New Mortgage Options Allow Startup Employees to Buy Homes Using Private Stock
San Francisco, Saturday, 18 July 2026.
A new California mortgage program converts pre-IPO startup stock into monthly qualifying income, allowing paper-wealthy employees to finally buy homes before their company goes public.
Bridging the Wealth Gap for Paper Millionaires
For decades, a persistent financial paradox has plagued the technology sector: employees of highly valued, venture-backed startups are frequently “wealthy on paper” but locked out of the housing market due to rigid underwriting standards [1]. Mainstream financial institutions typically refuse to recognize non-liquid private shares in mortgage underwriting, citing concerns over valuation volatility and liquidity constraints [GPT][1]. Consequently, even early employees and executives with millions of dollars in vested equity find themselves limited by strict borrowing caps based solely on their base salaries [1]. However, a significant paradigm shift is occurring in the mortgage industry as of July 2026, offering a potential solution to this long-standing issue [1]. On July 17, 2026, California-based mortgage brokerage A Good Lender launched an innovative lending framework that allows startup employees to utilize pre-IPO stock options and private equity as qualifying income [1]. This program specifically targets late-stage, venture-backed companies, including prominent artificial intelligence firms like OpenAI and Anthropic [1]. By transforming non-liquid private shares into a recognized income stream, this development could unlock substantial purchasing power in high-cost real estate markets across Silicon Valley and Southern California [GPT][1].
The Asset Depletion Underwriting Mechanism
Unlike traditional collateralized loans, which require borrowers to pledge physical or liquid assets as security, this new mortgage program utilizes an “asset depletion” underwriting mechanism [1]. Under this framework, the lender calculates additional monthly qualifying income without requiring the borrower to sell or collateralize their shares [1]. The calculation begins by discounting the total eligible pre-IPO stock value by 25% to account for estimated future taxes [1]. The remaining 75% of the equity value is then divided by 84 months to determine the monthly qualifying income that can be stacked on top of the borrower’s regular base salary [1]. To illustrate this mechanism, consider an applicant holding $1.5 million in eligible pre-IPO stock [1]. The lender first reduces this total by 25% for taxes, leaving 75% of the original value, and then divides the result by 84 months: 13392.857 [1]. This calculation yields approximately $13,400 in additional monthly qualifying income [1]. This supplemental income significantly boosts the applicant’s debt-to-income ratio, allowing them to qualify for high-value properties that would have otherwise been far out of reach based on salary alone [GPT][1].
Broader Implications for Silicon Valley and Talent Retention
This shift in underwriting is particularly timely as companies remain private for 10 or more years, delaying liquidity events and keeping employees locked out of the housing market [1]. Rodney Roloff, founder of A Good Lender, noted that for the last 40 years, Silicon Valley has generated paper millionaires whose stock did them no good on a mortgage until a sale occurred [1]. While the brokerage previously qualified clients using SpaceX stock prior to its public offering, the formalized expansion of this program to other pre-IPO companies represents a broader institutional adaptation to the modern startup lifecycle [1]. Despite the flexibility of these portfolio lending programs, which are typically accessed through specialized brokers rather than mainstream banks, applicants must still meet standard documentation requirements [1]. Approvals are granted on a case-by-case basis, and borrowers must verify their employment, assets, and overall financial health [1]. Often paired with bridge loans to facilitate purchases before a formal liquidity event, this program could reshape talent retention strategies for tech firms, making equity compensation feel far more tangible to employees seeking homeownership today [GPT][1].