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CPA letters and profit/loss statements provide third-party validation of your business income and expenses. While not always required, these documents can improve your qualifying income by justifying a lower expense factor.

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CPA Letters

A CPA letter is a statement from your accountant confirming details about your business and income. Lenders use these to verify information that bank statements alone don’t show. A CPA letter typically confirms:
  • You are self-employed in the stated business
  • Length of time in business
  • Your ownership percentage
  • The business is currently operating
  • Actual expense ratio (if requested)
Sample language: “I have prepared tax returns for [borrower name] for the past three years. They are the 100% owner of [business name], a consulting firm operating since 2019. Based on my review of their financials, their business expenses average 25% of gross revenue.”

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How CPA Letters Reduce Expense Factors

Without documentation, lenders apply default expense factors based on industry—often 40-50%. A CPA letter stating your actual expenses are 25% can significantly increase qualifying income. Example on $400,000 annual deposits:
Expense FactorQualifying Income
50% (default)$200,000
25% (CPA-verified)$300,000
That $100,000 difference substantially increases borrowing power.

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Profit & Loss Statements

A profit and loss (P&L) statement summarizes your business revenue and expenses over a specific period. Lenders may request a P&L covering the same timeframe as your bank statements. P&L requirements vary by lender:
  • Some accept borrower-prepared P&Ls
  • Others require CPA-prepared or CPA-reviewed P&Ls
  • Some require the P&L to be audited
A CPA-prepared P&L carries more weight than a self-prepared one.

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What Lenders Look For

ElementPurpose
Gross revenueShould align with bank statement deposits
Itemized expensesJustifies expense factor
Net profitSupports qualifying income calculation
Preparation dateMust be recent
CPA signature/letterheadAdds credibility

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When to Get a CPA Letter

Consider obtaining a CPA letter if:
  • Your actual expenses are lower than industry defaults
  • You want to maximize qualifying income
  • The lender offers a reduced expense factor with documentation
  • Your business type typically triggers high default expense factors
The cost of a CPA letter (typically $100-300) can be worth thousands in additional borrowing capacity.