B3-3.3-07, Restricted Stock Units and Restricted Stock Employment Income (03/04/2026)

• Restricted stock must have vested and been distributed to the borrower without restrictions.
• Sign-on bonuses received in the form of restricted stock that vest over any length of time are not eligible to be used as qualifying income.

The lender must obtain

• a completed Request for Verification of Employment ( Form 1005) that shows restricted stock distributions, or
• the most recent paystub showing receipt of restricted stock income and two years' W-2s.

The lender must also document the following:

• evidence stock is publicly traded;
• current vesting schedule reflecting past and future vesting;
• 200-day moving average stock price (for income paid in shares); and
• brokerage or bank statement showing receipt of previous year(s) distribution of restricted stock and, at a minimum, the number of vested shares or cash equivalent.

Additionally, a verbal VOE is required. See B3-3.1-04, Verbal Verification of EmploymentB3-3.1-04, Verbal Verification of Employment, for specific requirements.

Performance-based awards:

A minimum two-year history is recommended; however, income received for a shorter period, but no less than 12 months, may be considered acceptable if there are positive factors to reasonably offset the shorter income history, such as

• future vesting equal or greater than previous vesting and that will continue for at least 24 months; or
• restricted stock income received for the previous 5 years from any employer.

Time-based awards:

A minimum 12-month history from the current employer is required.

Performance-based awards:

The lender is not required to verify continuance unless they have reason to believe the income may not continue.

Time-based awards:

• For one-time awards: The lender must document that income on the vesting schedule is expected to continue for at least three years from the note date.
• For recurring awards: The lender is not required to verify continuance unless they have reason to believe the income may not continue.

The calculation method for restricted stock income will vary depending on whether payment is made in shares or cash.

For income paid in shares: 

(200-day moving average of share price x total number of distributed vested shares (pre-tax) in most recent 24 months) / 24 months

For income paid in cash:

The cash distributed (pre-tax) equal to the total value of vested shares in the most recent 24 months / 24 months

Note: When the borrower has a history of income ranging from 12-24 months, the lender may use the actual number of months the borrower has received the income rather than 24 months.