Most lenders want 2 years of K-1s. The K-1 for the prior year arrives in Q1 or Q2 of the current year, so there is always a 2 to 3 month lag between earning and reporting.

Recently-promoted partners have limited K-1 history - they have made partner mid year and have not yet received a full year of partnership income on a K-1. This is a common stumbling block at retail banks.

The fix is lenders that accept partner agreements, partnership tax returns, YTD distribution statements from the firm, and draws history, and that allow 1 year of K-1 (or none, for very recent partners) when the partner letter is explicit about ongoing compensation.

A recent promotion does not have to derail the mortgage. The right lenders work with newly-minted partners every year.

The "partner letter" from the firm outlining the new compensation structure (draw schedule, expected distributions, capital contribution if any) can substitute for K-1 history at some lenders. 12 months of partner compensation may be sufficient at the most permissive lenders. We work with lenders going to program minimums where allowed.

Before promotion, qualifying on prior associate W-2 income plus the new partner letter is sometimes the smoothest path. After promotion, partner-experienced lenders take over.

When partners buy in, they contribute capital - often a six- or seven-figure amount, frequently financed through a firm-arranged personal loan with a bank.

The capital contribution liability appears on your personal balance sheet. Some lenders treat the loan strictly as debt that adds to DTI; others recognize the corresponding capital account as a balancing asset and only count the monthly payment, not the full balance.

The right lender selection matters: a lender that recognizes the capital account as an offsetting asset materially improves the DTI calculation and the qualifying number.

Of counsel status varies widely - former partner on a retainer, semi-retired attorney, lateral hire on a contract, or a senior counsel role short of equity partner. Income may flow through W-2, 1099, K-1, or a combination.

Treated case-by-case. The underwriting approach depends on the actual arrangement. Often a hybrid of W-2 plus 1099 underwrites. Asset-qualifying is frequently the cleanest answer for of-counsel attorneys with substantial brokerage and retirement balances.

• 2 years of K-1s from the partnership (or 1 year for newly-promoted partners on permissive programs)
• 2 years of personal tax returns
• Partnership tax return (Form 1065) - required by some lenders, not all
• Partner agreement or partnership agreement, including capital terms
• Recent draws and distribution history from the firm
• YTD income statement from the firm
• Capital contribution documentation if applicable, plus any related financing

Recently-promoted associate-to-partner buying primary residence. Partner letter plus YTD draw history plus prior associate W-2 history. 1-year K-1 acceptance lender or asset-qualifying.

Equity partner buying vacation home or investment. Full K-1 history. Jumbo on the primary if needed; second-home or investment pricing on the new acquisition. Capital contribution loan factored in DTI.

Partner transitioning between firms. Two partner letters, partial K-1 history from each, gap in distribution timing. Asset-qualifying or bank statement often the cleanest answer.

Of counsel transitioning to retirement. Mixed income, semi-retired status. Asset-qualifying is usually the right call; large retirement and brokerage balances support the loan easily.