Mortgages for self-employed attorneys and law-firm partners in Arizona.
Mike Certo · Cornerstone First Mortgage · NMLS #260555 ·
You earn a strong income, but the mortgage system was built for W-2 employees. As a self-employed attorney or law-firm partner, your pay arrives through a K-1, guaranteed payments, draws, or a 1099. We read all of it. This page shows how we qualify you on the income you actually keep.
How are you paid? It changes everything
The first question we ask an attorney is simple: how does the money reach you? An associate on payroll gets a W-2. An of-counsel attorney often gets a 1099. An equity partner gets a K-1 from the firm's partnership return, plus guaranteed payments and draws. A solo practitioner files a business return or runs everything through a single account. Each of those paths uses different documents and a different income calculation.
Most lenders treat anyone without a W-2 as a risk. We do the opposite. We map your pay structure to the right program, then qualify you on real cash flow. A partner who clears $300,000 in distributions should not get squeezed into the same box as a brand-new sole proprietor.
This covers mortgage documentation only — not legal or tax advice. Partnership, entity, and tax decisions belong with your own attorney or CPA.
Pay type, qualification path, and what we document
Here is the quick version. Find the row that matches how your firm pays you, and you will see which path we use and what we ask you to provide.
| How you are paid | Qualification path | What we document |
|---|---|---|
| W-2 associate | Conventional or FHA, standard employee path | Recent pay stubs, 2 years of W-2s, employer verification |
| 1099 of counsel | Conventional using 2-year net, or bank statement loan | 2 years of 1099s, 2 years of returns with Schedule C, current contract |
| K-1 equity partner | Conventional with add-backs, or bank statement loan on draws | 2 years of K-1s, partnership return, personal returns, guaranteed-payment detail |
| Solo practice | Conventional on business return, or bank statement loan | 2 years of business and personal returns, or 12 to 24 months of deposits |
If your situation spans two rows, that is normal. Plenty of attorneys carry a W-2 from one role and a 1099 from side work, and we can blend those streams.
Why equity partners look "broke" on paper
This is the trap that catches most partners. Your firm takes every legal deduction it can. Depreciation, Section 179 equipment, amortization, business meals, and retirement contributions all pull down the taxable income on your K-1. Smart for taxes. Rough for a mortgage if the lender stops at the bottom-line number.
We do not stop there. On a conventional loan, we add back the non-cash deductions that reduced your taxable income but never touched your bank account. Depreciation and amortization are the big two. Your share of those add-backs goes back into qualifying income. A partner showing $95,000 of taxable income might qualify on $130,000 once we restore the paper deductions.
When the add-backs still are not enough, we switch programs. See how write-offs affect your qualifying income for the full breakdown of which deductions help and which hurt.
Draws, guaranteed payments, and distributions
Partners often ask whether we can just use the money they take home. On a conventional loan, the answer is no, because conventional financing reads taxable income from the K-1 and your returns, not the cash you draw. Guaranteed payments do count, and they show on the K-1, so those are easy.
The cash gap shows up with draws and distributions. If your firm distributes far more than your taxable income reflects, a bank statement loan is usually the better move. We pull 12 to 24 months of your personal account deposits and qualify you on what actually lands in your account. That captures the real draws a partner lives on. The trade-off is that bank statement loans are non-QM, so pricing differs from conventional, and the down payment usually runs 10 to 20 percent. Whether it makes sense depends on your specific file.
Solo practice and the 2-year question
If you opened your own shop, the usual rule is 2 years of self-employment in the same field. There is a useful exception. When you left a salaried associate or in-house position to start your own practice in the same area of law, some programs accept a 1-year track record because the work is continuous. The skill set did not change, only the letterhead.
If you are short of even one year, a bank statement loan can bridge the gap once you have 12 months of deposits. We look at your start date and your prior role to find the earliest path that works. The point is not to make you wait two years by default. The point is to read your real history.
What attorneys need to qualify
- Income history in the same field: Two years is standard, with the 1-year exception above for attorneys who went solo in the same practice area.
- Steady or rising income: A flat or growing trend reads well. A sharp drop in the second year raises questions we will want to answer up front.
- Credit of 620 or higher: That covers most conventional and bank statement files for attorneys.
- Down payment of 10 to 20 percent: Conventional can run lower when tax-return income qualifies; bank statement loans land in the 10 to 20 percent range.
- Reserves: Three to six months of housing payment in documented accounts after closing.
We will run a quick read on where your income stands today and what it supports. If a conventional loan qualifies you, we use it first. If write-offs hold you back, we model the bank statement option. See bank statement loans for that program in detail, or browse all of our programs.
Talk to Mike — No Obligation, No Script
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Attorney Mortgage Arizona — Frequently Asked Questions
Can a law firm partner get a mortgage on K-1 income?
Yes. We qualify equity and income partners using the K-1 from the firm's partnership return, supported by 2 years of personal tax returns. We read ordinary business income, guaranteed payments, and your share of distributions, then add back non-cash items like depreciation and amortization that lower taxable income but not real cash flow. If write-offs leave your taxable income too low, we can switch to a bank statement loan that qualifies you on actual deposits instead.
How do self-employed attorneys qualify for a mortgage?
It depends on how you are paid. A W-2 associate qualifies like any employee with pay stubs and W-2s. An of-counsel attorney paid on a 1099 qualifies on 2 years of net Schedule C income. An equity partner qualifies on the K-1 plus guaranteed payments. A solo practitioner qualifies on the business return or bank deposits. We compare every path and use the one that gives you the most buying power. Credit of 620 or higher and 10 to 20 percent down cover most files.
Can I use partner draws instead of tax returns?
Often, yes, through a bank statement loan. Conventional financing reads taxable income from the K-1 and tax returns, not the draws you take. If your firm distributes more cash than your taxable income shows, a bank statement program lets us count 12 to 24 months of personal account deposits, which captures your real draws and distributions. This is the better path when firm-level write-offs push your reported taxable income well below the cash you actually live on.
Do solo-practice attorneys need 2 years of self-employment?
Usually, yes, but not always. Most programs want 2 years of self-employment in the same field. If you left a salaried associate or in-house role to open your own practice in the same area of law, some programs accept a 1-year track record because the work is continuous. We can also bridge a short solo history with a bank statement loan once you have 12 months of deposits. We review your start date and your prior role to find the earliest path that works.