The Quick Read: A law firm partner qualifies by showing 12 or 24 consecutive months of statements that capture the cash the firm pays you, then the program converts eligible deposits into monthly income and checks credit, debt-to-income, reserves and the property, subject to lender guidelines.
- Qualifying income comes from eligible deposits divided by the statement months, not from the K-1 allocation.
- Transfers from your own firm into a personal account count in full. Business statements need at least 25% ownership and an expense ratio.
- Through select wholesale programs, leverage steps down with size. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Above $4,000,000 every file is reviewed case by case.
- Credit starts at a 660 floor on one program and 680 on another. Debt-to-income can run up to 50%.
- A rental purchase usually moves to a different product, a DSCR loan, which tests the property’s rent instead of your deposits.
What a Bank Statement Loan Actually Is
A bank statement loan is a non-QM mortgage, meaning it sits outside standard agency guidelines. It qualifies a self-employed borrower on deposit history instead of tax-return income. For a partner, that fixes a real mismatch. Your K-1, the form that reports your share of firm profit, rarely equals the cash you take home.
Scotsman Guide describes the standard setup as 12 to 24 months of personal or business statements. It lists a profit-and-loss statement or a tax professional’s expense statement as alternatives.
Non-QM does not mean loose. Underwriters still review credit, debt-to-income (DTI, your monthly debts as a share of qualifying income), assets and reserves. The loan is reviewed on documented income under the applicable program, subject to lender guidelines.
How Big Can the Loan Be, and How Much Down?
Through select wholesale programs, subject to full underwriting, the network places files from $300,000 to $30,000,000 across two programs. A portfolio non-QM program, where the lender keeps the loan on its own books, carries files to $6,000,000. A bank portfolio program carries twelve-month-statement files up to $30,000,000 on its own size ladder. That ladder begins above $4,000,000 and overlaps the first program up to $6,000,000.
Leverage on a primary-residence purchase steps down as the loan grows:
- 90% up to $1,000,000.
- 85% from $1,000,000 to $2,000,000.
- 80% from $2,000,000 to $3,000,000.
- 75% from $3,000,000 to $4,000,000. The top band wants the top credit tier.
Above $4,000,000, the bank portfolio program allows 65% to $5,000,000, 60% to $10,000,000 and 55% to $30,000,000 on a primary-residence purchase. Each of those is reviewed case by case before submission.
Second homes and investment property run about five points lower at every size. On an investment-property purchase, the ceiling is 85% up to $1,000,000 and 80% from $1,000,000 to $2,500,000. On a primary-residence cash-out, the best ceiling is 80%. Cash-out proceeds are unlimited at or below 60% LTV (loan-to-value) on the portfolio non-QM program. Above 60%, cash in hand is capped at $1,500,000 on that program. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Credit and reserves follow the same pattern:
- Credit: The floor is 660 on the portfolio non-QM program and 680 on the bank portfolio program. The best leverage in each size band asks for a higher score. Large files above $3,500,000 on a primary residence, or $3,000,000 on a second home or investment property, carry a 700 floor. They also need a 0x30x24 housing history and 48 months of seasoning after any credit event. They are limited to U.S. citizens and permanent residents, with no non-occupant co-borrowers, no rural property and a ten-acre maximum.
- Debt-to-income: Up to 50%.
- Reserves: Reserves are liquid assets left after closing. Most files need 3 months to $500,000, 6 months to $1,500,000 and 9 months above that. Each additional financed property adds 2 months, to a 12-month maximum. First-time investors need 12 months.
Partners often have wealth tied up inside the firm. Whether partner capital counts as liquid reserves depends on the program. The asset paths below exclude business funds outright. On large files, cash-out proceeds cannot satisfy reserves.
How Do Deposits Become Qualifying Income?
Underwriters follow a fixed sequence. Here is how it runs on a partner’s file.
1. Pick the window. Use 12 or 24 consecutive months. The bank portfolio program uses 12. A 24-month window smooths lumpy pay. A 12-month window can work when pay is steady and rising.
2. Pick the account. Most partners are paid into a personal account through draws and distributions. Transfers from the borrower’s own business into a personal account count at 100%.
3. Screen the deposits. Strip out transfers between your own accounts, loan proceeds, refunds and one-off windfalls. The next section shows how each deposit type is treated.
4. Average what is left. Eligible deposits divided by the number of statement months gives the monthly figure.
5. Apply the expense ratio if you use business statements. The expense ratio is the share of deposits the program treats as business cost. Trade press often uses 50% as an example expense factor, per Scotsman Guide. In the network, the ratio is set by firm profile:
- 20% for a service business with no employees.
- 40% for a service business with 1 to 5 employees.
- 50% for 6 or more employees, or any product business.
- An accountant-provided ratio or a profit-and-loss method capped at 80% is also an option.
6. Check ownership. Business statements need at least 25% ownership. How the share is applied beyond that gate is program-specific.
7. Run DTI, credit and reserves. The monthly income goes against all monthly debts.
Statements must be consecutive and complete. A transaction history never substitutes for a statement.
Run a modeled example. Treat the average monthly eligible deposit as 100. If the firm’s pay lands in your personal account as transfers from the firm, all 100 counts. If the same cash sits in a firm account and the firm has six or more employees, a 50% ratio leaves 50. An accountant-provided ratio can change that result. These are assumptions for illustration, not market data.
Which Deposits Count and Which Don’t
A deposit table is the fastest way to see how underwriters read a partner’s statements. Treatment varies by program, but this is the usual read.
| Deposit type | Usual treatment | Why |
|---|---|---|
| Firm draws and distributions | Counts | It is your pay |
| Guaranteed payments from the firm | Counts | Cash you actually receive |
| Transfers between your own accounts | Excluded | Same money twice |
| Capital contributions or buy-in | Excluded | Money in, not income |
| Partner loans and loan proceeds | Excluded | Debt, not income |
| Client trust account funds | Excluded | Belongs to clients |
| Refunds and one-off windfalls | Excluded unless documented | Not repeatable |
Settlements need care. A contingency fee can land in the firm’s operating account and then reach you as a distribution. Count it once, at the point it reaches your personal account.
Partner Type Changes the Path
Not every partner fits the same lane. Here is how the common types line up.
| Partner type | Likely statement path | Watch for |
|---|---|---|
| Equity partner, 25%+ | Personal or business | Year-end true-up |
| Equity partner under 25% | Personal statements | Business route closed |
| Salaried (W-2) partner | Different documentation | Not self-employed income |
| Newly promoted partner | Deposits since promotion | History needed varies |
| Solo practitioner | Personal or business | Trust-account separation |
Several edge cases come up repeatedly on partner files:
- Draws versus allocation. Monthly draws are advances. They will not equal the annual allocation, so a statement-based method can understate or overstate true annual pay.
- Year-end true-up. Equity partners often receive a large year-end distribution. A 12-month window may or may not capture it. A 24-month window smooths it.
- Newly promoted partners. The move from associate pay to partner pay creates a short record. A deposit-based program can read the new pay directly, but how much history it wants depends on the program and the file.
- Fixed share versus profit share. Fixed payments are predictable. Variable profit distributions are less so. Underwriters treat declining or erratic deposits with caution.
- Multiple accounts. Operating, draw, tax and joint accounts need labels. Joint accounts with a spouse may need to be separated or explained.
K-1 on Paper, Cash in the Account
Your K-1 and your cash are different things, and underwriters want to know which is which. The IRS Partner’s Instructions for Schedule K-1 define guaranteed payments as payments determined without regard to the partnership’s income. Those are reported separately from distributions and from your allocated share of profit.
The practical consequence: a K-1 can show allocated income that was never paid out in cash. You can also receive more cash than the K-1 shows. A deposit-based method looks at what reached your account.
Bank statements are third-party records. That fits the federal rule that a lender must verify the income it relies on from reasonably reliable third-party records, as the CFPB ATR/QM Small Entity Compliance Guide explains.
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.
Bank Statements, Assets, or DSCR?
Pick the path that matches how you are paid and what you are buying.
| Path | Income basis | Best when |
|---|---|---|
| Tax-return (K-1) route | Returns | Returns show your full cash pay |
| Bank statement | Deposits | Returns understate cash received |
| Asset allowance or assets-only | Liquid assets | Large liquidity, lumpy pay |
| DSCR loan | Property rent | Buying a rental |
The asset paths are worth knowing about. The asset allowance divides liquid assets by 36, 60 or 84 months to create income. It applies to primary and second homes only, at 80% maximum. Assets-only qualifies with no DTI when U.S. liquid assets equal the loan amount plus closing costs plus sixty months of any net loss on other residential property. Retirement accounts count at 70%, or 80% at age 59.5 or older. Business funds, gifts, unvested stock and cryptocurrency never count.
For a rental, bank statements are not the only option. 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. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. That keeps each rental’s debt out of your personal DTI. Many high-earning partners use a bank statement loan for the home and DSCR for the rentals. The complete DSCR loans guide walks through that side.
Your 90-Day Preparation Plan
Cleaner statements make for a cleaner file. Start about three months before you apply:
- Route firm pay into one personal account, and label transfers.
- Gather every page of every statement for each account used.
- Pull the partnership agreement and your K-1s to prove ownership and tenure.
- Ask your accountant whether a firm-specific expense ratio is available, since it can beat the fixed ratios.
- Write short explanations for large deposits.
- Line up reserve statements, keeping the asset exclusions above in mind.
Common red flags are unexplained spikes, commingled accounts, missing pages, trust funds counted as income, and an ownership share below 25% on a business-statement file.
Key Terms Defined
Expense ratio: The percentage of business deposits the program treats as costs before calculating your income.
Guaranteed payment: A payment to a partner fixed by agreement, regardless of the firm’s profit.
Distribution: Cash the firm pays out to you, separate from your allocated share of profit.
Reserves: Liquid assets you still hold after closing, measured in months of payments.
Asset allowance: A path that converts liquid assets into monthly income by dividing them over 36, 60 or 84 months.
Frequently Asked Questions
Do I have to be an equity partner?
Bank statement programs serve self-employed borrowers. A partner who is paid through the firm can still show those payments landing in a personal account. A salaried partner paid on a W-2 uses different documentation.
Does my year-end distribution count?
Yes, if it lands in your account during the statement window. A 24-month window spreads a large payment across more months. A 12-month window may or may not catch it. Which window helps depends on your pay pattern.
How much do I need to put down?
The leverage ceiling sets the floor on cash in. A 90% primary-residence purchase up to $1,000,000 implies at least 10% down. Above $4,000,000, a 65% ceiling implies 35% or more, and every file is reviewed case by case. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Can I use bank statements to buy a rental?
Yes, on an investment property. Purchase leverage is 85% up to $1,000,000 and 80% from $1,000,000 to $2,500,000, through select wholesale programs, subject to full underwriting. Each added mortgage stacks against your personal income. A DSCR loan avoids that.
Can my brokerage or retirement accounts help?
They can. The asset allowance and assets-only paths use liquid assets instead of deposits. Retirement accounts count at 70%, or 80% at 59.5 or older. Business funds never count.
Next Step
If you are financing a high-balance property on business or personal bank statements and want to see how the numbers work, Lendmire can help you compare super jumbo bank statement loan options based on your deposits, the property, credit profile, leverage, and your goals. Lendmire is a mortgage broker that arranges financing through select wholesale lenders. Its consumer mortgage lending is licensed in AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA. Reach the team at 828-256-2183. Programs change and every file is underwritten individually, so nothing here is a commitment to lend.
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 non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 2026).
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References
1. Scotsman Guide, Rev Up the Engine for Non-QM Lending
2. IRS Partner’s Instructions for Schedule K-1 (Form 1065)
3. CFPB ATR/QM Small Entity Compliance Guide
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: How to Qualify for a Bank Statement Loan for Authors · How to Qualify for a Bank Statement Loan for Attorneys · How to Qualify for a Bank Statement Loan for Executives Paid in Stock
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.