The underwriter asked for "a CPA letter," your CPA asked "saying what, exactly?" and now you're stuck in the middle. It's one of the most frustrating moments in a self-employed loan, and it usually comes down to vague requests. A CPA letter for mortgage underwriting can mean several different documents, each confirming something specific.
Once you know which letter the lender wants and what it should cover, the conversation with your CPA gets much easier. Here's the breakdown.
Key takeaways
- "CPA letter" is a catch-all. Lenders commonly ask for letters verifying self-employment, ownership, business expenses or the impact of using business funds.
- CPAs carry professional liability for what they sign, so many won't attest to future business performance or make guarantees about your finances.
- Lender requests should be specific. Getting the exact items in writing from your loan officer prevents rewrites.
- Enrolled agents and licensed tax preparers are acceptable to many lenders, but not all.
- If your CPA declines, there are often alternative documents that can satisfy the same requirement.
Why lenders ask for a CPA letter
On a self-employed loan, especially a non-QM loan, the lender may not have full tax returns to lean on. A letter from an independent tax professional helps verify facts the lender can't easily confirm on its own: that your business exists, how long it's been operating, what you own and sometimes how your business expenses compare to revenue.
Lenders frequently ask for these on bank statement loans and P&L programs, but they can show up on conventional files too.
The common types of CPA letters
1. Self-employment verification letter
The most common request. It typically confirms:
- Your name and the business name.
- That you're self-employed and the nature of the business.
- How long the business has been operating, or how long the preparer has known it to be operating. Many lenders look for around two years of history, though some programs consider less.
- That the preparer has filed your most recent tax return, if they have.
This letter supports business existence. Lenders may accept a business license or state registration as an alternative or in addition.
2. Ownership percentage letter
Confirms what share of the business you own. Lenders care because many programs count only your share of business income, and some require a minimum ownership share, often around 25% or more, to use business accounts for income at all. If you own an LLC or S-corp with partners, this letter matters. Our guide for LLC and S-corp owners explains how ownership affects qualifying.
3. Expense ratio letter
Used mainly with bank statement loans. Lenders typically apply a standard expense factor to business deposits, often somewhere around 50% for business statements, depending on the lender and business type. Some lenders allow a lower factor if a CPA, EA or tax preparer provides a letter stating the business's actual expense ratio.
The letter usually states the business's expense ratio for a period, based on records the preparer has reviewed. It's a powerful tool, but also one CPAs are careful with. For a deeper look, see our guide to the bank statement loan expense factor.
4. Use of business funds letter
If you plan to use business funds for your down payment, closing costs or reserves, some lenders want confirmation that withdrawing those funds won't negatively affect the business. Others perform their own cash-flow analysis instead.
This is the letter CPAs most often push back on, because it asks them to make a judgment about future business operations. Read more in our guide on how to use business funds for a down payment.
5. Other letters
Lenders occasionally ask about specific items: explaining a one-time expense, confirming a business closure or change in structure, or verifying that certain deposits are business revenue. These are usually narrower and easier for a preparer to address.
Lender requests vs CPA comfort: a quick comparison
| Letter type | What lenders typically want | What many CPAs are comfortable stating | Possible alternative |
|---|---|---|---|
| Self-employment verification | Business exists, how long, your role | Facts from tax returns they've filed | Business license, state registration, website, third-party listings |
| Ownership | Your ownership share | Ownership as reported on returns they prepared | Operating agreement, articles, K-1 |
| Expense ratio | Business's actual expense ratio | Ratio based on returns or records they reviewed | Lender's standard expense factor, or a P&L program |
| Use of business funds | Withdrawal won't harm the business | Often declined, or limited to factual balance info | Lender cash-flow analysis, or using personal funds |
Not sure which letter your lender actually needs? We'll pin down the exact language before you ever call your CPA. See if you qualify →
What CPAs will and won't sign
CPAs are governed by professional standards and carry liability for what they put their name on. Understanding their limits helps you ask for something they can actually provide.
Usually comfortable
- Facts drawn from returns they prepared: business name, your ownership share, years filed, nature of the business.
- How long they've worked with you.
- An expense ratio based on returns or books they've reviewed, sometimes with a disclaimer.
Often uncomfortable
- Statements about the future, like "the business will continue to be profitable."
- Assurances that withdrawing funds won't hurt the business.
- Anything that sounds like a guarantee or a certification beyond the work they performed.
- Lender-drafted letters that use language they didn't write.
Many CPA firms have standard template letters for these situations. Asking whether they have one is a good first step.
Sample wording outline
This is not legal or accounting language, and your CPA will use their own wording. It's just an outline of what a self-employment verification letter commonly covers:
- Preparer's letterhead with name, firm, credential and contact information.
- Date.
- Statement that the preparer has prepared tax returns for the named borrower and business for a stated period.
- Business name, type of entity and nature of the business.
- Borrower's ownership share, as reflected in the returns prepared.
- Length of time the business has been operating, to the preparer's knowledge.
- Any specific item the lender requested, such as an expense ratio for a stated period.
- Preparer's signature and credential number.
Lenders typically verify the preparer's license or credential independently, so make sure the information is accurate and current.
How to ask your CPA for a letter
- Get the exact request from your loan officer in writing, including any required wording.
- Send it to your CPA early. Year-end and tax season are busy times for preparers.
- Explain the purpose. "This is to verify my self-employment for a mortgage application."
- Ask what they're comfortable stating. If they can't sign a lender's template, ask if their own standard letter would work.
- Expect a fee. Many firms charge for letters, which is reasonable for the time and liability involved.
- Share the letter with your loan officer before submission so we can confirm it fits the program.
Alternatives if your CPA refuses
A "no" from your CPA isn't the end of the road.
- Use a different preparer type. Some lenders accept letters from enrolled agents or licensed tax preparers.
- Substitute documents. Business licenses, state registrations, operating agreements, K-1s and third-party verifications can cover existence and ownership.
- Use the lender's standard expense factor instead of a custom expense ratio letter.
- Use personal funds or seasoned transfers instead of business funds for your down payment.
- Switch programs. A CPA prepared P&L for mortgage program, a 1099 program or a different lender may have requirements your CPA can meet.
Because Matador Lending works with a large network of wholesale lenders, we can often find a lender whose documentation requirements fit what your preparer is willing to provide.
Frequently asked questions
Q: What should a CPA letter for a mortgage say?
A: It depends on what the lender is verifying. Most commonly it confirms your self-employment, business name, how long the business has operated and your ownership share. Get the exact requirements from your loan officer before contacting your CPA.
Q: Can an enrolled agent or tax preparer write the letter instead of a CPA?
A: Many lenders accept letters from enrolled agents and licensed tax preparers, especially if they prepared your most recent return. Requirements vary, so confirm with your loan officer.
Q: Why won't my CPA sign the letter my lender sent?
A: CPAs carry professional liability and typically avoid statements about future business performance or anything resembling a guarantee. Ask if they'll provide their own standard letter or a narrower statement of facts.
Q: Do I need a CPA letter for a bank statement loan?
A: Often, but not always. Lenders commonly use one to verify business existence and ownership, and sometimes to support a lower expense factor. Other documents may substitute, depending on the lender.
Q: How long is a CPA letter valid?
A: It varies by lender, but many want letters dated reasonably close to your application or closing. Ask before your CPA writes it so it doesn't expire mid-process.
Let's make the CPA ask simple
Most CPA letter headaches come from vague requests and mismatched expectations. When the lender's need, the CPA's comfort and the right program line up, the letter is usually routine.
Tell us about your business and your preparer, and we'll find the program and lender whose documentation requirements fit.
See if you qualify → — no credit pull to check your options. Prefer to talk? Call or text 713-366-4668.
This article is general education, not tax, legal, or financial advice, and not a commitment to lend. Loan programs, guidelines, and availability vary by lender and state and change without notice. Non-QM loans are subject to credit approval, income and asset verification, and appraisal. Talk with your CPA about tax questions. Small Business Mortgages is a marketing brand of Matador Lending, NMLS #2072896. Equal Housing Opportunity.