How a CPA Letter Affects Bank Statement Income on First-Page Submissions

The Quick Read: A CPA letter changes the expense percentage the underwriter applies to your business deposits, not the deposits themselves, and it does the most good when it is in the very first file the underwriter opens. Where a program accepts one, the preparer’s certified ratio can replace the lender’s default factor, which raises qualifying income on the same twelve months of statements. Here is what to know before you submit:

• The letter moves the expense factor only; it never adds deposits.
• It matters on business statements and does little on personal-statement programs.
• Most programs treat it as optional, so it is an upgrade, not a standard document.
• Its period should match the statements in the file.
• A letter has no role in DSCR math, where the property’s rent carries the file.

Most self-employed borrowers think of the CPA letter as a document to collect later, once the underwriter asks for it. That habit costs income. The calculation tends to be set early, and a file reworked after the first review is a file that lost its best framing. What follows is how the process works, step by step, and where the general rule breaks.

What “First-Page Submission” Means Here

The phrase has no industry-standard definition, so here is how Lendmire’s brokerage uses it. A first-page submission is the initial package the underwriter reads: the loan summary, the income documentation and the supporting letters, arranged so the income story is clear without follow-up. It is the first impression of the file. A CPA letter that rides along in that package can shape the income figure from the start. A letter that arrives later may force a recalculation, and not every program allows one.

Whether a first-page file can also carry a CPA-lowered expense factor depends on the individual program sheet. Lendmire places files with select lenders in its wholesale network, and the programs differ on this point. Confirm the rule before you build the package around it.

Key Terms Defined

CPA letter: A signed statement from a licensed tax preparer certifying what share of a business’s deposits goes to operating expenses.

Expense factor: The percentage of business deposits the lender treats as expenses, so only the remainder counts as income.

Business statements: Bank statements for the account your company runs through, as opposed to your personal checking.

Deposit averaging: Adding up eligible deposits over the statement window and dividing by the number of months.

P&L alternative: A profit-and-loss statement prepared by a tax professional, which some programs accept in place of a letter.

How Bank Statement Income Is Calculated Before Any Letter

The underwriter starts with deposits, not traditional personal-income documentation. Across our wholesale network, the standard path uses twelve months of statements, either personal or business, and averages the eligible deposits. Scotsman Guide describes the same approach, with lenders calculating income from a year or more of personal or business statements and applying a standard expense factor in the business case.

The steps run in a set order:

1. Choose the account type. Personal statements often count eligible deposits in full. Business statements carry an expense factor.

2. Remove ineligible deposits. Transfers between your own accounts, refunds, loan proceeds and one-off items come out.

3. Average the window. Eligible deposits are totaled and divided by the months in the window.

4. Apply the lender’s default factor to business deposits. Each lender sets its own number. No regulation fixes it, and no universal formula exists.

5. Run the rest of the file. Credit, debt-to-income and reserves are tested against the proposed housing payment. Reserves commonly run around six months.

This is alternative documentation, not no documentation. The loan still is reviewed on documented income under the applicable program, subject to lender guidelines.

What the CPA Letter Changes

The letter swaps one number. Where the default expense factor would apply, the preparer certifies the business’s real expense ratio in writing, and the lender uses that figure instead. If a consulting practice runs lean, the real ratio may sit well below the default, and qualifying income rises on identical deposits.

Three points are easy to miss:

• It changes the percentage, not the deposits. A letter cannot turn thin deposits into strong ones.
• It only helps where a factor applies. On a personal-statement program the factor often does not apply, so the letter adds little.
• It cuts both ways. If a business carries heavy costs, a certified ratio could land above the default. In that case skip it.

Some programs also accept an accountant-prepared ratio, which matters most on owner-occupied cash-out. There, a fixed expense ratio typically applies, and a ratio prepared by an accountant can replace that default with a 75% figure for the file. That ratio belongs to the cash-out program, so do not read it across to purchase files.

A Same-Statements Comparison

Here is the structural difference, expressed without dollar figures. Picture two borrowers with identical twelve-month business deposits.

For a lean business, the certified ratio can be the difference between a file that clears debt-to-income and one that does not. For an expense-heavy business, the default may already be generous. The letter is a tool for the borrower whose real costs sit below the lender’s assumption.

Send It, Skip It, or Use a P&L?

The decision turns on account type, business profile and program rules.

Scotsman Guide notes that a lender could use a P&L or an expense statement prepared by a third-party tax professional instead of a flat factor. Whether a P&L replaces the letter, the statements or neither depends on the program.

A second Scotsman Guide piece makes a related point: a one-size expense factor can wrongly penalize asset-heavy businesses. That is the case where a certified ratio does real work. Think of trucking, equipment-heavy trades or real estate holding companies, where deposits are large but true operating costs differ from a generic assumption.

What the Letter Must Contain and Who Can Sign

Programs differ, but the same elements show up on file after file:

• Preparer letterhead, with the license or credential identified
• The business name and the borrower’s role
• A single stated expense percentage
• A period that matches the bank statements in the file
• Signature and date

Only a qualifying preparer counts. A borrower cannot certify their own ratio. This lines up with the general expectation that self-employment income be supported by a third party’s verification, as the Butler Snow summary of the CFPB guide describes it.

What the Underwriter Does With the Letter

The underwriter treats the letter as evidence to test, not a number to accept. Three checks come up most.

Plausibility. Does the certified ratio fit the business type? A figure far below what similar businesses typically run will draw questions.

Period alignment. A letter covering the wrong year, or months that do not match the statements, does not answer the underwriting question. It becomes a condition.

Consistency with the file. If the deposit pattern, the business description and the certified ratio tell different stories, expect a request for explanation. That could be a P&L, a clarifying note or both.

Lender policy also bounds the benefit. A letter is not an automatic route to the highest possible income. Some programs set a floor on the ratio they will accept, and those floors are program-specific, so do not assume one from an outside source. The regulatory backdrop is general: lenders must verify the income they rely on, and the CFPB’s Ability-to-Repay guide lists self-employment among the employment types a lender can consider, with income or assets verified rather than stated. The guide does not set an expense percentage.

One practitioner pattern is worth knowing. When a CPA’s number and the deposit trend disagree, files tend to go smoother if the borrower resolves it before submission, with the preparer adding a short explanation, than if the underwriter finds the gap on their own.

First-Submission Package Order

Arrange the package so the income story reads top to bottom:

1. Loan summary stating the program, occupancy and intended income method

2. The CPA letter, when you are using one, placed ahead of the statements

3. Twelve months of statements, complete and with every page

4. Ownership proof for the business, with the share you hold

5. Short explanation letters for unusual deposits or dips

6. Credit and reserve documentation

Putting the letter ahead of the statements tells the underwriter which method you chose before they begin calculating. Submitting it after the file is reviewed risks a recalculation, or a program that will not reopen the income figure.

Common First-Submission Errors

Ownership share matters on business accounts, since qualifying income is typically prorated by the percentage you hold. A new business, multiple accounts and mixed personal-and-business deposits all need a clear explanation in the first package.

Where the CPA Letter Does Not Help: DSCR Files

The letter has no role in DSCR math. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, so personal income is not in the calculation. Because DSCR loans are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.

Many self-employed investors run two lanes. A bank-statement loan covers the home, where leverage can reach up to 90% on a primary-residence purchase or rate-term refinance, with the owner-occupied cash-out ceiling at 80%. DSCR covers each rental. Occupancy decides the disclosure regime: an owner-occupied file is a consumer mortgage under TRID, while a bank-statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and TRID-exempt. On investment-property cash-out, the ceiling tops out around 75%. Loan amounts run roughly $125,000 to $3,500,000.

If deposits have been sliding, steering the rental purchase toward DSCR can sidestep the income trend entirely, since the property carries the file. For a related look at the letter’s effect, see Lendmire’s piece How a CPA Letter Changes Your Bank Statement Loan Income, and the complete DSCR loans guide covers the investor side in full.

Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.

If you are self-employed and want to see how the numbers work, Lendmire can help you compare bank statement loan options based on your deposits, the property, credit profile, leverage, and your goals. Qualification is subject to lender guidelines and is not a commitment to lend.

About Lendmire

Lendmire, NMLS# 2371349, is a non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 2026).

References

1. Scotsman Guide: Rev Up the Engine for Non-QM Lending

2. Scotsman Guide: Don’t Shut the Door on Quality Borrowers

3. Butler Snow summary of the CFPB guide

4. CFPB ATR/QM Small Entity Compliance Guide