A statement that handles equity compensation.

What a lender checks on a high earner's statement

Income qualifies you for the payment, and assets are what a jumbo underwriter checks next. On a conforming file the debt-to-income ratio does most of the work, but on a jumbo file the underwriter spends as much time on what is left in your accounts after closing. Many jumbo programs ask for 6 to 12 months of PITIA in reserves, meaning principal, interest, taxes, insurance, and any association dues on the subject property, verified in accounts you control. Additional financed properties and loan amounts above roughly $2 million commonly push that requirement higher, so treat 6 months as a floor and ask your lender for the actual number before you plan around it.

Two situations come up again and again with high earners. The first is lumpy income: a partner draw, a bonus that lands once a year, a book of business that swings by six figures. When documented monthly income does not support the payment but the balance sheet clearly does, an asset depletion loan converts a share of your liquid assets into a qualifying income figure. The second is the large deposit. Sell a block of vested RSUs and a six-figure credit shows up in checking, which underwriting flags until it is sourced. Keep the trade confirmation and the vesting statement, and attach them to a letter of explanation before the condition arrives.

How to list RSUs, stock options, and ESPP shares

Vested RSUs are shares, so list them like any other holding: number of shares times the closing price, with the date you priced them. A statement priced in March and submitted in June invites a repricing request. Unvested RSUs belong in a footnote and nowhere else. Fannie Mae's Selling Guide section B3-4.3-01, "Stocks, Stock Options, Bonds, and Mutual Funds," states that non-vested stock options are not an acceptable source of funds for the down payment, closing costs, or reserves and should not be entered on the loan application. Many lenders apply the same logic to unvested restricted stock.

Options are valued on the spread. For a vested option, the reportable figure is the current share price minus the strike price, times the number of vested options. That same Fannie Mae section asks for a statement listing the number of options and the option price, plus the current stock price, so the underwriter can work out the gain from exercising the option and selling the stock. An option whose strike sits above the current price is worth zero for this purpose. Incentive stock options can also trigger alternative minimum tax at exercise, which the statement does not show, so note it if you plan to exercise before closing.

ESPP shares are ordinary stock once the purchase date passes. List them at market value with your other brokerage holdings. If you are still inside an offering period with payroll money accumulated but no shares purchased yet, that balance is cash.

Deferred compensation and multiple retirement accounts

A non-qualified deferred compensation plan is an asset with a string attached. Until it is paid out, the deferred balance is an unsecured claim on your employer (that is what keeps it untaxed under section 409A), which puts you behind the company's secured creditors if things go badly. Disclose the balance, disclose the distribution schedule, and expect a lender to treat it more cautiously than a brokerage account.

List every retirement account separately at its vested balance, including the 401(k) from two employers ago. Fannie Mae's Selling Guide B3-4.3-03, "Retirement Accounts," treats vested IRA, SEP, Keogh, and 401(k) funds as acceptable for down payment, closing costs, and reserves, provided the account allows withdrawals regardless of your current employment status, and it does not require the money to be withdrawn when it is counted as reserves. Non-agency jumbo lenders write their own overlays and many credit only part of a retirement balance, so ask before you build a reserve plan around a 401(k). If you are unsure which side of the statement an item belongs on, the breakdown in types of liabilities covers the debt side.

Practice loans, personal guarantees, and other contingent liabilities

Physicians, dentists, and law firm partners often carry a buy-in note that never shows up on a consumer credit report. A practice acquisition loan, an equipment note in the practice's name, or a partnership capital loan can run into six or seven figures, and it is still yours to disclose if you signed for it.

The personal guarantee is the line people forget. Signing one makes you personally responsible for a business debt if the business stops paying, which is a contingent liability, and it belongs on the statement. What a personal guarantee commits you to covers the mechanics. If you are filling out SBA Form 413, contingent liabilities get their own lines at the bottom of the Section 1 table, and this walkthrough explains what goes in them. Leaving off a guarantee you signed reads as concealment once the lender finds the note in a business credit file.

A realistic net worth benchmark

The rule of thumb most high earners have heard comes from Thomas Stanley and William Danko's The Millionaire Next Door (1996): expected net worth is your age times your pre-tax annual household income, divided by 10. A 45-year-old household earning $400,000 would be at $1.8 million by that math.

The formula breaks for young high earners. A 32-year-old surgeon three years out of residency, earning $280,000 and still carrying student loans, is not behind by any useful measure, yet the formula says she should have $896,000. The formula assumes you have been earning your current income for your whole adult life, which a 32-year-old surgeon has not. Run the number, then ignore it if your earning curve started late.

Your own statement, kept current, is the number a lender will use. The net worth calculator will total it. If you own rentals, lenders will also want a schedule of real estate owned listing each property, its market value, its loan balance, and its rents.