Section 01

For many first-time homebuyers, preparing for a mortgage means gathering familiar documents like pay stubs, tax returns, and bank statements. But for many self-employed borrowers, business owners, independent contractors, and some 1099 workers, lenders may ask for something a little less familiar: a CPA letter.

If you have never applied for a mortgage while self-employed, this request can feel confusing. Does it replace tax returns? Does it guarantee loan approval? Does every borrower need one? The answer to all three questions is no.

A CPA letter is simply one of several documents that may help lenders better understand certain aspects of a borrower’s financial situation. Whether it is required, and what it should include, depends on the lender, the loan program, and the borrower’s individual circumstances.

Section 02

What is a CPA letter?

A CPA letter is a document prepared by a Certified Public Accountant, often referred to simply as a CPA, that may be requested during the mortgage process.

Unlike tax returns or bank statements, it is not a standard document that every borrower automatically provides. Instead, it may help confirm information that lenders are already reviewing through other financial documents.

It is worth being clear about what a CPA letter is not. A CPA letter does not replace required income documentation. It does not guarantee mortgage approval. It is simply one piece of a larger underwriting review, used alongside tax returns, bank statements, and other financial records.

Section 03

Why might a lender request a CPA letter?

Rather than thinking of a CPA letter as something requested “because you’re self-employed,” it helps to understand what a lender is actually trying to confirm.

Lenders generally want to better understand how a business operates, whether the business is currently active, how income is generated, and whether the financial information reviewed is consistent with the documents already submitted. A CPA letter may help provide additional context alongside tax returns and other financial records, particularly in situations where the underwriter needs a bit more clarity.

Not every lender requests a CPA letter, and not every loan program requires one. Whether it comes up in your specific file depends on your lender, your loan program, and the details of your income.

Section 04

Who is more likely to be asked for a CPA letter?

It is more accurate to think in terms of who may be asked, rather than who needs one, since requirements vary by lender and situation.

Self-employed business owners are sometimes asked for a CPA letter because their income can be more complex to verify than a traditional paycheck, particularly when business deductions significantly affect taxable income. Independent contractors receiving 1099 income may also be asked, especially when their income history or business structure needs additional context.

Owners of partnerships, S corporations, and LLCs may be asked for a CPA letter as well, since these business structures can involve more layers of documentation than a sole proprietorship. Borrowers with more complex income structures, such as those with multiple businesses, several income sources, or income that varies significantly from year to year, may also be more likely to receive this kind of request.

None of these categories make a CPA letter mandatory. They simply describe situations where a lender may find one useful.

Section 05

What information may be included in a CPA letter?

Formats for CPA letters vary from lender to lender and from CPA to CPA, since there is no single universal template used across the industry.

That said, a typical CPA letter may include the business name, the nature of the business, and how long the business has been operating. It may also include a description of the CPA’s relationship with the borrower, confirmation that the CPA prepared the borrower’s tax returns, and, when appropriate, confirmation that the business remains active. Beyond these common elements, a lender may request other factual statements specific to the borrower’s situation.

An important point worth emphasizing is that a CPA should only include information they are able and willing to verify. A CPA letter is meant to reflect facts the accountant can stand behind, not projections or assurances about the future.

Section 06

What a CPA letter usually does NOT include

Just as important as what a CPA letter includes is what it generally does not include.

A CPA letter does not guarantee future income, and it does not predict how a business will perform going forward. It does not recommend loan approval, and it does not verify the value of the property being purchased. It also does not replace tax returns, does not replace underwriting, and does not replace the other documentation a lender requires. Understanding these limits helps set realistic expectations for what this document can and cannot accomplish in your file.

Section 07

CPA letter vs. tax returns

	CPA Letter	Tax Return
Purpose	Provides additional factual context about the business or CPA relationship	Serves as a primary source of documented income history
Prepared by	A Certified Public Accountant	The borrower, often with help from a tax preparer or CPA, and filed with the IRS
Used for	Supplementing or clarifying information already under review	Verifying actual reported income over time
Can replace the other?	No	No

Lenders often review both because they serve different purposes. Tax returns provide the documented income history underwriters rely on, while a CPA letter can help clarify specific details, such as business structure or continued operation, that tax returns alone may not fully explain.

Section 08

When during the mortgage process might a CPA letter be requested?

A CPA letter is not typically something you will be asked for at every stage of the mortgage process.

During pre-qualification, a CPA letter is usually not requested, since this early step is generally based on the information a borrower provides directly. At pre-approval, it is possible a lender may ask for one, depending on the complexity of the borrower’s income. During underwriting, a request becomes more common if the underwriter needs additional clarification after reviewing tax returns and other documents. Even after that, a CPA letter may still be requested as one of the conditions a lender asks a borrower to satisfy before closing.

Section 09

Real-world examples

Example 1: A restaurant owner has operated the same business for eight years, and their CPA has prepared their tax returns throughout that time. During underwriting, the lender requests a CPA letter simply confirming that the business is still active. This example is illustrative only and does not represent every self-employed borrower’s experience or a guaranteed underwriting outcome.

Example 2: A real estate agent earning 1099 income submits their tax returns as part of their application. The underwriter requests additional clarification about the nature of the agent’s income, and the CPA provides a factual confirmation to help address the question. This example is illustrative only and does not represent a guaranteed step in every self-employed borrower’s file.

Example 3: A borrower owns two separate businesses, with income coming from several different entities. A CPA letter helps explain the overall business structure alongside the borrower’s other financial documents. This example is illustrative only and does not represent every multi-business borrower’s situation.

Example 4: A borrower assumes that a CPA letter alone will replace the need to submit tax returns, so they delay gathering their returns while waiting on the letter. This misunderstanding can slow down the application, since a CPA letter is not a substitute for required income documentation. This example is illustrative only, intended to highlight a common misconception rather than describe a specific loan file.

These examples describe general situations that can arise during the mortgage process. They are not a guarantee of how any individual file will be handled, since actual documentation requirements depend on the lender, loan program, and the borrower’s specific circumstances.

Section 10

Common misconceptions about CPA letters

Some borrowers assume that a CPA letter guarantees approval, but that is not accurate. It is simply one document among several that a lender may review as part of a broader underwriting process.

Others worry that being asked for a CPA letter means there is a problem with their file. That is not necessarily true either. In many cases, it is simply a routine step a lender takes to gather more context about a business, not a sign that something is wrong.

It is also a common misconception that every self-employed borrower needs a CPA letter. In reality, many self-employed borrowers complete the mortgage process without ever being asked for one. Similarly, some borrowers assume a CPA letter can replace tax returns entirely, but it cannot. It is meant to supplement documentation, not substitute for it.

Finally, some borrowers wonder whether they can write their own CPA letter or have a friend or family member who happens to be a CPA sign off on one without a genuine professional relationship. A CPA letter should come from a CPA who has an actual working relationship with the borrower’s business and tax filings, since the letter is meant to reflect facts that professional can genuinely verify.

Section 11

Why does your loan officer work with your CPA?

It can help to understand the roles each party plays in this process. The borrower provides information and authorizations needed to move the application forward. The loan officer identifies what documentation the lender needs and communicates those requirements clearly to the borrower. The CPA, when involved, provides factual financial documentation or verification when appropriate.

Understanding these roles helps clarify that a CPA does not approve a loan or represent a borrower in front of a lender. A CPA is simply part of the process of providing accurate documentation to support the lender’s review of the file.

Section 12

How to prepare before your lender requests a CPA letter

Staying in regular communication with your CPA throughout the homebuying process can make this step much smoother if it comes up. Letting your CPA know early that you are planning to buy a home gives them time to prepare, rather than being caught off guard by a last-minute request. Responding quickly once a request does come in, and avoiding last-minute scrambling, can help keep your application moving on schedule.

Keeping your tax filings current is also important, since outdated or incomplete filings can complicate any documentation request, including a CPA letter. Before reaching out to your CPA, it is worth asking your loan officer exactly what the lender needs, so your CPA can prepare a letter that addresses the specific information requested rather than guessing at what might be helpful.

Section 13

Questions to ask your loan officer

It is worth asking your loan officer whether a CPA letter is required for your specific loan program, and if so, what information the lender actually needs included. You might also ask whether there is a preferred format the lender expects, whether your CPA can send the letter directly to the lender, and whether any additional documents are needed alongside the letter itself. Getting clear answers to these questions before contacting your CPA can save both of you time.

Section 14

Conclusion

A CPA letter is not a requirement for every mortgage application, nor is it a substitute for tax returns or other financial documents. However, for some self-employed borrowers and applicants with more complex income situations, it may provide helpful clarification during the underwriting process.

Understanding why a lender may request a CPA letter, and preparing early with both your loan officer and your CPA, can help reduce delays and keep your mortgage application moving forward.

Section 15

Sources

This article is provided for educational purposes only and should not be considered financial, tax, accounting, or legal advice. Whether a CPA letter is requested depends on the lender, loan program, underwriting guidelines, and the borrower’s individual circumstances. A CPA letter does not guarantee loan approval and does not replace tax returns or other required documentation. Borrowers should consult their loan officer and their own CPA regarding documentation specific to their mortgage application.