For salaried applicants, underwriting is a formula: W-2s, pay stubs, done. If you’re self-employed, your income, deductions, and financial statements tell a more nuanced story—one that lenders need translated. That’s where a CPA letter for self-employed mortgage approvals earns its keep. Prepared on firm letterhead by a Certified Public Accountant (CPA), it summarizes your business ownership, verified income, and supporting records in a format mortgage underwriters actually use.
Quick Defination: a CPA letter for income verification bridges the gap between your business reality and a lender’s checklist—without overstating assurance.
What Is a CPA Letter—and What It Isn’t
A concise, third-party verification
A CPA letter is a signed statement from an independent accountant confirming key facts about a self-employed borrower: time in business, nature of operations, and a grounded view of income drawn from tax filings and financial reporting (e.g., balance sheets, cash flow statements, and profit and loss accounts). It’s commonly requested for a home loan, mortgage loan, refinance, or commercial loans, and sometimes by landlords assessing income stability.
Not an audit or guarantee
It does not replace underwriting, nor is it an audit or review engagement. The CPA states the basis of verification and its limitations—important for transparency and professional credibility.
Why Lenders Ask for One
Risk, clarity, and consistency
Self-employed income fluctuates. Underwriters in mortgage lending want a consistent, third-party lens on the numbers you’ve reported to the IRS. A CPA letter helps them reconcile your bank statement activity with filed tax returns, your P&L with cash movements, and your assets with obligations.
Frameworks and standards
Depending on your context, statements may reference U.S. GAAP or International Financial Reporting Standards. While U.S. mortgages primarily tie back to IRS filings, mentioning the framework used aligns the letter with recognized accounting conventions.
When You’ll Be Asked for a CPA Letter
Common scenarios
- Applying for a home mortgage or investment property loan
- A refinance after a strong year of earnings
- Asset-based lending or a portfolio money lender review
- Lease approvals where landlords want more than a credit score
What it helps answer
- How long has the business operated and who holds ownership?
- Is income durable enough to support the payment plus down payment reserves?
- Do financial statements and bank statements align with IRS filings?
The Documents to Prepare Before You Ask
Core financial package
- Two years of filed tax returns (business and personal, if pass-through)
- Year-to-date financial statements: profit and loss accounts, balance sheets, and cash flow statements
- Recent bank statements (2–6 months, operating and savings)
- Proof of ownership (articles of organization/incorporation, EIN letter, or partnership agreement)
- A summary of major assets or nonrecurring items affecting income
Pro tips that save time
- Consistency is king: Numbers in the letter must reconcile to IRS filings.
- Context matters: Flag seasonality, one-offs, or large financial transactions your CPA should explain.
- Name the recipient: Provide the exact mortgage lender or institution and the purpose (purchase, refinance).
How to Get a CPA Letter for Self-Employed Mortgage Approval
Step-by-step process
- Engage the right professional: Work with a licensed Certified Public Accountant who knows mortgage documentation.
- Define the ask: Request a “CPA letter for self-employed mortgage” and specify “CPA letter for income verification” in the subject so staff recognize the use case.
- Share your package: Provide returns, YTD financial statements, and bank statements up front.
- Clarify scope and dates: Indicate the period under review (e.g., last two tax years plus YTD through a specific month).
- Call out nuances: Note major clients, recurring contracts, or seasonality that impact income stability.
- Confirm the framework: GAAP by default; International Financial Reporting Standards if applicable (e.g., cross-border reporting or consolidated groups).
- Review the draft: Verify spelling, entity legal names, numbers, and the lender’s address—all must match the loan application.
- Deliver securely: Ask your CPA to transmit the final on firm letterhead directly to the lender when requested.
Timing and fees
Turnaround varies by firm and complexity; fees generally reflect the verification effort. If your books require cleanup, expect additional accounting work first.
What the Letter Should Include (Key Elements)
Must-have components
- CPA identity & credentials: Firm name, license number, address, and contact info on letterhead.
- Client and business details: Legal names, entity type, and ownership.
- Income basis: Reference to filed tax returns, YTD profit and loss accounts, balance sheets, cash flow statements, and bank statements reviewed.
- Time in business: Operating since [Year]; any material changes.
- Purpose and recipient: Identify the mortgage lender, loan, or refinance purpose.
- Scope & limitations: A clear statement of what the CPA did—and did not—do.
Sample CPA Letter for Income Verification (Adaptable)
Draft language you can share with your CPA
[CPA Firm Letterhead
Date: [Month Day, Year]
To: [Mortgage Lender / Underwriter Name and Address]
Re: CPA letter for self-employed mortgage — [Borrower’s Full Name, Business Name]
I am a Certified Public Accountant licensed in [State]. Our firm provides accounting and financial reporting services to [Business Name], owned by [Borrower’s Name], since [Year].
Based on our preparation/review of tax filings (Years: [20XX–20XX]), and our review of year-to-date financial statements (profit and loss accounts, balance sheets, and cash flow statements) through [As-of Date], as well as recent bank statements, the business has reported approximate net income of $[X] (20XX) and $[Y] (20XX). Year-to-date results are generally consistent with prior periods, subject to normal seasonality.
This CPA letter for income verification is provided at the request of [Borrower’s Name] solely to assist [Lender] in evaluating a mortgage loan (home loan/refinance). It is not an audit, review, or examination, and we express no opinion or assurance on the financial statements beyond the information presented herein. Figures are presented in accordance with [GAAP/International Financial Reporting Standards], as applicable.
[CPA Name], CPA
[CPA Firm Name] | License [####] | [Address] | [Email/Phone]
How to tailor this safely
Keep numbers aligned with filings, avoid absolute guarantees, and ensure the recipient and purpose match the lender’s file.
Common Pitfalls—and How to Avoid Them
Inconsistent numbers with IRS filings
Underwriters cross-check. If your letter, returns, and bank statements disagree, expect delays or denials.
Solution
Reconcile first. Ask your CPA to explain any timing differences or unusual items.
Overstating assurance
A CPA letter isn’t a guarantee of repayment or a substitute for underwriting.
Solution
Ensure the letter’s “scope & limitations” section is explicit to protect both borrower and CPA.
Thin documentation of assets and reserves
Even with strong income, some programs require post-closing reserves or a larger down payment.
Solution
Document liquid assets and match the lender’s reserve rules.