When a borrower is self-employed or owns a business, proving ownership can become a major underwriting hurdle. Mortgage lenders, especially conventional and portfolio lenders, often want reliable, third-party verification confirming who owns the business, how long it has operated, and the borrower’s ownership percentage.
One of the most effective ways to establish this is through a CPA comfort letter for business ownership. While this document may look simple, the standards behind it, AICPA rules, lending guidelines, and verification requirements, are carefully defined.
This guide explains how a CPA comfort letter verifies business ownership, what underwriters expect, and how borrowers can prepare the required documentation.
Why Business Ownership Verification Matters in Mortgage Underwriting
For salaried employees, income verification is straightforward. But for business owners, lenders must ensure:
- The borrower actually owns the business generating the income
- The ownership percentage aligns with the tax returns submitted
- The business is legally active and registered
- The borrower has authority to sign for or manage the company
- Financial statements reflect the correct ownership structure
A clean verification process helps mortgage underwriters evaluate risk, determine qualifying income, and issue final approval.
What Is a CPA Comfort Letter for Business Ownership?
A CPA comfort letter for business ownership is a written statement prepared by a Certified Public Accountant confirming specific business details the CPA has already verified through tax filings or accounting work.
Unlike a general reference letter, a comfort letter follows professional rules:
What a CPA Comfort Letter Can Confirm
- Legal business name and entity type (LLC, S-Corp, C-Corp, Sole Proprietorship, Partnership)
- Ownership percentage
- Beneficial ownership details
- Dates the CPA has provided accounting services
- Existence of business filings the CPA has already viewed
- Operating status and years in business
- Accuracy of business formation documents the CPA relies on
What a CPA Comfort Letter Cannot Guarantee
- Future business performance
- Profitability expectations
- Stability of income
- Ability to repay a mortgage
- Verification of documents the CPA has not personally reviewed
A CPA must follow AICPA and State Board of Accountancy ethics rules when issuing these letters.
When Mortgage Lenders Request Business Ownership Letters
Different lenders request ownership verification at different stages:
Conventional Lenders (Fannie Mae & Freddie Mac)
Underwriters may request ownership verification when income is derived from:
- Schedule C (sole proprietorship)
- 1120S (S-Corporation)
- 1120 (C-Corporation)
- 1065 (Partnership)
- K-1 income
FHA, VA, USDA Loans
Government-backed programs rely heavily on AUS systems such as:
- Desktop Underwriter (DU)
- Loan Product Advisor (LPA)
If AUS flags a concern with income stability or business structure, a business ownership letter may be required.
Portfolio Lenders & Non-QM Lenders
These lenders ask for ownership verification more frequently, especially for:
- Bank statement loans
- Asset-based loans
- Alternative income programs
- High-net-worth borrowers
Documents CPAs Review Before Issuing the Letter
To issue a CPA comfort letter. The accountant must have prior, documented knowledge of the business. Common documents include:
Business Formation Documents
- Articles of Incorporation
- Articles of Organization (LLC)
- Operating Agreement
- Shareholder Agreement
- Partnership Agreement (LP, LLP, GP)
- Single-Member LLC documentation
- Multi-Member LLC documentation
Ownership Verification Records
- Ownership ledger or stock ledger
- Membership certificates
- Buy-sell agreements
- Beneficial ownership information
Tax Records
- IRS Tax Returns (Schedule C, 1120S, 1120, 1065)
- K-1 Forms
- EIN Confirmation Letter
Accounting Records
- Bookkeeping records
- Bank statements
- Invoices and receipts
- Financial statements (P&L, balance sheet)
- Operating statements
How CPAs Verify Business Ownership for the Letter
Here’s what CPAs typically evaluate:
Confirm Legal Structure
The CPA verifies whether the business is a:
- Sole Proprietorship
- LLC
- S-Corporation
- C-Corporation
- Partnership
Validate Business Registration with the State
Using:
- Secretary of State filings
- Business registration records
Review Ownership Percentages
Based on:
- K-1s
- Operating agreements
- Shareholder agreements
- Stock ledgers
Determine Beneficial Ownership
Verify individuals holding ownership rights or authority.
Verify Authorization to Sign
CPAs check if the borrower is:
- Authorized signer
- Managing member
- Corporate officer
- General partner
What Underwriters Expect in a Business Ownership Comfort Letter
A strong CPA comfort letter for business ownership includes:
Essential Elements
- CPA letterhead and contact details
- Borrower’s full legal name
- Business legal name and entity type
- Confirmation of the CPA–client relationship
- Ownership percentage and role
- Documents reviewed
- Business operational status
- Dates of formation
Required Disclaimers
Per AICPA standards, the letter must include:
- Limitations of verification
- No assurance or audit provided
- No guarantee of future income
- Not intended to evaluate repayment ability
Sample Structure of a CPA Comfort Letter (High-Level)
Letterhead & Date
Official accounting firm branding.
Borrower Identification
“Regarding: Business Ownership Verification for [Borrower Name]”
Statement of CPA Relationship
How long the CPA has served the client.
Business Ownership Confirmation
Ownership percentage and business structure.
Documents Reviewed
Tax returns, agreements, registration.
Disclaimers & Limitations
Signature, CPA License Number, and Firm Information
What Borrowers Should Do Before Asking for the Letter
Borrowers should prepare:
- Updated tax returns
- Operating agreements
- Formation documents
- K-1s
- Business license
- Secretary of State registration copy
This helps the CPA issue the letter faster.
