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Comment by worker767424 | Hacker News Reader

I'm in a bizarre place financially. I'm single, in the Bay Area, and work for a FAANG. I have enough saved for 40+% down for a lot of decent things, so I'm limited by my salary, not my down payment. It's extra weird because RSUs don't necessarily count towards salary for mortgage purposes, but they're (for now) a significant chunk of my net pay.

I'm also a little worried about putting a lot down because prices might go down when interest rates go up.

I realize this isn't normal. Most people are somewhere cheaper, lots are married, and most have nowhere near as much cash.

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I'm trying to understand your comment about not putting a large down payment in case prices go down. Whether you buy or not is really the only thing that matters if you think the price will go down.

Now the thing to consider, is how much to put down vs how much of your down payment you should invest. With rates so low, it seems better to invest the down payment in the stock market and putting the minimum in the house.

The amount down changes if I'm playing with my money or they bank's. There's a cutoff where you can default on the home, wreck your credit, but if you have enough in the bank to buy a replacement, come out ahead.

> With rates so low, it seems better to invest the down payment in the stock market and putting the minimum in the house.

I'd agree that it'd be better to put the minimum possible down, but remember that I'm limited by my salary, not my down payment, so I'm expecting 40% down so I can afford something nicer. I also think that stocks have done will because there's no alternative, and people buy the most expensive home they can afford the mortgage for, so if interest rates go up, both stocks and real estate will go down (or up less quickly).

RSU's absolutely do count for income for mortgage purposes. (Source: I've bought a house recently and my RSU's were accepted as part of my income). It's different if you work at a startup, where the stocks are not yet publicly traded, but if you are working at FAANG it is publicly traded, then the stock is quite liquid, so banks consider those RSU's to be as good as dollars.

You just need a document from your employer demonstrating to the bank what they are intending to pay you per year in total compensation, including both salary and RSU stock. Also get some documents from your stock broker showing how many RSU's you have vested so far versus ones that are scheduled to vest over the next X years.

For a bonus: rather than liquidating all your vested RSU's for the downpayment, hold onto a good number of RSU's in your brokerage account as these can be used to show you are holding assets, which can help you get a lower mortgage rate as well. Banks love to see that you have assets you are holding onto and can liquidate just in case you do need cash. Their ideal customer is someone who can technically buy a house in cash, but is only applying for the mortgage because the mortgage rates are currently lower than the stock return rates.

Chances are if you work at FAANG and have RSU's that's actually considered a very safe loan that you are basically guaranteed to be approved for at a very nice low mortgage rate. You'll be able to get approved by multiple banks, and then get them to compete with each other to lower their rates by fractions of a percent to try to win your mortgage agreement. Mortgage brokers are your friends here, pay one to do the hard work of contacting the banks on your behalf and make sure your documents look good and then the banks will be falling over themselves to give you a loan.

> hold onto a good number of RSU's in your brokerage account as these can be used to show you are holding assets

Would they really care if the asset is cash or stocks?

> very nice low mortgage rate

True, and my credit score is higher than 760, so banks love me.

> Would they really care if the asset is cash or stocks?

You would think not, but I suspect that the process, or the people involved in the process, see a good amount of assets in stocks as an indicator of a more financially savvy applicant, which theoretically translates to a safer mortgage. Having a large amount of cash is ironically a bit suspicious looking as well. It is normal for banks to ask for many months of bank statements to verify that the cash is actually yours, and you aren't just temporarily holding onto it for someone else, or got a big transfer from parents / friends that you need to pay back. With stocks it is easy to see that you have had this asset for a while, so they can trust that it is actually yours.

A bit OT, but this is my current dilemma. My entire career has been with startups so I effectively value any equity at $0 (none have made an exit). That means all my assets are cash/stock, since I've rented my whole life.

Makes me nervous that I won't qualify for a low mortgage rate right as the Fed is likely to start raising interest rates again (further chilling my enthusiasm to buy).

> I'm also a little worried about putting a lot down because prices might go down when interest rates go up.

Get married, move to a cheaper place - remote work is all the rage now after all - and use that cash to buy some real estate without the need for any mortgage (in this order or the other way around, your choice). You'll gain the financial security of having your own home, the social security of having a family and the freedom to explore whatever befits you. Who cares what interest rates or housing prices do, you're not affected by either.

Source: I more or less did this and have never looked back with regret.

> It's extra weird because RSUs don't necessarily count towards salary for mortgage purposes, but they're (for now) a significant chunk of my net pay.

Are you sure this is true? In my (admittedly limited) experience, the way it works is that the bank asks for your annual income and you have to provide proof of that, which you can do by providing a statement from the brokerage account your company vests your RSUs to. RSUs issued from your (presumably publicly traded) company are liquid, so you can pretty easily claim them as part of your annual income and get a mortgage against that income.

It did with one lender I talked to (Rocket Mortgage). I'll check with another (probably First Republic).

This depends a lot on the bank, most of them are glad to use stock as part of the income calculation so long as you have a history of vesting a certain amount over time. It works the same way as bonuses or commissions, if you want variable income to count toward your DTI you need to demonstrate you get it regularly.

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