arXiv:2608.10144v2 Announce Type: replace-cross Abstract: We consider federated parameter-efficient fine-tuning of foundation models, e.g., LLMs and LVMs, using low-rank adaptation (LoRA; ~Hu et al.\ 2022). Combining LoRA with federated learning introduces challenges absent from either setting alone: clients may use different LoRA ranks, making their factor matrices dimension-incompatible, and factor-wise averaging suffers from a bilinear mismatch. We propose SeFoRA, a sketch-aggregated federated LoRA algorithm in which each client transmits a linear sketch of its local $\Delta \mathbf{W}$ updates, enabling direct aggregation at the federator. As a result, SeFoRA overcomes the rank heterogeneity challenge and alleviates the bilinear mismatch. We establish convergence to a neighborhood of a first-order stationary point at rate $\\mathcal{O}(T^{-1/2})$. Extensive numerical experiments on language and vision models showcase the performance of our algorithm compared to existing methods.