Microsoft Engineer: Qualifying for a $1.2M Jumbo With RSU Income

Ethan is a senior engineer at Microsoft in Redmond. His 2024 W-2: $685k total, of which $215k was base salary, $65k was bonus, and $405k was RSU vest income. He and his wife wanted to buy a $1.5M home in Bellevue with 20% down, requiring a $1.2M jumbo mortgage. Their loan application went out to three lenders and came back with three different income figures used for debt-to-income qualification: $285k, $415k, and $580k. The variance reflected how each lender treated RSU income.

Situation

His equity and income:

• Microsoft RSUs: 1,500 shares per year vesting over 4 years starting 2022.
• 2024 RSU vest: 1,500 shares × $270 = $405,000.
• 2023 RSU vest: 1,500 shares × $355 = $532,500 (he had a smaller historical position at the time).
• Actually, let us simplify. His 2023 RSU income was $290k. His 2022 RSU income was $195k. 2024 was $405k.
• Pattern: growing annually due to stock appreciation and refresh grants.
• Remaining vest schedule: 1,500 shares/year through 2027, then refresh grants extending to 2029.

Mortgage application:

• Home price: $1.5M.
• Down payment: $300k (20%).
• Loan amount: $1.2M (jumbo, above the $766k-ish conforming limit for most counties; Seattle was higher but still jumbo at $1.2M).
• Requested 30-year fixed rate.

Debt-to-income calculation: housing expense + other monthly debt divided by monthly qualifying income. Most lenders target 43% max DTI for jumbo.

At $1.2M mortgage, 7.1% rate, 30-year fixed: P&I = $8,080/month. Plus property tax ($1,450/month), insurance ($200/month), HOA ($0). Total housing: $9,730/month. No other debt. DTI target: 43%.

At 43% DTI, required qualifying income: $9,730 / 0.43 = $22,630/month = $271,600/year.

His base + bonus only: $280,000/year. Barely qualifies even without RSUs.

What we modeled

Three lender treatments of RSU income:

Lender A: Base + bonus only, no RSUs.

• Qualifying income: $280,000.
• DTI: 41.7%. Qualifies, tight.
• Available products: standard jumbo at 7.1%.

Lender B: Base + bonus + RSU income averaged over 2 years.

• RSU trailing 24 months: ($405k + $290k) / 24 months = $28,960/month average.
• But most lenders haircut RSU income 25-30% for volatility.
• 2-year average × 75% = $21,720/month = $260,640/year.
• Qualifying income: $280k + $260k = $540,640/year.
• Actually that double-counts some. A cleaner version: base ($215k) + bonus ($65k) + 75% of RSU average (~$260k) = $540k.
• DTI: 21.6%. Qualifies easily.
• Rate: 6.95% (slight discount for stronger DTI).

Lender C: Base + bonus + full RSU income from most recent year.

• Qualifying income: $215k + $65k + $405k = $685k.
• DTI: 17.0%. Qualifies easily.
• Rate: 6.85% (best rates for lowest DTI).
• Requirements: verifiable RSU vest schedule for the next 3+ years and employer letter confirming continued vesting.

The differences between lenders came down to:

• Whether they counted RSU income at all.
• What “averaging” methodology they used.
• What “haircut” they applied for volatility.
• Whether future vesting was considered “continuing” income.

What he did

He went with Lender C. Key documentation provided:

1. Most recent 2 years of W-2s showing consistent RSU income.
2. Recent paystubs.
3. Microsoft equity plan document describing grant terms.
4. E*TRADE account statements showing vested share balances.
5. Offer letter with current grant detail and refresh grant history.
6. Letter from Microsoft Stock Administration confirming grant vesting schedule through 2029.
7. Current FMV report from the equity plan showing the value of vested and unvested RSUs.

The lender’s underwriter required the “continuing income” attestation from Microsoft, confirming that his RSUs were on a multi-year vesting schedule and that his base role and compensation structure were expected to continue. Microsoft provided this as a standard form; many lenders have templates for it.

Loan closed at 6.85% on a $1.2M fixed-rate 30-year mortgage.

He also negotiated two other features:

• Pledged asset line (PAL) for the 20% down payment: rather than liquidating $300k of his taxable brokerage, he used a pledged asset line at 6.5% to keep the brokerage invested. The PAL was collateralized by $500k of his Microsoft ESPP holdings and index fund positions. This cost him approximately $19,500/year of interest but avoided $62,000 of capital gains tax from liquidating appreciated positions.
• Auto-sell-at-vest 10b5-1 plan for the remaining RSU vests to generate cash flow for mortgage payments and potential accelerated PAL payoff.

What he wishes he had done differently

He did not shop lenders aggressively enough initially. Lender A would have closed the loan at 7.1% with his base income alone, but the terms were materially worse. The $0.25% rate difference on a $1.2M loan over 30 years equals approximately $72,000 of interest savings, or $200/month. The lender shopping took him a total of 10 days of effort; the value per hour was roughly $7,200. High-effort lender shopping is almost always worth doing for large loans.

He also did not ask about rate locks during the shopping period. Rates moved 0.15% higher between his first lender inquiry and his final choice. A 60-day rate lock at no cost or low cost (typical for jumbo) could have saved $30k over the loan life.

Third regret: he did not think carefully about mortgage structure. Given his income trajectory (growing RSU vests), a 7/1 ARM at 6.45% would have lowered his early-year payments by $450/month. Over the initial 7 years, that is $37,800 of cash flow he could have invested. The risk was higher payments after year 7; if he refinanced or moved by then, the risk was moot. He chose 30-year fixed for peace of mind, which was reasonable but not financially optimal.

Fourth: he did not maximize the use of his PAL structure. The pledged asset line sat mostly idle. He could have used the PAL for part of the down payment (yes) and also for a short-term bridge if he had needed to float temporary expenses. He treated it as a one-time tool rather than an ongoing liquidity facility.

Frequently asked

How do lenders qualify RSU income?

Varies widely. Conservative lenders use base + bonus only. Moderate lenders use 2-year average with 25-30% haircut. Aggressive lenders use the most recent year in full, subject to verification of future vesting.

What documentation do jumbo lenders want for RSU income?

Typically: 2 years of W-2s, recent paystubs, equity plan document, vesting schedule, brokerage statements showing vested positions, employer attestation of continuing grant schedule, and any recent refresh-grant documentation.

Does my employer need to confirm future vesting?

Most jumbo lenders require it. A standard “continuing income” form is filled out by the stock administration team. Microsoft, Google, Amazon, Meta, and most large tech employers have templates.

Can I use unvested RSUs toward qualifying income?

No, not directly. Lenders qualify based on vested, already-received income. Unvested RSUs affect net worth and reserves calculations but not qualifying income.

Is a pledged asset line a good alternative to liquidating for a down payment?

It can be. PALs let you avoid capital gains tax and maintain portfolio exposure while borrowing against the portfolio for the down payment. The interest rate is typically 1-2% above secured overnight financing rates. The cost of interest must be weighed against the tax savings and opportunity cost of liquidation.

Composite scenario drawn from common patterns in our advisor network's casework. Names, companies, and exact numbers are illustrative. Not tax, legal, or investment advice.