How Australian Lenders Treat Foreign Income Paid Partly in Stock Options and Partly in Cash When Calculating Borrowing Power

When your income is split between a cash salary and stock options or RSUs, Australian lenders will almost always assess the two components differently. This is general information only and does not constitute personal credit advice. Cash salary is typically accepted at 100% (subject to standard verification), while stock options and unvested equity are usually heavily discounted or excluded entirely from borrowing power calculations. Borrowing power, approval outcomes, and lender treatment of equity-based income depend on individual circumstances and lender policy. This matters a great deal for expats in finance, tech, and consulting roles, where equity can make up a third or more of total compensation, because it means the number on your employment contract and the number a lender will actually use are often very different.

TL;DR

• Cash salary is generally assessed close to face value; stock options, RSUs, and unvested equity are usually shaded or excluded because lenders view them as variable and less certain than base pay.
• Vested and regularly exercised stock income has a better chance of partial recognition than unvested grants tied to future performance or continued employment.
• Policies differ significantly across the many Australian lenders that accept foreign income, so which lender you approach can change your borrowing power by a large margin.
• Structuring documentation properly (vesting schedules, historical exercise patterns, employer letters) before applying materially improves the odds of equity income being counted at all.

About the Author: This article draws on ODIN Mortgage’s work assessing foreign income structures for Australian expats, including finance and tech professionals paid partly in equity, across 2,300+ client engagements in 40+ countries. ODIN Mortgage maintains proprietary data on how individual Australian lenders shade different income types, which is the basis for the comparisons below.

Why Do Lenders Treat Cash and Stock Options Differently?

The core issue is predictability. Lenders calculate borrowing power based on income they can reasonably expect to continue for the life of the loan, and cash salary is contractually fixed in a way that equity compensation is not. A base salary of USD 180,000 is the same number every pay cycle. A stock grant worth USD 60,000 at issue might be worth more, less, or nothing by the time it vests, depending on share price movement, and it can also be forfeited entirely if the employee leaves before the vesting date.

Think of it the way a lender thinks about rental income versus a fixed bond coupon. A bond coupon is contracted and near-certain; rental income can fluctuate with vacancy and market conditions, so lenders typically shade it. Stock options sit even further along that risk spectrum than rental income because their value depends on an equity market the lender has no ability to forecast. That is the mechanism behind the discount, not an arbitrary lender preference.

How Do Lenders Actually Calculate Foreign Income That Includes Equity?

Most Australian lenders start by separating income into “fixed” and “variable” categories, then apply different treatment to each before combining them into a servicing assessment. This is general information only. Base salary sits in the fixed category. Bonuses, commissions, and stock-based compensation typically sit in the variable category alongside other irregular income. Individual lender policy and your circumstances will determine the actual treatment of your income.

• Cash base salary: Usually accepted close to full value once converted to AUD, subject to standard payslip and employment verification.
• Vested, regularly exercised stock: Some lenders will consider an average of the last one to two years of realised (exercised or sold) equity income, rather than the face value of new grants.
• Unvested RSUs or options: Frequently excluded altogether, since there is no guarantee the employee remains employed long enough for them to vest.
• Performance-based option grants: Often given the least recognition of all, because vesting is contingent on both continued employment and hitting performance targets.

On top of this equity shading, foreign income overall is discounted again. Most lenders only accept a portion of foreign income once it is converted to Australian dollars, commonly citing exchange rate volatility as the reason. This is sometimes described as an income “shading” or “haircut” policy, and it applies on top of, not instead of, any separate discount applied to stock-based pay.

Does Currency Conversion Make the Equity Discount Worse?

Yes, and this is where the numbers can move further than most borrowers expect. Building on the equity shading discussed above, currency conversion is a second, separate discount applied to whatever foreign income figure survives the first step. Lenders typically convert foreign income to AUD using their own internal exchange rate, and then apply a further reduction on top of that to account for exchange-rate risk over the life of the loan. The size of that reduction varies by lender and depends on individual lender policy and borrower profile, with some applying a flat reduction around 20% and others applying a range that can extend up to around 40%.

For someone paid in USD with a mix of cash and equity, the effective sequence often looks like this:

• Step 1: Stock-based income is discounted or excluded (equity shading).
• Step 2: The remaining income, cash plus any recognised equity, is converted to AUD at the lender’s chosen rate.

Because these discounts compound rather than offset each other, a compensation package that looks strong on a US or Hong Kong payslip can translate into meaningfully lower assessable income once it reaches an Australian lender’s servicing calculator. This is the single biggest reason expats are surprised by borrowing power estimates that seem low relative to their actual take-home pay.

Which Lenders Are More Flexible With Equity-Based Income?

A related but distinct question is whether all lenders apply the same equity and currency discounts, and they do not. Policy on foreign income and stock-based compensation varies significantly from one Australian lender to the next. These policies are subject to change as lenders update their risk appetite and regulatory environment [coposit.com.au]. Some lenders will not consider stock-based income at all, regardless of vesting history. Others will average two years of realised equity income if it can be documented consistently. A smaller subset will consider unvested RSUs at a reduced rate if the employer’s vesting schedule is contractually clear and the employee has a long tenure.

This is the practical reason working with a broker who tracks lender-by-lender policy matters more for equity-heavy earners than for standard salaried borrowers. ODIN Mortgage maintains proprietary data across its panel of Australian lenders on exactly how each treats foreign income, including different equity structures and currencies, which is not information published on any lender’s public rate sheet. That data is used to match a client’s specific compensation mix, cash plus options plus currency, to the lenders most likely to recognise more of it, rather than defaulting to whichever lender is best known domestically.

How Should You Document Stock-Based Income for a Home Loan Application?

Documentation is where equity-heavy applications are won or lost, and it is worth treating as a distinct step rather than an afterthought. Lenders that are willing to consider stock-based income will generally want to see a consistent, verifiable pattern rather than a single strong year.

• Vesting schedule: A formal document from the employer or equity plan administrator showing what has vested, what is still unvested, and the conditions attached.
• Two years of exercise or sale history: Evidence of equity actually converted to cash, not just granted, tends to carry more weight than grant value alone.
• Employer confirmation letter: A statement confirming the employee’s tenure, role, and the ongoing nature of the equity component of their package.
• Tax returns or foreign equivalent: Used to cross-check that reported equity income aligns with what is being claimed on the loan application.

Managed properly, this kind of documentation can be the difference between a lender recognising a meaningful slice of equity income and excluding it altogether, which directly affects borrowing power and, in some cases, how quickly a file moves through approval [coposit.com.au].

Frequently Asked Questions

Do all Australian lenders exclude unvested stock options from income assessments?
No, but exclusion is the more common outcome. A minority of lenders will consider unvested equity at a reduced rate if the vesting schedule is contractual and well documented, though most treat it as too uncertain to include, subject to that lender’s current policy [coposit.com.au].

Is RSU income treated differently to stock options?
Often yes, since RSUs typically vest based on time served rather than a strike price or performance hurdle, which some lenders view as marginally more predictable than options. Treatment still varies by lender and is not standardised across the market [coposit.com.au].

Does the currency I’m paid in affect how my stock income is assessed?
Yes. Currency conversion and the associated risk buffer are applied on top of any equity-specific discount, so income paid in a currency the lender is less familiar with can face additional scrutiny or a larger buffer.

Can bonus income be combined with stock options for servicing purposes?
Some lenders group all variable income (bonuses, commissions, and equity) together and apply a single averaging approach, while others assess each component separately. This depends on individual lender policy [coposit.com.au].

How much of my total package should I expect a lender to count?
This depends entirely on your specific mix of cash and equity, your employer, your currency, and the lender’s individual policy at the time of application. Borrowing power depends on individual circumstances and lender policy, and the only reliable way to know your actual position is to discuss it in a formal consultation with a qualified broker or lender.

Will using an Australian expat mortgage broker actually change my outcome?
It can, because different lenders apply materially different treatment to equity and foreign income, and an Australian expat mortgage broker with visibility across many lenders can direct your application toward those more likely to recognise your specific compensation structure.

Is this general information or personal advice?
This article is general information only and does not constitute personal credit advice. Borrowing power, loan structure, and approval outcomes depend on individual circumstances and lender policy, and should be discussed in a formal consultation.

About ODIN Mortgage

ODIN Mortgage is part of ODIN and works exclusively with Australian citizens, permanent residents, and foreign investors living overseas, including a large base of expats earning income partly in stock options or RSUs across finance, tech, and consulting roles. As an Australian expat home loan specialist, ODIN Mortgage holds proprietary data on how its panel of Australian lenders shade foreign income and equity-based compensation, built from 2,300+ client engagements across 40+ countries. Led by Mortgage Director Steven Lee, the team is regulated under ASIC and the National Consumer Credit Protection Act (NCCP), and coordinates mortgage structuring with Odin Tax for outcomes that consider both lending and tax position together.

If your income includes stock options, RSUs, or other equity alongside cash salary, get a borrowing power assessment that accounts for how individual lenders will actually treat your specific package. Visit ODIN Mortgage to speak with a specialist about your situation.