise, federal and California
- A same-day sale turns options straight into cash, after withholding
- Vested options can count as an asset with lenders, valued at the current gain
isosincentive stock options
No regular tax at exercise; watch AMT
The spread at exercise is an alternative minimum tax adjustment instead.
- 2026 AMT exemption: $90,100 single, $140,200 married filing jointly
- The exemption phases out above $500,000 single and $1,000,000 joint
- A qualifying sale gets long-term capital gains treatment; check the holding periods with your plan and tax advisor
what lenders count
What lenders count
Fannie Mae and Freddie Mac set the guidelines most lenders follow; your lender can be stricter.
- RSU income for qualifyingFannie Mae counts RSUs that have vested and been paid out, with at least 12 months of history for time-based awards (24 months recommended for performance-based) and, for one-time awards, at least 3 years of future vesting. Income is averaged over up to 24 months using a 200-day average share price; Freddie Mac uses a 200-day average for loans dated from April 1, 2025.
- Sign-on awardsFannie Mae doesn’t count sign-on RSU awards as qualifying income.
- PaperworkExpect to show a written verification or pay stub, 2 years of W-2s, the vesting schedule and brokerage statements.
- Stock for the down paymentVested stock counts at its value net of any margin loan, shown on your latest monthly or quarterly statement. Under Fannie Mae, if the holding is worth at least 20% more than the cash you need, you don’t have to show a sale.
- ReservesFannie Mae doesn’t require you to sell stock you’re counting toward reserves.
Ask your lender how they’ll count your equity before you shop. The answer can change your price range by a lot.
timing
Timing the sale
- Trading windowsMany public companies let employees trade only during open windows, so plan the sale for your down payment around them.
- 10b5-1 plansA pre-set trading plan can sell during closed windows. Since February 27, 2023, new plans have a cooling-off period: 30 days for most employees, 90 to 120 days for directors and officers.
- IPO lock-upsAfter an IPO, insiders usually can’t sell for a lock-up period, typically 180 days, and the price can move when it ends.
- ConcentrationIf most of your down payment sits in one company’s stock, a price drop can shrink it before you close. FINRA flags concentration risk for stock awards.
- Capital gains in 2026Long-term federal rates are 0%, 15% or 20%, with 20% starting at $613,700 for joint filers and $545,500 single. The 3.8% net investment income tax applies above $250,000 joint and $200,000 single. California taxes gains as ordinary income, up to 13.3%.
the plan
Plan the purchase around your vesting
- step01
Map your vests and windows
List upcoming vest dates, trading windows and any lock-up end dates.
- Note which shares will be long-term by your target closing
- Check your company’s trading-window calendar
property nerd tipPut vest dates next to your contract clock so the cash lands before the deposit and the close. - step02
Talk to a lender early
How your RSUs count can change your price range more than your rate does.
- Ask how they’ll average RSU income and which awards count
- Gather W-2s, vesting schedules and brokerage statements
- step03
Set aside the tax true-up
Hold back the difference between what was withheld and what you’ll owe.
- Run the RSU calculator with your own brackets
- Keep the true-up in cash, not in the stock
property nerd tipUnderpaying can bring interest and penalties at filing; ask your tax advisor about estimated payments. - step04
Decide what to sell and when
Tax lots, holding periods and concentration all matter.
- Selling at vest usually adds little gain, since your basis is the value at vest
- Check whether ESPP shares are past the qualifying holding period
- Decide how much single-stock risk you want to carry until closing
- step05
Move the money in time
Sales settle and transfers take days; escrow needs the deposit within 3 business days of acceptance by default.
- Keep statements that show where the money came from; lenders ask
- Wire to escrow only with instructions you’ve confirmed by phone
sources
Where the numbers come from
Official sources, checked October 15, 2026.
- IRS Publication 15 (2026)Supplemental wage withholding (22% and 37%), Social Security and Medicare.www.irs.gov/publications/p15
- IRS Topic 560: Additional Medicare Tax0.9% above $200,000 in wages.www.irs.gov/taxtopics/tc560
- IRS Rev. Proc. 2025-322026 brackets, capital gains thresholds and AMT exemptions.www.irs.gov/pub/irs-drop/rp-25-32.pdf
- California EDD: supplemental wages10.23% for bonuses and stock options.edd.ca.gov/siteassets/files/pdf_pub_ctr/de231ps.pdf
- California EDD: rates and withholding2026 SDI rate.edd.ca.gov/en/payroll_taxes/rates_and_withholding/
- Fannie Mae Selling Guide B3-3.3-07RSU income.selling-guide.fanniemae.com/sel/b3-3.3-07/restricted-stock-units-and-restricted-stock-employment-income
- Fannie Mae Selling Guide B3-4.3-01Stock and options as assets.selling-guide.fanniemae.com/sel/b3-4.3-01/stocks-stock-options-bonds-and-mutual-funds
- Freddie Mac Bulletin 2024-16RSU income changes for loans dated from April 1, 2025.guide.freddiemac.com/ci/okcsFattach/get/1009577_3
- 26 U.S.C. 423 and IRS Topic 427ESPP limits and holding periods; option taxation.www.law.cornell.edu/uscode/text/26/423
- SEC: Rule 10b5-1 fact sheetCooling-off periods.www.sec.gov/files/33-11138-fact-sheet.pdf
- FINRA: questions about stock awardsConcentration risk.www.finra.org/investors/insights/questions-employees-should-ask-stock-awards
questions
Questions we hear
Is RSU withholding enough to cover the tax?
It can fall short. Federal withholding at vest is usually a flat 22% (37% over $1 million) while 2026 federal brackets run up to 37%, and California withholds 10.23% against a top rate of 13.3%. The difference is due when you file.
Can I use RSU income to qualify for a mortgage?
Usually, with history. Fannie Mae counts vested, paid-out RSUs with at least 12 months of history for time-based awards, averaged using a 200-day average share price. Your lender will tell you how much counts.
Do I have to sell my stock before closing?
Not always to qualify. Under Fannie Mae, if your vested holdings are worth at least 20% more than the cash you need, a statement can document them without proof of a sale, but the cash still has to reach escrow by closing.
Should I sell RSUs when they vest?
That’s a tax and investment decision for you and your advisor. Selling at vest usually adds little extra gain, because your cost basis is the value at vest, and it removes price risk before you close.
more to learn
Keep going
- Buyer playbookSeven steps to a purchase, with a contract clock.
- What you can affordWork back from income, debts and cash.
- Early accessHomes before they reach the MLS.
- Market PulsePrices and days on market by city.
- Moving hereRelocating to Silicon Valley.
General information, not tax, legal, investment or lending advice. Tax rates and lender guidelines change; confirm with your tax advisor and lender. Checked October 15, 2026.
talk to a property nerd
Turning equity into a home?
We’ll map your vesting, your lender’s rules and the market, and time the offer around them. Commissions are negotiable, and we offer bundled services, so ask us what’s included.
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