A client earns a $210,000 base salary and another $340,000 a year in RSUs that vest quarterly — on paper, a household income north of half a million dollars. When they apply for a mortgage through their bank’s standard channel, the loan officer counts the base salary, asks for two years of vesting history on the RSUs, and only partially credits the equity income after applying a haircut for stock price volatility. The client walks away qualifying for a loan sized to $210,000, not $550,000, and can’t understand why. This is one of the most common gaps advisors encounter with tech, private equity, and finance clients, and it’s exactly where RSU income qualification rules need to be understood before an offer gets written.
The Problem: Non-Salary Income Doesn’t Qualify Itself
Conventional underwriting is built around income that shows up the same way every month. RSUs vest on a schedule but their value moves with the stock price. K-1 income from a partnership or LLC can be lumpy year to year and often includes non-cash allocations that never hit a personal bank account. Carried interest — the performance-based share private equity and venture professionals earn on fund returns — can be enormous in one year and zero in the next. All three are real income, and all three are treated with suspicion by lenders whose systems are built for pay stubs.
The result is a borrower who is, by any reasonable measure, extremely creditworthy, getting qualified for a fraction of what their actual earning power supports — or getting declined outright because a loan officer didn’t know how to document the income at all.
The Solution: Documentation Built for Non-Traditional Compensation
Non-QM and portfolio lenders that specialize in HNW borrowers have underwriting paths built specifically for this income. RSU income can typically be counted using a two-year vesting history and current share price, often with a conservative discount applied rather than an outright exclusion, and some programs will count unvested but scheduled shares if the vesting pattern is well established. K-1 income is analyzed using a two-year average with add-backs for non-cash items like depreciation, rather than taking the bottom-line number at face value. Carried interest can be counted using a multi-year average once a track record of distributions exists, smoothing out the year-to-year volatility that would otherwise sink a debt-to-income calculation.
The common thread across all three is that the lender is looking at trend and trajectory rather than a single tax-return line, which is a fundamentally different — and far more accurate — way to evaluate a client whose compensation structure doesn’t map to a W-2.
What This Looks Like in Practice
Take a venture partner with a $180,000 base salary and carried interest distributions of $95,000 and $410,000 over the past two years — wildly inconsistent on paper. A program built for carried interest income might average the two years to roughly $252,500 annually and add that to the base salary, producing over $430,000 in qualifying income rather than $180,000. On a similar file, a product manager with $160,000 base pay and RSUs vesting at roughly $220,000 per year over a documented two-year history could have the bulk of that equity income counted toward qualification, moving them from a conforming loan amount into jumbo territory they’d actually planned around.
Where Advisors Fit In
Clients with RSU-heavy pay, K-1 income, or carried interest are exactly the profile most likely to get an inaccurate pre-qualification from a generalist loan officer — and the most likely to walk away from a home search believing they can afford less than they actually can. If you have a client whose compensation doesn’t look like a standard pay stub, it’s worth a quick conversation before they start house hunting so their budget reflects what they can actually qualify for.
Jeff Singleton | Advisor Aligned Mortgage | NMLS# 215354 | CA BRE# 01510260 | (949) 344-1717 | advisoralignedmortgage.com