How are RSU's factored into Income during loan qualification?
"RSUs are not ""essentially cash"". ""R"" in the RSU stands for restricted. These awards have strings attached, and as long as the strings are attached - you don't really own the money. As such, most banks do not include RSUs in the income considerations. Some do, especially if they have a specific agreement with your employer (check your HR/benefits coordinator). Specifically for mortgage loan,  where the underwriting is very strict, I'm not aware of banks that include RSUs as income without a specific agreement with the employer as a perk. For credit cards/car loans, where you just need to write a number, they would probably care less. Some banks (but not all) consider past performance, and would include bonuses (and maybe RSUs) if you can show several consecutive years of comparable bonuses." Long ago when I was applying for my first mortgage I had to list all my income and assets. At the time I had some US Savings Bonds from payroll deduction. I asked about them. The loan officer told me that unless I was willing/planning on selling them to make the down payment, they were immaterial to the loan application. So unless you have a habit of turning RSUs into cash, or are willing to do so for the down payment, it is no different from having money in a 401K or IRA: the restrictions on selling them make them illiquid.
Make sure you can really do what you plan on doing: Look at the maximum loan length and the maximum loan amount.   From the IRS- retirement plans faqs regarding loans A qualified plan may, but is not required to provide for loans. If a   plan provides for loans, the plan may limit the amount that can be   taken as a loan. The maximum amount that the plan can permit as a loan   is (1) the greater of $10,000 or 50% of your vested account balance,   or (2) $50,000, whichever is less ... A plan that provides for loans must specify the procedures for   applying for a loan and the repayment terms for the loan. Repayment of   the loan must occur within 5 years, and payments must be made in   substantially equal payments that include principal and interest and   that are paid at least quarterly.  Loan repayments are not plan   contributions. The referenced documents also discuss the option regarding multiple loans, and the maximum amount of all active and recent loans  Having a 401K loan will still count against the maximum amount of monthly payments you can afford. Also check the interest rate, and yes they required to charge interest.  Some companies will not allow you to make contributions to a 401K while you have an outstanding loan. If that is true with your company then you will miss out on the matching funds. Now assume these shares are vested, held for at least 1 year, and are   then sold for $5 each. Everything I've read implies that the grantee   now owes long-term capital gains taxes on the difference, which would   be 10k * ($5 - $1). No. That's exactly what the SO is NQ for. Read more on the differences between ISO and NQSO here. Now assume these shares are vested, held for at least 1 year, and are   then sold for $5 each. Everything I've read implies that the grantee   now owes long-term capital gains taxes on the difference, which would   be 10k * ($5 - $1). At this point you no longer have NQSO, you have RSU. If you filed 83(b) when  you exercised, then you pay capital gains tax when they vest. If you didn't - its ordinary income to you. NQSO is a red herring here since once exercised they no longer exist. If you didn't file 83(b), then when the stock vests the difference between the FMV at vest and the money you spent on it when exercising (if any) is considered wages and taxed as ordinary income (+FICA etc). From that point the RSU becomes a regular stock investment and the capital gains clock starts ticking. They use an amortization table like can be found Here.  The Forumula is not that complex  where:   A = payment Amount per period    P = initial Principal (loan amount)   r = interest rate per period   n = total number of payments or periods You will need to add 50 to  the A to account for the payment fee amount though. The days are long gone when offered mortgages were simply based on salary multiples. These days it's all about affordability, taking into account all incomes and all outgoings. Different lenders will have different rules about what they do and don't accept as incomes; these rules may even vary per-product within the same lender's product list.  So for example a mortgage specifically offered as buy-to-let might accept rental income (with a suitable void-period multiplier) into consideration, but an owner-occupier mortgage product might not. Similarly, business rules will vary about acceptance of regular overtime, bonuses, and so on. Guessing at specific answers: #1 maybe, if it's a buy-to-let product, Note that these generally carry a higher interest rate than owner-occupier mortgages; expect about 2% more #2 in my opinion it's extremely unlikely that any lender would consider rental income from your cohabiting spouse #3 probably yes, if it's a buy-to-let product it's just a passthrough security essentially.  sofi packages a bunch of loans, refinances them for the student, and you invest in sofi corporate debt as they pass through the returns on the loan to you in the form of bond cpns.  i mean its not exactly the same, but its pretty close "I speak from a position of experience, My BS and MS are both in Comp Sci. I know very little about loans or finances. That is very unfortunate as you are obviously an intelligent human being.  Perhaps this is a good time to pause your formal education and get educated in personal finance.  To me, it is that important. I study computer science, and am thus confident that I will be able to find work after I finish school. This kind of attitude can lead to trouble.  You will likely have a high salary, but that does not always translate into prosperity.  Personal finance is more about behavior then mathematics.  I currently work with people that have high salaries in a low cost of living area.  Some have lost homes due to foreclosure some are very limited in their options because of high student loan balances.  Some are millionaires without hitting the IPO/startup lotto.  The difference is behavior. It's possible that someone in my family will be able to cosign and help me out with this loan. This is indicative of lack of knowledge and poor financial behavior.  This kind of thing can lead to strained relationships to the point where people don't talk to each other.  Never co-sign for anyone, and if you value the relationship with a person never ask them to co-sign. I'll be working as a TA again for a $1000 stipend. Yikes!  Why in the world would you work for 1K when you need 4K?  You should find a way to earn 6K this semester so you can save some and put some toward the loans you already acquired.  Accepting this kind of situation ""raises red flags"" on your attitude towards personal finance.  And yes it is possible, you can earn that waiting tables and if you can find a part time programming gig you can make a lot more then that.  Consider working as a TA and wait tables until you find that first programming gig. I am just about done with my undergraduate degree, and will be starting graduate school at the same university next semester. To me this is a recipe for failure in most cases.  You have expended all your financing options to date and are planning to go backwards even more.  Why not get out of school with your BS, and go to work?  You can save up some of your MS tuition and most companies will provide tuition reimbursement.   Computer Science/Software Engineering can be a fickle market.  Right now things are going crazy and times are really good.  However that was not always the case during my career and unlikely for yours.  For example, Just this year I bypassed my highest rate of pay that occurred in 2003.  I was out of work most of 2004, and for part of 2005 I actually made less then when I was working while in college.  In 2009 my company cut our salaries by 5%, but the net cost to me was more like a 27% cut.  In 2001 I worked as a contractor for a company that had a 10% reduction in full time employees, yet they kept us contractors working.   Recently I talked with a recruiter about a position doing J2EE, which is what I am doing now.  It required a high level security clearance which is not an easy thing to get.  The rub was that it was located in a higher cost of living area and only paid about 70% of what I am making now.  They required more and paid less, but such is the market.  You need to learn about these things! Good luck." In the United States, when applying for credit cards, proof of income is on an honor system. You can make $15k a year and write on your application that you make $150k a year. They don't check that value other than to have their computer systems figure out risk and you get a yes or no. It was traditionally easy to attain credit, but that got tightened in 2008/2009 with the housing crisis. This is starting to change again and credit is flowing much more easily. It's not a question with a single right answer.  Other answers have addressed some aspects, my case may provide some guidance as to one way of looking at some of the issues. When I had student loans, the interest rate was RPI¹ and I could get more than that as the return on a savings account.  At the time I could get a whole year's worth of loan at the start of the year, save it, and draw from the savings, partly because I had a little working capital saved already.  Importantly in my case, the loans were use-it-or-lose-it: if I didn't take the loan out by about halfway through each academic year, it was no longer available to me. The difference in interest rates was probably similar to what you can get with a careful choice of savings account and 0% on the loan (I did this in the 90s when interest rates were higher). Over a four year degree the interest I earned this way added up to no more than about £100, which went someway towards offsetting the fact I would be paying interest after graduation. If you can clear the loan before you pay any interest it would give you a return, but a small one that could easily be eroded by rate changes or errors on your part (like not keeping on top of the paperwork).  It still may be beneficial to take out the loans depending on your capital needs -- in my case it made buying a house after graduating much easier, as we still had money for the deposit (downpayment) and student loan rates were much lower than mortgage rates (100% mortgages were also available then, but expensive). ¹ RPI stands for retail price index, a measure of inflation. No, you're not missing anything. RSUs are pretty simple when it comes to taxes. They are taxed as compensation at fair market value when they vest, basically equivalent to the company giving you a cash bonus and then using it to buy company stock. The fair market value at vesting then becomes your cost basis. Assuming the value has increased since vesting, selling the shares that vested at least a year ago (to qualify for lower long-term capital gains tax rates) with the highest cost basis with result in the minimum taxes. "Eh. A FICO change is more important than you think.  Underwriting waterfalls almost always include **minimum** FICO scores. This only really becomes important when you get into securitization and the standards (both GSE and Private-Label) required for MBS issuance. Because -- of course -- an underwriter can originate a loan and then hold it it on the books (this is very prevalent in non-conforming Jumbo loans).  That said, if you want to sell the whole loans to a GSE or private label, they have to meet underwriting requirements (Reps &amp; Warranties).   To your original answer: you're right that it probably won't make a difference but not because FICO doesn't matter. Moreso because there are only 9 million potential ""borrowers"" affected and that 9 million most likely doesn't constitute any real demand for mortgages.  This also ignores the possibility that FICO requirements in underwriting standards adjust to FICO 9; but I really doubt that they will." Do you know how SoFi's business model works? They're usually pretty conservative with their loans and refinancing. But I guess if they were looking to expand into riskier loans then it sounds like they've got some red tape that'd hold them back. Thank you for the explanation, much appreciated. The sale of shares on vesting convolutes matters. In a way similar to how reinvested dividends are taxed but the newly purchased fund shares' basis has to be increased, you need to be sure to have the correct per share cost basis. It's easy to confuse the total RSU purchase with the correct numbers, only what remained.  The vesting stock is a taxable event, ordinary income.  You then own the stock at that cost basis. A sale after that is long or short term and the profit is the to extent it exceeds that basis.  The fact that you got these shares in 2013 means you should have paid the tax then. And this is part two of the process. Of course the partial sale means a bit of math to calculate the basis of what remained. "From the HLSS 1st quarter 10Q: ""Match funded advances on loans serviced for others result from our transfers of residential loan servicing advances to SPEs in exchange for cash. The SPEs issue debt supported by collections on the transferred advances. We made these transfers under the terms of our advance facility agreements. These transfers do not qualify for sale accounting because we retain control over the transferred assets. As a result, we account for these transfers as financings and classify the transferred advances on our Interim Condensed Consolidated Balance Sheet as Match funded advances and the related liabilities as Match funded liabilities. We use collections on the Match funded advances pledged to the SPEs to repay principal and to pay interest and the expenses of the entity. Holders of the debt issued by this entity can look only to the assets of the entity itself for satisfaction of the debt and have no recourse against HLSS.""   I'm not an expert in the accounting of these things but I'll take a stab from the view of a bond investor.  Let's assume the mortgage(s) in question have been pooled together and sold into the bond market in the form of a mortgage-backed security (MBS).    When a homeowner falls behind on their payment, scheduled principal and interest (their monthly mortgage payment amount, or ""P&amp;I"") is advanced as if the borrower is still current to the person who holds the MBS.  This is typically done from the time they first fall behind until either they 1) catch up on their payments or, 2) are foreclosed upon and the home is sold to repay the mortgage balance.  In either instance the advanced monthly payments are recaptured by the servicer before the holder of the MBS is paid.  In this sense, the servicer develops a sort of prepaid asset over time by advancing money they are almost certain to recover at a future date (usually via foreclosure and liquidation).    Due to a high number of borrowers falling behind on their payments since the housing crisis and the resulting time it takes to foreclose on a property, the servicers (OCN, HLSS, etc.) have built a large balance of advances on the asset side of their balance sheet.  To free up this cash prior to liquidation of the home, they have sold short term bonds against this asset (via an SPE), thereby creating the liability you reference.  So in essence they have, say, a home they expect to be liquidated in twelve months that they have advanced P&amp;I on.  The short term bonds sold via the SPE offset this asset at an equivalent term, thereby making the asset and liability ""match funded""." Here is how it should look: 100 shares of restricted stock (RSU) vest. 25 shares sold to pay for taxes. W2 (and probably paycheck) shows your income going up by 100 shares worth and your taxes withheld going up by 25 shares worth. Now you own 75 shares with after-tax money. If you stop here, there would be no stock sale and no tax issues.  You'd have just earned W2 income and withheld taxes through your W2 job. Now, when you sell those 75 shares whether it is the same day or years later, the basis for those 75 shares is adjusted by the amount that went in to your W2.   So if they were bought for $20, your adjusted basis would be 75*$20. It's important because you may be able to reduce the total amount of interest paid (by paying the loan faster); but you can do nothing to reduce the total of your principal repayments. The distinction can also affect the amount of tax you have to pay. Some kinds of interest payments can be counted as business expenses, which means that they reduce the amount of income you have to pay tax on. But this is not generally the case for money used to repay the loan principal.