The Quick Read: The amount an equity partner can borrow depends on eligible deposits averaged over 12 or 24 months, less an expense ratio on business accounts, then tested against a debt-to-income limit of up to 50%, through select wholesale programs and subject to full underwriting. Loan amounts run from $300,000 to $30,000,000 across two wholesale programs. Leverage steps down as the loan gets bigger.
- Qualifying income is deposits divided by statement months, not the K-1 figure.
- Distributions from the firm into your personal account count in full.
- Business statements need at least 25% ownership and an expense ratio.
- Credit floors vary by scenario and rise with loan size.
- Above $4,000,000, every file is reviewed case by case before submission.
This article covers a partner borrowing personally for a home purchase or refinance. It does not cover firm credit lines or partner buy-ins.
Why a Partner’s Tax Return Understates What Lands in the Account
A partner’s K-1 shows an allocated share of firm income, after deductions. It does not show the cash that moved. That gap is the whole reason bank statement programs exist for partners.
An equity partner gets a Schedule K-1 with a distributive share of income, deductions and credits, plus any guaranteed payments, per LeanLaw’s breakdown of income versus equity partners. An income partner treated as an employee gets a W-2 and no K-1. So an income partner usually belongs in a standard W-2 loan, not a bank statement file.
Draws add another wrinkle. A draw is an advance against expected year-end profit, and it reduces the partner’s capital account, as Steph’s Books explains for law firm distributions. A partner also owes tax on the allocated share whether or not cash was paid out. K-1 income and deposits can drift apart in either direction.
A bank statement file reads the deposits. That is the number that matters.
Which Partner Type Are You?
Equity partners with steady personal distributions have the cleanest files. Minority owners, new partners and partners paid through several accounts need more care. The table shows where each profile usually lands.
| Partner profile | Statements that usually fit | Watch-out |
|---|---|---|
| Equity partner, distributions to personal account | Personal | Lumpy year-end payouts |
| Owner of a PC or PLLC (25%+) | Business, or personal | Expense ratio applies to business |
| Minority owner under 25% | Personal | Business statements not available |
| Newly made partner | Personal, 12 months | Short partner history |
| Income or salaried partner | Usually W-2 loan | No K-1 distributions |
Across the wholesale network, most programs want the borrower to be an owner, not an employee with a title. A partnership agreement, the K-1 or a CPA letter usually proves ownership share.
Personal or Business Statements?
Personal statements are simpler for most partners. Eligible deposits are totaled and divided by the number of statement months. Transfers from the borrower’s own business into a personal account count at 100% through select programs.
Business statements take more work. The lender totals eligible deposits, then applies an expense ratio, then looks at your ownership share. Business statements need at least 25% ownership.
| Factor | Personal statements | Business statements |
|---|---|---|
| Expense ratio | None | Required |
| Ownership minimum | None | 25% |
| Best for | Steady distributions | Owner of a closely held firm |
| Main risk | Gaps in deposits | Ratio cuts income |
The expense ratio on business accounts varies with the type of business and its staffing, and it is applied to deposits to reduce the qualifying income. Lenders set these ratios in their own guidelines, so the exact bands differ from one program to the next. An accountant-provided ratio is another option. A profit-and-loss method is also available. A law firm with a real support staff will typically sit in a higher expense band unless a CPA letter supports a lower ratio.
So a partner who can route distributions to a personal account often avoids the expense ratio entirely. That is a decision to make with your CPA before the statement window starts, not after.
How the Borrowing Amount Gets Built
Capacity is a chain, and every link can move the answer. The steps run in this order.
1. Pull consecutive statements. The portfolio non-QM program accepts 12 or 24 months. The bank portfolio program, which carries larger balances, uses 12. Statements must be consecutive, and transaction histories never substitute.
2. Screen out non-income deposits. Transfers between your own accounts, loan proceeds, capital you contributed, and one-off items like a property sale come out. Client trust account money is never income. Only distributions and compensation from the firm count.
3. Total what is left and divide by the months. That is monthly qualifying income on personal statements.
4. Apply the expense ratio and ownership share if you used business statements.
5. Test against DTI. The housing payment plus all other monthly debts must fit within a ratio of up to 50%. Existing debts shrink capacity directly.
6. Check credit and reserves. The portfolio program has a 660 credit floor. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Above the super-jumbo line, the floor is 700. Reserves run 3 months to $500,000, 6 months to $1,500,000 and 9 months above that, through select wholesale programs.
The loan size that falls out is a ceiling, not a promise. Property type, credit tier and leverage also cap it.
A Worked Example in Ratios
Picture an equity partner whose personal account shows steady monthly distributions, with a few large year-end payouts. Over 12 months, the average smooths the lumps. Say the housing payment on the target home uses roughly 35% of that averaged income, and other debts add another 10%. The file sits near 45% DTI, inside the 50% ceiling.
Now picture the same partner using business statements at a 40% expense ratio and a 30% ownership share. Qualifying income drops sharply, because the ratio and the share both shrink the deposits. The same home might now push DTI past the limit. Same firm, same partner, different answer. These are modeled assumptions, not an offer.
What Moves the Number
| Lever | Effect on capacity |
|---|---|
| Expense ratio | Higher ratio cuts income |
| Ownership share | Lower share cuts income |
| Existing debts | Each debt reduces room |
| Statement window | 24 months can smooth or drag |
| Credit tier | Higher tier raises leverage |
What Leverage Looks Like as the Loan Grows
Leverage is where partners with high income still get surprised. Through select wholesale programs, the maximum leverage on a primary residence steps down with loan size.
On a primary residence purchase, the ladder typically runs like this:
- 90% to $1,000,000.
- 85% to $2,000,000.
- 80% to $3,000,000.
- 75% at the top credit tier to $4,000,000.
Above $4,000,000, every file is reviewed case by case before submission. The bank portfolio program’s own ladder begins above $4,000,000 and overlaps the portfolio program to $6,000,000. On review, it runs 65% to $5,000,000, 60% to $10,000,000 and 55% to $30,000,000. Never read those as flat promises.
Second homes and investment property typically run about five points lower at every size. Cash-out is lower again. On a primary residence cash-out, the best cell is 80% on loans up to $1,500,000, and it steps down from there. Cash-out is capped at $1,500,000 cash in hand above 60% LTV on the portfolio program, and the bank program has no published cap. Above $3,500,000 on a primary residence, extra overlays apply, including a 700 credit floor and 48 months of seasoning after any credit event.
Interest-only structures exist. On purchase and rate-and-term files they reach 85% LTV with a 700 credit floor on the portfolio program, and 60% on the bank program. That is a payment structure, not a higher cash-out limit. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Beyond Deposits: Two Other Paths
Partners with large liquid holdings have two more options through select programs.
An asset allowance divides liquid assets by 36, 60 or 84 months and adds that to income. It works on primary and second homes, up to 80% LTV. An assets-only file needs no DTI, but liquid U.S. assets must cover the loan amount plus closing costs. Retirement accounts count at 70%, or 80% at age 59.5 and up. Business funds, gifts and cryptocurrency never count. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
These paths suit partners whose deposits are uneven but whose balance sheet is strong.
What Does Not Count (and Where Partner Files Break)
Partner files fail on deposit hygiene more than on income. Four patterns come up again and again.
- Capital contributions you put in. They are your money going back to you. A firm can finance a partner’s contribution with a loan recorded as a note receivable, per LeanLaw’s guide to partner capital contributions. That loan is not income.
- Client trust account money. It belongs to clients. A transfer of earned fees into your account is the income, not the trust balance.
- Moves between your own accounts. These are stripped out unless they trace to firm compensation.
- Declining deposits. A 12-month average pulls down when recent months are weak. A partner whose payouts are falling should check both the 12- and 24-month windows.
Large firms add another layer. Multiple operating and reserve accounts, frequent transfers and payroll flows make the statement package harder to read. A clear distribution history and a clean account separate the file from the pile.
Bank Statement vs. Other Tracks for a Partner
A bank statement loan tests you. A DSCR loan tests the property. That difference decides which track fits.
| Track | What it tests | Best fit |
|---|---|---|
| Bank statement | Your deposits and DTI | Home to live in, or second home |
| Full documentation | K-1 and returns | Partners with strong taxable income |
| Asset-based | Liquid assets | Cash-rich, income-light files |
| DSCR | Property rent vs. debt | Rental that stands on its own |
On a bank statement file, every added mortgage stacks against your personal DTI. A partner with high income but heavy existing debt can hit the ceiling fast. For rentals, DSCR reviews each property on its own rent, so the personal DTI is not the constraint. Lendmire’s complete DSCR loans guide walks through that side. Partners buying rentals usually price both tracks. A deeper look at partner-specific documents sits in Lendmire’s bank statement loan guide for law firm partners.
A partner with strong returns and a conventional-size loan may do better on full documentation. The bank statement route earns its place when the return understates the cash. It is worth running both.
The Agency Contrast and the Rules
Agency loans treat partners differently. Fannie Mae’s guide has a nominal-ownership exception for professional partnerships, including law firms, which lets a lender rely on guaranteed compensation for a borrower with recent nominal ownership and an established employment history, per the Selling Guide’s K-1 income section. Non-QM programs do not work that way. They read deposits.
One more point. Bank statement loans are not “no documentation” loans. They are alternative documentation, and lenders still must make a reasonable, good-faith determination that you can repay. The CFPB’s ability-to-repay assessment report covers that rule. The expense ratio and DTI limit are set by the lender and program, not by regulation.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Key Terms Defined
Bank statement loan: a mortgage that qualifies a borrower on documented deposits instead of tax-return income.
Expense ratio: the share of business deposits treated as costs before income is counted.
K-1: the tax form showing a partner’s share of firm income, deductions and credits.
Draw: an advance against expected year-end profit, paid to a partner during the year.
Distribution: a payout of firm profit to a partner.
DTI: monthly debts, including the new housing payment, divided by monthly qualifying income.
Partner Document Checklist
Gather these before the statement window ends:
- Consecutive personal or business statements for 12 or 24 months.
- The partnership or operating agreement showing ownership percentage.
- The most recent K-1.
- A CPA letter, if you want an accountant-provided expense ratio.
- A distribution history that explains large or uneven deposits.
- A written note on any large transfer, capital call or firm loan.
Consumer lending through Lendmire’s network is licensed in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA. Programs change, and every file is underwritten individually.
Frequently Asked Questions
Can a non-equity partner use bank statements?
Usually not. A non-equity or salaried partner generally gets a W-2, so standard income documentation fits better. A bank statement file is built for owners whose deposits reflect their share of firm profit, subject to lender guidelines.
Should I use 12 or 24 months of statements?
It depends on the shape of your payouts. The portfolio program takes 12 or 24 months, and the bank program uses 12. If recent deposits are higher than older ones, 12 months may help. If a big year-end payout sits just outside the window, 24 months can smooth it.
Does a newly made partner qualify?
Possibly. A new partner often has a short history of partner-level deposits, and lenders weigh that. Twelve months of steady distributions, plus the partnership agreement, makes the strongest file. Review is on a case-by-case basis.
Can I use this for a rental property?
Investment property is on the leverage ladder, about five points below primary at each size. But a rental has to carry itself, and each added mortgage stacks against your DTI on a bank statement file. Many partners compare it with DSCR financing for rentals, which looks at the property’s rent against its debt, subject to lender guidelines.
Does a low K-1 hurt me?
Not directly. The program reads deposits, not the allocated K-1 figure. Steady distributions and clean statements matter more than the number on the form.
Next Step
Phone 828-256-2183 or request a quote through Lendmire’s mortgage quote page. Nothing here is a commitment to lend. Lendmire is a mortgage broker that arranges financing through select wholesale lenders.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. LeanLaw: Income Partner vs. Equity Partner
2. Steph’s Books: Law Firm Partner Distributions
3. LeanLaw: Partner Capital Contributions
4. Fannie Mae Selling Guide: Schedule K-1 Income
5. CFPB: CFPB Ability to Repay Qualified Mortgage Assessment Report
This article is part of Lendmire’s super jumbo bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Bank Statement Loan vs Asset Depletion Loan for Attorneys · Bank Statement Loan vs Asset Depletion Loan for Actors · How to Use Cash After a Sale on a Super Jumbo Bank Statement Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.