If you work in tech and you’re thinking about buying your first home in Silicon Valley, there’s a good chance your down payment is sitting in RSUs. That was true for all three first-time buyers I helped this year, each of whom bought at around $2.5 million after renting here for years. The hardest part for them wasn’t finding the house. It was deciding how much company stock to sell, when to sell it, and what the tax bill would look like.
I’m a REALTOR®, not a CPA or financial advisor, so I’ll stay in my lane on tax specifics. What I can share is what I’ve seen work and fail over 23+ years and 460+ transactions, along with what the IRS, the California Franchise Tax Board, Fannie Mae and FINRA actually say. Please take this to your tax professional before you place a single sell order.
Key Takeaways
Summary: For most Silicon Valley tech buyers, selling enough vested RSUs to cover a 20% down payment, closing costs, reserves and the resulting tax before making offers is the cleanest way to buy a home. Choosing recently vested tax lots keeps the tax bill low, and moving money out of a single stock into a home reduces the risk of having your job and your savings tied to one company.
The Short Answer
For most tech buyers, selling enough vested RSUs to cover a 20% down payment, closing costs and a cash reserve is the cleanest way to buy. Doing it before you start making offers protects you from a stock drop mid-escrow. The bigger risk usually isn’t the tax bill, it’s having your job, your income and most of your net worth tied to one company.
How RSUs Are Taxed When You Sell Them
The tax hit is often smaller than people fear, because the big tax event already happened. When RSUs vest, their value is taxed as ordinary wage income and shows up on your W-2, and that vesting-date value becomes your cost basis, as the IRS explains in Publication 525. When you later sell, you’re only taxed on the change in price since vesting. One trap to watch for is that brokerages often report RSU sales on Form 1099-B with a cost basis of zero or no basis at all, because the vest-date value was already on your W-2. If nobody adjusts it on Form 8949, you can end up paying tax on the same money twice.
If you held the shares more than a year after vesting, that gain is long-term and taxed federally at 0%, 15% or 20% depending on income, under IRS Topic 409. Most of my tech clients also owe the 3.8% Net Investment Income Tax, which applies above $250,000 of modified AGI for married couples filing jointly and $200,000 for single filers. Shares held a year or less are short-term, and that gain is taxed as ordinary income.
California is the surprise for a lot of people. The Franchise Tax Board states plainly that California has no lower rate for capital gains, so every gain is taxed at your regular state income tax rate, which tops out at 13.3% once you include the 1% Mental Health Services Tax on income over $1 million. A long-held position that has doubled can carry a meaningful combined bill.
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A Simple Way to Think About Which Shares to Sell
Your brokerage account usually holds many tax lots, one for each vest. Recently vested shares have a cost basis close to today’s price, so selling them triggers very little gain. Older shares that have run up carry most of the tax.
| Lot | Vested at | Price today | Gain per share | Tax treatment |
|---|---|---|---|---|
| Vested 3 months ago | $200 | $210 | $10 | Short-term, small |
| Vested 3 years ago | $100 | $210 | $110 | Long-term, much larger |
In this hypothetical, selling the recent lot raises the same cash with about a tenth of the taxable gain. Your CPA may still steer you toward older lots for long-term treatment or to harvest losses, which is exactly why this is a conversation to have before you sell. Also check whether your RSU withholding at vest covered your actual bracket. Employers usually withhold federal tax on vested shares at the flat 22% supplemental rate (37% once your supplemental wages pass $1 million for the year), according to IRS Publication 15, and California’s supplemental withholding rate for stock compensation is 10.23%. If you’re actually in the 32% to 37% federal bracket, that gap can turn into a five-figure bill in April.
If any of your lots are underwater, be careful about selling them at a loss within 30 days of a new vest. Under the wash sale rule, buying substantially identical stock within 30 days before or after a loss sale disallows that loss for now, and a regular RSU vest can count as the purchase. Your CPA can help you time the sale around your vesting calendar.
The Real Risk Is Concentration, Not Taxes
FINRA notes that some experts recommend keeping no more than 10% of your investment assets in any single stock, including your employer’s, in its guide Love Your Company Stock? Here’s What to Know. It also points out the double hit you take if your company struggles, since your paycheck and your savings fall together. FINRA’s broader piece on concentration risk makes the same case for diversifying.
This is why I often see a home as the most natural diversification move for tech employees. You’re shifting part of a single-stock position into a different asset class that you also get to live in.
Why You Should Sell Before You Make Offers
In our market, and especially in the neighborhoods tech buyers target in Sunnyvale, Cupertino and Mountain View, offers usually need to show proof of funds and often come with short or waived contingencies. If your down payment is still in stock when you go into contract, a bad earnings report can shrink it right when you need it most. Selling first turns a moving target into a fixed number your lender and the listing agent can rely on.
Selling early also gives the cash time to show up cleanly on your bank or brokerage statements, which lenders will review. If you’re subject to trading windows or blackout periods at work, map those dates out first, because a closed window during escrow can wreck an otherwise strong deal. If you’re an insider who sells through a Rule 10b5-1 trading plan, keep in mind that new or modified plans now come with a cooling-off period before the first trade, so set it up well ahead of your house hunt. My guides on winning offers and preemptive offers explain why being fully liquid matters so much here.
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How Lenders Count Your RSUs as Income
Separately from the down payment, your RSUs can help you qualify for a bigger loan. Fannie Mae’s Selling Guide section B3-3.3-07 lets lenders count vested RSU income when it is documented and likely to continue. For time-based awards it requires at least 12 months of history with your current employer, sign-on grants don’t count, and for a one-time award the lender has to document that vesting will continue for at least three years from your application date.
The calculation typically uses a 200-day moving average price multiplied by the vested shares distributed over the past 24 months, then divided by 24. If you have between 12 and 24 months of history, the lender can divide by the actual number of months instead. Your loan at this price point will usually be jumbo, since it exceeds the FHFA’s 2026 high-cost conforming limit of $1,249,125, and jumbo lenders set their own rules that may be stricter or looser. Ask early how each lender treats RSUs, because the answers vary a lot. My post on the underwriting process in Silicon Valley goes deeper.
Alternatives to Selling Everything
You don’t have to liquidate your whole position. Some buyers put down less than 20% with a jumbo lender that allows it, accepting a higher rate to keep more shares invested. Others borrow against their portfolio with a securities-backed line of credit, which avoids a sale but can force one if the stock drops sharply and the lender calls for more collateral.
You can also combine sources, like a smaller stock sale plus savings or a 401(k) loan. A 401(k) loan is generally capped at the lesser of $50,000 or half your vested balance, according to the IRS, so it usually fills a gap rather than covering the whole down payment. I break down that option in how to use your 401(k) to buy a home in the Bay Area. If you’re considering paying all cash, read my post on the pros and cons of buying with cash first, since tying up that much liquidity has its own costs.
How Much to Sell
Work backward from the full amount you’ll need at closing, not just the down payment. On a $2.5 million purchase, 20% down is $500,000, and you’ll want closing costs plus at least several months of reserves on top. Jumbo lenders often require reserves, and you don’t want to empty every account the week you get the keys.
Don’t forget the tax on the sale itself. Set aside enough to cover what you’ll owe on the gain so April doesn’t turn into a second down payment. To see how much house your income supports, try my affordability calculator.
A Practical Order of Operations
- Meet with your CPA to choose tax lots and estimate the bill on the sale.
- Talk to two or three lenders about how they treat RSU income and what reserves they want. My pre-approval guide explains what to bring.
- Check your company’s trading window calendar.
- Sell what you need for the down payment, closing costs, reserves and the tax, then let the cash settle.
- Start touring with a buyer’s agent who knows the neighborhoods tech buyers target. Here’s how working with me as your buyer’s agent works.
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Frequently Asked Questions
Can I use RSUs for a down payment?
Yes. Once vested shares are sold and the cash is in your account, lenders treat it like any other documented asset. Unvested RSUs can’t be used.
Do I pay tax twice on RSUs?
No. You’re taxed on the value at vest as wages, and then only on any gain or loss after vesting when you sell.
Should I sell RSUs right when they vest?
Many advisors suggest it to limit concentration, since there’s little extra tax on shares sold at vest. The right answer depends on your total portfolio, so ask your financial advisor.
Do lenders count RSUs as income?
Often, yes. Fannie Mae allows it with enough documented history, and jumbo lenders have their own versions of that rule.
How long before buying a house should I sell my RSUs?
Ideally before you start writing offers, and early enough that the cash shows up on your statements before you apply for the loan. Lenders typically review your most recent bank and brokerage statements, so money that has already settled is much easier to document than a last-minute sale.
Can unvested RSUs help me buy a house?
Not as a down payment, since you can’t sell them yet. For qualifying income, lenders look at the vested shares you’ve already received, and your future vesting schedule mainly helps show that the income will continue.
Why does my 1099-B show a huge gain on RSUs I sold?
Brokerages often report RSU sales with a zero or missing cost basis, even though the value at vest was already taxed on your W-2. Your tax preparer can correct the basis on Form 8949 so you aren’t taxed twice.
What if my company’s trading window is closed when I need the money?
You generally can’t sell until the window opens unless you have a Rule 10b5-1 plan in place. Check your trading calendar before you go into contract so a blackout period doesn’t land in the middle of escrow.
This article is general information and not tax, legal or investment advice. Talk with your CPA and financial advisor before selling any stock. Last updated October 11, 2026.
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