Can an Enrolled Agent Letter Unlock a Select-Industry Bank Statement Expense Factor?

The Quick Read: It depends on the program, because an enrolled agent letter can support a lower expense factor on a business-account bank statement file only when the lender’s program sheet accepts an enrolled agent as signer and lets the borrower’s industry move off the default factor. The letter never changes the deposits. It only changes how much of them the lender counts as income. On a rental purchase financed with a DSCR loan, the letter does nothing at all.

• An enrolled agent is a federally authorized tax practitioner, so an enrolled agent is a plausible signer, but each lender decides whether to accept one.
• The letter applies to business-account bank statement files. Personal-account programs generally have no expense factor to adjust.
• Select-industry is program language. Each lender sheet defines which industries get fixed or floor treatment.
• A letter that conflicts with the deposits or covers the wrong period is a common reason a file stalls in review.
• Rental financing on DSCR does not use the letter, because that loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.

Key Terms Defined

Expense factor: The share of business deposits the lender treats as operating cost, which is removed before the remainder is counted as income.

Enrolled agent: A tax professional authorized by the federal government to represent taxpayers before the IRS, with no state license required for the credential.

Expense factor letter: A signed statement on letterhead from a qualified preparer that certifies the business’s expense percentage for a stated period.

Select-industry treatment: A lender program’s rule that certain business types get a fixed factor, a floor, or a limit on how far a letter can move the number.

Qualifying income: The monthly income figure the lender carries into the debt-to-income test after the factor is applied.

How the Expense Factor Turns Deposits Into Income

The math is simple. The lender averages eligible deposits over the statement window, removes transfers and non-income deposits, then multiplies by one minus the expense factor. What is left is qualifying income. A lower factor leaves more of each deposit dollar standing, so qualifying income rises with no change in the bank account.

Across the wholesale network, the typical bank statement file uses 12 months of statements. Qualifying income comes from deposit averages with lender-specific expense factors. No single formula applies everywhere, and no one should promise a specific factor before a lender reviews the file.

Most programs set a default or fixed factor when no letter is provided. The letter is the optional override. If the borrower skips it, the default applies and the deal works on.

Why Can an Enrolled Agent Sign?

An enrolled agent is a recognized tax professional, and that is why lenders that allow a custom ratio often list enrolled agents next to CPAs and other preparers. The IRS describes enrolled agents as federally authorized practitioners who are unrestricted as to which taxpayers they represent, which tax matters they handle, and which IRS offices they appear before. Their conduct is governed by Circular 230.

That credential is a representation credential. It is not a lending credential. No federal rule says a lender must accept an enrolled agent letter to change an expense factor. Acceptance is a lender decision, so the program sheet is the only place to confirm it.

The table shows tendencies across programs, not a promise. Some lenders accept any of these signers. Others name only a short list.

Where Industry Changes the Answer

The phrase select-industry is not a federal category. It is how a program describes business types that get special treatment. In some programs a type of business gets a fixed factor that no letter can move. In others, the letter can lower the factor but only down to a floor. A few programs let the letter move the number freely when the numbers support it.

That is why the first question is never who will sign. The first question is whether the borrower’s industry is eligible for a letter-based factor at all. Lendmire’s piece How to Get a CPA Letter for a Bank Statement Select-Industry Factor walks through the signer side of this in more detail.

This table is a decision path, not program terms. Each lender sheet defines its own tiers, and a few lenders in the network are stricter than the rest. The honest answer for any single borrower comes from the sheet of the lender the file is headed to.

What the Letter Must Say

A letter that leaves out a required element gets sent back. Most programs that accept a letter want these items:

1. The preparer’s name, credential, and license or enrollment number.

2. The business name, matching the account on the statements.

3. The period covered, matching the statement window.

4. The certified expense percentage, stated as a single number.

5. A statement that the preparer prepared or filed the most recent business return.

6. A signature and date, on letterhead.

A simple skeleton works. Open with the preparer’s identity and credential. State that the preparer prepared the business’s most recent return. Certify the expense percentage for the stated period. Close with the signature block. Placeholders stay in brackets until the preparer fills them.

When asking the enrolled agent, keep the request short. Name the lender’s program, state the period, ask for a single certified percentage, and ask that the letter reference the filed return. Do not ask the preparer to hit a target number. A preparer who certifies a figure the records do not support puts the borrower and the file at risk.

Same Deposits, Two Outcomes

Say a borrower’s eligible deposits average out to an index of 100 each month. The table shows how the same number plays out under two paths.

The deposits do not move. Only the share counted as income does. That is the whole value of the letter, and it is also why underwriters read it closely.

How Underwriters Test the Letter

Underwriters check that the percentage is plausible for the business type and consistent with the activity on the statements. They also check that the signer qualifies under the program and that the period lines up. A non-QM lender still has to make a reasonable, good-faith repayment determination. The CFPB’s Ability-to-Repay compliance guide lists eight factors the lender must consider, including verified income or assets, but it does not dictate a particular underwriting model. That is why expense factors come from lender and investor guidelines rather than from a federal formula. A law firm summary of the rule makes the same point about non-QM lenders and the eight factors.

A signed letter from a credentialed third-party preparer is the kind of record that supports an expense ratio below the default. Whether it carries the day is the underwriter’s call.

The common failure points are predictable:

• The letter covers a different period than the statements.
• The percentage conflicts with the deposit activity, such as heavy payroll or supplier payments in the account.
• The signer is not on the program’s accepted list.
• The preparer did not prepare or file the most recent return.
• The borrower owns a smaller share of the business than the program requires, since business-statement income generally follows ownership share.

There is also a tension to watch. A tax return can show a low expense ratio while the account shows high real cash outflow. When those two pictures differ, the file draws questions.

Letter or Profit-and-Loss Statement?

The profit-and-loss route is a separate path. It usually carries its own expense assumption and its own limits. Do not mix the two on one file.

Pick one route based on the lender sheet, then build the file around it.

Is It Worth It? A Skip-It Checklist

The letter pays off for a borrower with genuinely low overhead, such as an asset-light service business. It does little for a borrower whose real costs are heavy. A letter cannot support a number the business records do not support.

Skip the letter when:

• The program does not accept the signer you have.
• The industry sits in a fixed tier the letter cannot move.
• The default factor already leaves the borrower comfortable on debt-to-income.
• The real cost structure is heavy and the letter would not hold up in review.

Confirm eligibility first, then pay for the letter. That order saves money on files where the program turns out not to allow a custom ratio.

What This Means for Investors

Self-employed investors often split their financing. A bank statement loan can finance a primary home or second home, where the letter and the expense factor matter. The rentals are better financed on a DSCR loan. Lendmire’s complete DSCR loans guide covers that side. On a DSCR file the loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, so the letter has no effect. Statements on that file serve as asset, reserve, and source-of-funds evidence.

Occupancy decides which rules apply. An owner-occupied bank statement file, whether primary residence or second home, is a consumer mortgage, and TRID disclosure rules apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from TRID. Keep the two apart on every file.

Typical leverage through select lenders in the network runs as follows, subject to lender guidelines:

• Primary residence purchase or rate-term: up to 90% LTV, with stronger files earning the top of the range.
• Owner-occupied cash-out, primary residence or second home: up to 80% LTV with a fixed expense ratio. The accountant-prepared ratio path follows its own leverage tier on the program sheet.
• Investment property cash-out: around 75% LTV.
• Investment purchase on bank statement documentation: varies by lender.
• Loan sizes run roughly from $125,000 to $3,500,000, and reserves are commonly about six months of the housing payment.

For a closer look at how the second-home side compares, Lendmire’s piece on the expense factor versus a CPA letter on a second home loan covers the owner-occupied angle. Tax treatment varies, so consult a qualified professional before relying on any tax position.

The Process, Step by Step

1. Confirm the loan type. A bank statement loan is reviewed on documented income under the applicable program, subject to lender guidelines.

2. Confirm the account type. Expense factors generally apply to business accounts, not personal ones.

3. Check the program sheet for accepted signers, industry treatment, and any floor on the certified ratio.

4. Gather the statements and remove transfers and non-income deposits from the average.

5. Request the letter from the enrolled agent, with the period and elements listed above.

6. Compare the certified percentage against the statements before submitting. Any conflict is better found by the borrower than by the underwriter.

7. Submit the file with reserve and credit documents, then respond to review questions.

About Lendmire

Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. IRS – Enrolled agent information

2. CFPB – Ability-to-Repay and Qualified Mortgage compliance guide

3. Consumer Financial Services Review – CFPB and non-QM loans