The Quick Read: Usually, yes: a K-1 partner can qualify because the lender reads cash deposits rather than K-1 line items, provided the deposits are traceable, the partner meets the ownership minimum for business statements, and the file clears the credit, reserve and leverage rules at that loan size. Approval runs through select wholesale programs, subject to full underwriting.
- Deposits, not the K-1, set the qualifying income.
- Business statements need at least 25% ownership. Personal statements do not carry that test.
- Business-account deposits take an expense ratio, then get prorated to your ownership share.
- Above the super-jumbo line, credit floors rise to 700 and every file gets a closer look.
- Above $4,000,000, every file is reviewed case by case before submission.
What Does a K-1 Actually Show?
Your share of the partnership’s income on paper. It does not show how much cash reached you. The IRS Partner’s Instructions for Schedule K-1 put your share of ordinary business income or loss in box 1 and report cash distributions separately in box 19.
That gap is the whole story. A partner can owe tax on a large allocation while the partnership keeps the cash for growth. Or the reverse: write-offs and depreciation shrink box 1 while the partner pulls out plenty of money.
Traditional personal-income review trusts the first number. A bank statement program trusts the second. For founders, physicians, attorneys and investors with pass-through income, that difference often decides whether a big purchase works at all.
Fannie Mae’s Selling Guide on K-1 income shows the conventional logic. For partners under 25% ownership, K-1 income counts only if the lender documents consistent distributions or enough business liquidity to support withdrawals. Bank statement loans are not agency products, so that rule does not bind them. It does explain why K-1-based qualifying is so hard to get at a conventional lender.
Does Super Jumbo Size Change the Answer?
Size and documentation is two separate questions. The documentation method (bank statements) works the same way at $800,000 or $5,000,000. What changes at size is everything around it: the credit floor, reserves, leverage and how closely the lender reviews the file.
“Super jumbo” is a lender term, not a legal category. In our wholesale network, the tighter overlays kick in above $3,500,000 on a primary residence. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review.
Past that line, most programs want:
- A 700 credit floor.
- A 0x30x24 housing history.
- 48 months of seasoning after any credit event.
- No rural property, ten acres at most, and no non-occupant co-borrowers.
- Cash-out proceeds that cannot count toward reserves.
Two wholesale programs cover the full size range. A portfolio non-QM bank-statement program carries files up to $6,000,000. A bank portfolio jumbo program takes twelve-month-statement files up to $30,000,000 on its own ladder: 65% to $5,000,000, 60% to $10,000,000 and 55% to $30,000,000. Its ladder begins above $4,000,000 and overlaps the first program up to $6,000,000.
Leverage steps down as the loan grows. Through select wholesale programs, subject to underwriting, ceilings on a primary-residence purchase run like this:
| Loan size | Max LTV, primary purchase | Min credit |
|---|---|---|
| To $1,000,000 | 90% | 680 |
| $1M to $2M | 85% | 700 to 720 |
| $2M to $3M | 80% | 720 |
| $3M to $4M | 75% | 720 to 760 |
| Above $4M | Case by case | Per review |
Second homes and investment property run about five points lower at most sizes. Everything above $4,000,000 gets reviewed before submission, so treat any leverage figure up there as a starting conversation, not a promise.
How Does Ownership Percentage Affect the File?
Ownership decides which statements you can use and how much of the deposits count. The 25% line matters most for business accounts.
| Your stake | Likely statement route | What to document |
|---|---|---|
| 25% or more | Business or personal | Operating agreement, K-1 or CPA letter |
| Under 25% | Personal statements | Proof deposits trace to your work or distributions |
| Majority owner | Business statements often fit | Ownership proof, clean entity accounts |
These are patterns, not promises. Each program sets its own rules, and the wholesale network includes lenders with different tolerances.
If you own less than the whole business, business-account income is prorated to your share. A 40% partner gets credit for 40% of what remains after the expense ratio. Ownership is usually proven with the operating agreement, the K-1 or a CPA letter.
Personal or Business Statements: Which Fits a Partner?
Where your money lands decides this. If distributions go into your personal account, personal statements are usually the cleaner route. If your pay stays inside the entity, business statements may fit better.
Personal-account deposits are usually not hit with an expense ratio, though the lender may ask you to show they come from your work. Transfers from your own business into your personal account count at 100% in the programs we place files with.
Business-account deposits work differently. Programs apply a fixed expense ratio based on business type and headcount, with lower ratios for service businesses with no employees and higher ratios for businesses with more employees or any product business. A CPA-prepared ratio or a profit-and-loss method can substitute where the program allows. You do not choose the ratio. The lender does.
Statements must be consecutive. A transaction history printout never substitutes. Most programs use 12 or 24 months, and the bank portfolio program uses 12.
What Does the Math Look Like?
Run the numbers on a partner who owns 40% of a product business and takes everything through business statements. Here is the sequence, in percentages only.
1. Start with eligible deposits. Transfers between your own accounts, loan proceeds, refunds and one-time deposits come out first.
2. Apply the 50% expense ratio for a product business. Half the deposits remain.
3. Prorate to your 40% share. You are now counting 20% of the eligible deposits.
4. Divide by the number of statement months. That is your monthly qualifying income.
5. Test it against your debts. Debt-to-income can run up to 50% on most files.
Now flip it. Say the same partner moves distributions into a personal account every month. Those transfers count in full, with no expense ratio and no proration. The qualifying income can look dramatically different on identical economics. That is why we tell partners to plan account routing before they apply, not after.
The tradeoff is real, though. Seeding a personal account just before applying looks like staging. A history of regular distributions reads very differently from a sudden run of transfers.
The Retained-Earnings Trap
The most common K-1 problem is a large allocation with small distributions. The partnership keeps its profit, and the K-1 shows income you never touched.
On a deposit-based file, that retained cash does not count unless it reaches your account. If your partnership holds earnings inside the entity, your statements will look thin next to your K-1. Your qualifying income follows the statements.
Lendmire’s piece Does Undistributed K-1 Income Qualify on a Super Jumbo Bank Statement Loan? walks through that scenario in more detail. The short version: if the cash stays in the entity, a business-statement file can sometimes capture it, but only with the ownership minimum and clean entity accounts.
Business funds also get discounted when used for a down payment or reserves. The treatment varies by program, so the practical move is to build personal liquidity before you apply.
What Documents Does a Partner File Need?
Gather these in three groups before you talk to a broker.
Ownership: the operating or partnership agreement, a recent K-1, or a CPA letter confirming your percentage.
Statements: 12 or 24 consecutive months for the account type you are using, every page, with no gaps.
Entity records: business returns or a CPA-prepared profit and loss, if you are using the P&L method or asking for a lower expense ratio.
Lenders also ask for the standard personal file: credit, reserves and the property documents. Reserves run 3 months through $500,000, 6 months through $1,500,000 and 9 months above that, subject to program rules. Add 2 months for each additional financed property, up to a 12-month cap. First-time investors typically need 12 months.
Where Partner Files Stall
Partner files rarely fail on credit. They stall on the deposits.
- Commingled accounts. Personal spending running through the business account muddies what counts as business income.
- Circular transfers. Money that moves between your accounts and comes back looks like income and is not.
- Lumpy deposits. Large one-time inflows get stripped, and an erratic pattern invites questions.
- Several entities. Income from multiple partnerships means more statements to trace and more ownership proof.
- Guaranteed payments versus distributions. Lenders want to see which is which, because they behave differently month to month.
- Guaranteed partnership debt. Personal guarantees on entity loans can show up in the debt picture.
Nothing here is fatal. Most of it is fixed by separating accounts and documenting the flow before the application.
When a Partner Should Look Elsewhere
Bank statements are not the only route. If the partnership’s income comes from rentals, a DSCR loan may fit better. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Programs below 1.00 coverage exist through select lenders in the network, but leverage and terms adjust. Our complete DSCR loans guide covers how that path works.
| Situation | Best-fit path |
|---|---|
| Strong personal deposits, under 25% stake | Personal bank statements |
| Majority owner, cash held in the entity | Business bank statements |
| Rental-only partnership income | DSCR loan |
| Large liquid assets, thin deposits | Asset-based qualifying |
Asset-based files come in two forms. An asset allowance divides liquid assets by 36, 60 or 84 months to create qualifying income, on primary and second homes only. An assets-only path needs liquid U.S. assets equal to the loan plus costs, with no DTI test. Retirement accounts count at 70%, or 80% at age 59½ and up. Business funds, gifts and cryptocurrency do not count.
Skip bank statements entirely if your deposits cannot be traced to your income, or if your stake is too small and your personal accounts hold little. A full-documentation loan may serve you better in that case.
Key Terms Defined
K-1: the form that reports your share of a partnership’s income, deductions and distributions.
Bank statement loan: a non-QM mortgage that is reviewed around documented deposits rather than traditional personal-income documentation.
Non-QM: a loan outside the standard qualified-mortgage rulebook. It describes the rules, not the borrower’s credit.
Expense ratio: the share of business deposits the lender subtracts before counting income.
Retained earnings: profit a partnership keeps instead of paying out to partners.
DTI: debt-to-income, your monthly debts divided by qualifying monthly income.
Reserves: liquid cash left after closing, measured in months of payments.
Frequently Asked Questions
Can I use K-1 income itself on a bank statement loan?
No. The K-1 can prove your ownership percentage, but deposits set the income. A K-1 is an allocation, so it does not prove cash reached you. That is the point of the program. Federal rules still expect lenders to verify income they rely on with reliable records, so this is documented underwriting, not a no-doc loan.
Does 50% always get deducted from business deposits?
No. Fifty percent is common for product businesses and for firms with larger staffs. Service businesses with no employees or only a few can see a lower fixed expense ratio. A CPA-prepared ratio can sometimes replace the fixed one. The lender sets the number, not you.
Can a partner under 25% ownership qualify?
Often, yes, through personal statements. Business statements need at least 25% ownership. A smaller stake shifts you to personal accounts, asset-based paths or, for rental income, a DSCR loan. Each is subject to lender guidelines and your credit profile.
What credit score does a super jumbo partner file need?
Above the super-jumbo line, credit floors rise to 700. The leverage table shows many bands at 720 or 760, so higher scores unlock higher leverage. Anything above $4,000,000 is reviewed case by case.
Where is this available?
Lendmire’s consumer mortgage lending 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. Tax treatment varies, so consult a qualified tax professional before relying on any deduction.
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’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 2025 and 2026.
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References
1. IRS Partner’s Instructions for Schedule K-1 (Form 1065)
2. Fannie Mae Selling Guide B3-3.4-19: Schedule K-1 Income
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: Super Jumbo Bank Statement Loan vs Regional Bank ARM on a Condotel · How to Get a Super Jumbo Bank Statement Loan With a Law Practice · How to Blend Assets and Deposits on a Super Jumbo Bank Statement Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.