How a Partnership Owner Gets a Bank Statement Loan

The Quick Read: A partner is reviewed on documented income under the applicable program, subject to lender guidelines, by having the lender average twelve months of deposits, apply an expense factor to business-account deposits, and then credit only the partner’s ownership share of what remains.

• Deposits replace traditional personal-income documentation as the income test, so a K-1 mainly proves ownership.
• Your ownership percentage is the biggest swing factor: the same business supports a smaller loan for a 25% partner than for a 50% partner.
• The lender sets the expense factor, though some programs accept an accountant-prepared alternative.
• Reserves, credit, and debt load still apply after the income number is set.
• A property that rents well may skip the ownership math entirely through a rental-income loan.

A bank statement loan is a non-QM mortgage. Non-QM means the loan does not follow the standard rules for a qualified mortgage, so it can use different income proof. Here, the proof is your deposit history instead of tax-return line items.

This is a personal-income mortgage product. It is not a business loan for the partnership itself, which is a separate product with a separate application.

Why a Partner’s Tax Return Misses Real Income

A partnership does not pay income tax itself. It reports each partner’s share of income, deductions, and credits on a K-1, which is the schedule that carries those amounts to your personal return. The IRS instructions for Schedule K-1 describe it this way. They also say you may owe tax on your share whether or not the partnership distributes it.

That gap creates two problems for a mortgage file. Depreciation and pass-through allocations can push your K-1 income down even when cash is flowing. The reverse can happen too: the K-1 can show large income while little cash reaches you.

A deposit-based review sidesteps both. It looks at money that actually landed in an account, which is why many partners with thin taxable income turn to these programs.

The K-1 still has a job. Part II shows your profit, loss, and capital ownership percentages, as one tax practitioner guide explains. That makes it evidence of how much of the business you own. It is not the number the lender reviews your file on.

How Lenders Turn Deposits Into Partner Income

Most programs in Lendmire’s wholesale network follow the same basic sequence, though each lender sets its own details. The standard documentation window is twelve months of statements.

1. Pick the statement type. You use either personal or business statements. The next section covers how to choose.

2. Total the qualifying deposits. The lender sums the twelve months and divides by twelve to get a monthly average.

3. Remove what is not income. Transfers between your own accounts, loan proceeds, and one-off large deposits are generally stripped out.

4. Apply the expense factor to business deposits. This is a lender-set percentage meant to stand in for operating costs. It varies by lender, and you cannot pick it.

5. Apply your ownership share. This is the partnership-specific step. Your qualifying income is generally your percentage of the net business figure.

6. Run the rest of the file. Debt load, credit, assets, and reserves all still count.

In formula form, business-account income is average monthly deposits, times what is left after the expense factor, times your ownership share. Each step can lower the number, so it helps to know where yours will land before you apply.

Personal or Business Statements?

The right choice depends on your stake and on where the money actually lands. Business statements usually carry an expense factor and a proration to your ownership share. Personal statements are generally treated differently, and the business link has to show in the deposits themselves.

A shared business account adds a practical step. The other partners must usually authorize you to use those statements, since they reveal the whole company’s cash activity. Raise that conversation early, before you request anything from the bank.

Commingling is the other trap. If business expenses run through a personal account, a lender may reclassify it as a business account and apply the factor anyway. Keep the accounts separate for the full statement window if you can.

A Worked Example With Ownership Share

The numbers below are modeled assumptions for arithmetic only. They are not a program figure and not a promise of any lender’s expense factor.

Say a partnership’s business account shows average monthly deposits, which we will call D, after non-income items are removed. Assume, purely for illustration, that a lender’s factor leaves 60% of deposits as net business income.

• Net business income under that assumption: 0.60 × D.
• A 50% partner credited with: 0.30 × D.
• A 25% partner credited with: 0.15 × D.

The same business, the same deposits, and the same factor produce a qualifying figure for the 25% partner that is half of the 50% partner’s. That is the ownership share at work. It is also why a minority stake limits purchase size more than almost anything else on the file.

Now suppose the 25% partner takes regular distributions into a personal account, and those deposits average 20% of D. On a personal-statement program, that cash is already hers, so no ownership proration is applied to it. The lender’s own treatment of personal deposits still governs, but the figure can come out higher than the 0.15 × D from the business route.

This is why Lendmire’s brokers run both options before choosing a program. The account type can matter as much as the ownership percentage. If you want to see how accountant-prepared figures can change the factor, Lendmire’s piece How an S-Corp Owner Gets a CPA Letter to Lower the Bank Statement Factor walks through that adjustment. It is written for S-corp owners, but the logic carries over to partners.

How Do You Prove Your Ownership Percentage?

Lenders want the same percentage to appear in every document. Reconcile these before you submit, because a mismatch between the agreement and the K-1 slows everything down.

If the agreement says 30% and the K-1 says 25%, find out why before a lender does. Capital contributions, buyouts, and mid-year changes are common reasons for a gap. A short explanation letter, backed by an amended agreement where needed, usually settles it.

Ownership floors also exist. Agency-style underwriting draws a line between self-employed borrowers and people who simply receive K-1 income. Alt-doc programs set their own minimum ownership thresholds, and those differ by lender. Ask about the minimum before you invest time in a file with a small stake.

What Gets Stripped Out of Your Deposits

Partnerships generate deposits that are real money but not income. Lenders subtract them, and knowing which ones will be removed helps you forecast the number honestly.

• Transfers between partners. A partner moving money to settle up is not revenue.
• Capital contributions. Money you or another partner put into the business counts as funding, not earnings.
• Buyout proceeds. A buyout payment is not recurring income.
• Loan proceeds. Borrowed money is debt, not earnings.
• One-off large deposits. An unusual deposit is generally excluded unless you can document that it is repeatable income.

If a large deposit is legitimate, document it. A signed sale agreement, an invoice, or a short letter can keep a genuine deposit in the calculation. Without paper, assume it comes out.

Where the General Rule Breaks

A few situations bend the pattern above, and each is worth naming up front.

A K-1 showing a loss with strong deposits. On a deposit program, this can work, because the deposits drive the number. A lender will still ask why the books and the bank account disagree, and your accountant’s explanation matters here.

Allocations without distributions. A partnership can allocate large income to you while distributing little. Deposits to your own account are what a personal-statement review sees, so a big K-1 does not help if the cash stays inside the business.

A short history in the business. Prior years in the same field can sometimes support a shorter record. That is a case-by-case exception, not a rule to plan around.

A commingled account. As noted, the lender may treat a mixed account as a business account and apply the factor.

A very small stake. A partner with a small ownership share often finds the prorated figure too low for the purchase. That is usually when a rental-income loan is worth a look, which we cover below.

What If Both Partners Apply?

When two partners each apply for their own mortgage, each file stands on that partner’s own share and own deposits. The business deposits are not counted twice at full value. Each partner is credited with their proportion.

If only one partner applies, the others generally do not need to be on the loan. They may still need to authorize access to shared business statements, and the lender may want confirmation that the other partners know and agree.

What Happens After the Income Number

Statements prove income, not reserves or credit. Once the lender has your qualifying figure, the rest of the file still gets reviewed: debt load, credit profile, assets, and the property itself.

Across the select lenders in Lendmire’s network, the typical parameters look like this, subject to lender guidelines and not a commitment to lend:

• Primary residence purchase or rate-term refinance: up to 90% LTV, with stronger files earning the top of the range. LTV, or loan-to-value, is the loan balance as a percentage of the property’s value.
• Asset-depletion alternative on a primary residence: up to about 80% LTV, qualifying from liquid assets instead of deposits.
• Owner-occupied cash-out: up to 80% LTV on a primary residence with a fixed expense ratio, or 75% with an accountant-prepared ratio. A second home tops out at 75% LTV.
• Investment-property cash-out: around 75% LTV.
• Investment-property purchase on bank statements: leverage varies by lender, so a broker has to compare programs.
• Loan sizes: roughly $125,000 to $3,500,000, with reserves commonly around six months of the housing payment.

Owner-occupied files, meaning a primary residence or second home, are consumer mortgages and follow standard consumer disclosure rules (TRID). On those loans, the lender must also make a reasonable, good-faith determination that you can repay, per the CFPB’s ability-to-repay rule. Non-QM does not mean no income checks.

A bank statement loan on a non-owner-occupied rental, including a short-term rental, is a business-purpose loan and is exempt from TRID. Owner-occupied bank statement loans are available in the 16 states where Lendmire’s consumer mortgage licensing applies. Program terms and term lengths follow each lender’s own program sheet.

When a Rental Loan Beats a Bank Statement Loan

If the property you want is a rental, you have a choice about whose income carries the file. A BiggerPockets podcast episode contrasts DSCR loans with business bank statement loans: the first is reviewed on the property’s rent, and the second on business cash flow.

DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. They qualify primarily on property-level rental income covering the payment, subject to lender guidelines. Select lenders in the network also offer programs below a 1.00 coverage ratio, though LTV and terms adjust when coverage is thin.

A partner with a small stake may find DSCR the cleaner route for a rental purchase, because the ownership math drops out. For a primary residence or second home, DSCR is not an option, and the bank statement path is the one to work. Lendmire’s complete DSCR loans guide covers how those files work from start to finish.

If you also use a CPA-prepared profit-and-loss statement to support the business’s expenses, Lendmire’s article How an S-Corp Owner Gets a CPA P&L Accepted for a Bank Statement Loan explains what lenders look for.

Readiness Checklist

Before a broker submits your file, confirm these items:

• Twelve consecutive months of statements from the same account.
• A partnership agreement that matches your K-1 ownership percentage.
• Written consent from co-owners if statements come from a shared business account.
• A list of large or unusual deposits with paper behind each one.
• A clear split between business and personal spending.
• Reserves available in documented assets, typically around six months of the housing payment.
• A decision on whether you are buying an owner-occupied home or a rental.

Key Terms Defined

Non-QM: A mortgage that sits outside the qualified-mortgage category, which lets lenders use alternative income proof like bank deposits.

Schedule K-1: The tax form a partnership issues to report each partner’s share of income, deductions, and credits.

Ownership share: The percentage of the partnership you own, which sets how much of the business’s net income a lender credits to you.

Distribution: Cash the partnership actually pays out to a partner, which may differ from the income allocated to that partner on the K-1.

Expense factor: A lender-set percentage deducted from business-account deposits to account for operating costs.

LTV: Loan-to-value, the loan balance as a percentage of the property’s value.

Next Step

If you own part of a partnership and want to see how the numbers work, Lendmire can help you compare bank statement loan options based on your deposits, ownership share, credit profile, leverage, and goals. Lendmire is a mortgage broker that arranges financing through select lenders in its wholesale network.

This article is general information, not legal or tax advice. Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction. For questions about your partnership agreement or your own situation, consult a qualified attorney or CPA.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. IRS, Partner’s Instructions for Schedule K-1 (Form 1065)

2. k1x, Understanding the Form 1065 Schedule K-1

3. CFPB, Regulation Z § 1026.43 (ability-to-repay)

4. BiggerPockets podcast, Can’t Qualify for Another Mortgage? Try These Investor Loans