If you are trying to get approved for a mortgage as a self-employed individual? Then you’ve probably heard the term CPA letter tossed around by lenders. This little document holds big weight in the mortgage approval process, especially when you’re not getting a traditional paycheck.
Let’s dive deep into everything you need to know about getting a CPA letter for a mortgage, why it’s important, and how to get one that actually works in your favor.
What Is a CPA Letter?
Simply put, a CPA letter is a formal document prepared by a Certified Public Accountant (CPA) that verifies financial or business-related information. Lenders and institutions often ask for it as part of the third-party verification process. Think of it as your CPA vouching for your income, self-employment, or financial conduct.
Why Lenders Ask for a CPA Letter
Mortgage lenders use CPA income verification letters as a way to validate income when typical documentation like W-2s isn’t available. If you’re a freelancer, contractor, or small business owner, lenders might request this letter to:
- Confirm ongoing income
- Verify self-employment
- Ensure your business is legit
- Validate that getting a mortgage “will not adversely affect the conduct of the business.”
Types of CPA Letters Used in Mortgages
Different situations call for different kinds of letters. Let’s look at the main types lenders might request:
CPA Income Verification Letter
This is the most common type. It confirms your income amount, income stream stability, and current self-employment status. It’s also called a letter of income verification, proof of income letter, or even an income letter.
CPA Comfort Letter
A CPA comfort letter or CPA letter of comfort doesn’t guarantee anything legally, but it reassures the lender that, based on available data, you’re financially stable. A draft letter of comfort might state your gross income or affirm that the business is profitable.
CPA Letter of Explanation
A CPA letter of explanation can be used to address inconsistencies or clarify unusual financial data—like a sudden income drop or inconsistent earnings across tax years.
CPA Letter for Mortgage: What’s Included?
Wondering what goes into a CPA letter for a home loan or mortgage lender? Here’s the breakdown:
Key Elements in a CPA Letter
Verification of Self-Employment
It should clearly state that you are self-employed, how long you’ve been in business, and the nature of the business. Lenders prefer that you’ve been self-employed for at least two years.
Proof of Income
This section often includes your average income over the past two years. If you’re wondering what a CPA income verification letter sample looks like, this part usually resembles a summarized profit & loss statement.
Statement That It “Will Not Adversely Affect the Conduct of the Business”
This is lender-speak for “Getting a mortgage won’t ruin your company.” Including this phrase helps reassure lenders that taking out a loan won’t sink your income stream.
How to Get a CPA Letter
It is not as hard as you think. You just need a trusted accountant.
Finding a Licensed CPA
Look for licensed professionals, such as those listed under adamsbrown CPA, clearbooks CPA, or pulakos CPA. You can even check with state boards like New York State CPA verification.
Documents You’ll Need
Before requesting the letter, gather:
- Recent tax returns
- Profit & loss statements
- Bank statements
- Proof of business operations
- Any prior third-party verification letters (if applicable)
CPA Letter for Mortgage Sample
A CPA letter for mortgage loan might also include:
- CPA license number
- Date of letter
- Contact info for CPA mailing
- The line “Filed with a CPA” or reference to documents filed with CPA
Tips for a Strong CPA Letter
- Keep it concise but complete
- Use the exact legal name of your business.
- Include CPA license info and contact details.
- Use formal business letter formatting.
- Always mention that the letter was prepared for mortgage lender use.
Common Mistakes to Avoid
- Leaving out the phrase “will not adversely affect the conduct of the business”
- Using an unlicensed CPA or uncertified accountant
- Submitting a handwritten or unprofessional letter
- Failing to mention business tenure or income details
- Sending an outdated letter
Conclusion
Getting a CPA letter for mortgage lender approval doesn’t have to be intimidating. With the right CPA by your side and the right documents in hand, you can present a powerful, professional letter that checks all the boxes. Whether you’re applying for a home loan, an apartment, or a refinance, this document can be a game-changer, especially if you’re self-employed.
A well-prepared letter from CPA not only builds trust with lenders but also strengthens your entire mortgage application. It’s your income, your business, and your future—make sure it’s backed up with the right paperwork.
FAQs
What is filed with a CPA, and why does it matter for mortgage approval?
Filed with a CPA” means your documents were reviewed or prepared by a certified public accountant. Lenders trust CPAs, so this adds credibility.
How much does a CPA letter cost?
It can range from to $245, depending on the CPA time, your financial complexity, and local market rates.
Can I use the same CPA letter for multiple lenders?
Yes, as long as the letter is current (within 30–60 days) and the language is generic enough for different institutions.
4. What should I do if I don’t have a CPA?
You can hire one for this purpose alone. Search local firms like mgo CPA, smeed CPA inc, or use online directories.
