How mortgage brokers request a Schedule K-1 from borrowers
By Arthur Teboul, DokuTrak · Published
In short
Ask borrowers who own part of a partnership, LLC or S corporation for their Schedule K-1 from each business for the last two years. Lenders usually read the K-1 alongside the personal returns and, depending on the ownership share, the business’s own returns. Ask for every page of each K-1, including the attached statements.
Why mortgage brokers need a Schedule K-1
The K-1 shows the borrower’s share of the business’s income, losses and distributions, and their ownership share. The underwriter uses it to judge whether the business income is stable, and whether the borrower actually received cash or only reported income on paper. When the ownership share is large enough, the lender usually wants the business returns too, so the K-1 tells you what else to request.
What exactly to ask for
Schedule K-1 from Form 1065 or Form 1120-S, for each business and for the two most recent tax years, with every page and any supplemental statement. The ownership share is printed on the form. Where it is high enough for the lender to want business returns, request the Form 1065 or 1120-S for the same years at the same time, to avoid a second round.
What to check when it arrives
- The ownership share and the business name are readable, and the business matches the employment on the application.
- Ordinary income and distributions are both visible, so reported income can be compared with cash received.
- There is one K-1 per business per year for both years, and no business on the tax returns is missing.
Email to send your client
Replace the bracketed parts. The same text fits in the message of a DokuTrak request (up to 1,000 characters).
Subject: Your K-1s from the last two years
Hi [Client name],
Since you own part of a business, the lender will want to see your Schedule K-1 from it for the last two years. If you have more than one business, I need a K-1 from each.
The K-1 comes from the business’s accountant, and it is often in your personal tax file already. Please send every page, including any statements attached at the back.
Depending on your share of the business, I may also need the business’s own tax returns. If you can ask your accountant for both now, it saves a second request.
Could you send them by [date]?
Thanks, [Your name]
Ask once. DokuTrak does the chasing.
- Your client uploads from one link, with no account and no password.
- Reminders go out on a schedule, by default 2, 5, 10 and 14 days after the request, until the file arrives.
- With AI review switched on in your workspace (it is off by default), each upload gets a first pass that flags a file that is not a Schedule K-1 or an unreadable or blurry scan. It says so when it is not sure.
- You accept every file or mark it for re-upload, and your client gets the note by email. The AI never accepts a file.