How a CPA Letter Lifts Bank Statement Income in Select Industries

The Quick Read: A CPA letter replaces the lender’s flat expense assumption on business bank statements with a ratio a licensed preparer certifies, so it raises qualifying income only when the business’s real costs run well below the program default. Low-overhead service businesses tend to gain the most. Expense-heavy operators often gain nothing, and a letter can even lower their income.

• Business statements show gross revenue, so programs apply an expense factor before income counts.
• A certified ratio can replace that factor only if the program allows an override.
• Lean service businesses benefit. Restaurants and heavy-cost trades often do not.
• Personal statements usually need no letter.
• A CPA letter does nothing for a DSCR loan, which is reviewed on the property’s rent instead of personal income.

Most files that stall on this topic stall on the same point. The borrower assumes a letter always helps. It does not.

How Does Bank Statement Income Get Calculated?

Qualifying income comes from the average of eligible monthly deposits, reduced by an expense factor when the deposits are business revenue. Across Lendmire’s wholesale network, the typical file uses 12 months of statements, business or personal, and each lender sets its own factor.

HousingWire’s non-QM guide describes the same structure: statements from a set lookback window, with an expense factor that may apply, and a separate profit-and-loss product that relies on a CPA-prepared statement. The mechanics run like this.

1. Pick the account type. Business statements show gross receipts, so a factor is applied. Personal statements are usually counted more fully, since deposits are presumed closer to net income.

2. Collect the statement window. Twelve consecutive months is the common baseline on programs in the network.

3. Screen the deposits. Underwriters strip out transfers between accounts, loan proceeds, refunds and one-time deposits. This follows from the federal ability-to-repay requirement that a lender confirm relied-on deposits are the borrower’s income, as laid out in the CFPB’s compliance guide.

4. Apply the factor. Without a letter, the program’s default flat factor applies. With an accepted letter, the certified ratio may replace it, if the program guidelines permit.

5. Calculate. Eligible average deposits times one minus the factor gives monthly income. Run it with round, illustrative figures: deposits at a 50% factor yield half of the deposit average as income. The same deposits at a certified 30% yield seventy percent of it. Same bank account, a 40% larger income number.

6. Run the rest of the file. Qualifying income feeds the debt-to-income ratio. Credit, assets and reserves are checked as usual.

The expense factor is a lender convention, not a federal rule. The CFPB does not prescribe a factor or a CPA-letter process. Each program sheet decides what is allowed.

Key Terms Defined

Expense factor: The percentage of business deposits a lender assumes goes to operating costs before income is counted.

CPA expense-ratio letter: A signed statement from a licensed preparer certifying the business’s actual expense ratio for a stated period.

Bank statement income: Qualifying monthly income built from deposit averages instead of traditional personal-income documentation.

Profit-and-loss program: A separate alt-doc path where a CPA-prepared P&L statement replaces the factor logic.

Statement window: The consecutive months of statements the lender reviews, commonly 12.

Why Does Industry Change the Answer?

Industry decides the outcome because the letter only helps when actual costs sit well below the default factor. Cost structure drives that gap, and cost structure differs sharply by trade.

Think about what leaves the account. Cost of goods, subcontractor payments, payroll, fuel, equipment and platform fees are cash outlays that show up in the ledger. Depreciation is a non-cash expense that lowers taxable profit but not cash flow, which is one reason traditional personal-income documentation understates what a self-employed borrower really earns. A preparer certifying a ratio looks at the books for the same window as the statements.

Lenders and brokers publish industry ranges, but those are market anecdotes and not standards, so treat any table of percentages with caution. The direction holds across programs: lean service work wins, heavy-cost operations do not.

Where Does the Letter Help Most?

Low-overhead service businesses gain the most. A consultant or independent professional with little cost of goods may have a true expense ratio far under the default. Certifying that real number can lift qualifying income noticeably, and with it the debt-to-income headroom.

Here is where the extra headroom matters. Picture a self-employed borrower buying a primary residence who also carries existing debt. A higher certified income can be the difference between a file that fits and one that needs a smaller loan.

Mid-range cases, such as some trades and healthcare practices, sit in the middle. The answer depends on the actual books. Have the preparer run the number before anyone orders a letter.

Where Does the Rule Break?

The general rule is that a lower certified ratio raises income. These edge cases break it.

• High-expense industries. If real overhead is at or above the default, the letter can lower income or change nothing. A letter certifies the true ratio, so it can work against the borrower. A restaurant owner whose costs run past the default factor should usually skip it.
• Partial ownership. Income from a business account may be reduced by the borrower’s ownership share. Business funds used for reserves can be treated the same way.
• Deposit quality. Declining deposits, large unexplained deposits, overdrafts and cash-heavy activity can sink a file whatever the factor. A good ratio does not repair weak deposits.
• Programs that do not allow an override. Some guidelines accept only the default factor. Others set a floor on how low the factor can go, and that floor varies by lender.
• Personal statements. Factors are usually lighter or absent, so a letter often adds nothing.
• Mismatched periods. A letter covering a different period than the statements in the file gets questioned.

Lender approach also differs. One program may decline a file that another places, using a different factor or different thresholds. Experian’s overview of bank statement loans notes these loans sit outside the qualified-mortgage framework and that not every lender offers them. That spread between lenders is the practical reason to compare programs.

What the Letter Must Contain and Who Can Sign

An underwriter wants a letter that is specific and checkable. Expect these items:

• The preparer’s name, credentials and license or registration details
• The business name and the borrower’s ownership role
• The exact period covered, matching the statement window
• The certified expense ratio as a single stated percentage
• Signature and date

Programs generally accept a CPA, and many also accept an enrolled agent or another credentialed preparer. Borrower self-certification does not count. A preparer who has never worked with the business is a red flag, and so is a letter that contradicts the filed tax return.

What can a CPA actually attest to? A preparer can certify a ratio based on the books they have seen. They are not giving an opinion about the borrower’s total income. A CPA may decline the request or revise the number, particularly if the records are thin. If that happens, the file goes back to the default factor or moves to a different program.

When asking the accountant, request three things in plain terms: the expense ratio for the same months as the bank statements, the credentials on the letterhead, and a statement of how the ratio was derived from the ledger or P&L.

Letter, P&L or Personal Statements?

Pick the path by how clean the books are and how much of the business runs through which account.

Among select lenders in the network, owner-occupied cash-out runs up to 80% LTV with a fixed expense ratio, and 75% when the ratio comes from an accountant-prepared source. That cash-out ceiling is separate from the purchase ceiling. Primary-residence purchase and rate-term files go up to 90% LTV, with the top of the range going to stronger files. Loan sizes run roughly $125,000 to $3,500,000, and reserves commonly sit around six months of the housing payment. All of it is subject to lender guidelines, and each file is underwritten individually.

Does This Help a Rental Property Purchase?

Not directly. The letter matters only when personal income is the qualifying path: a primary residence, a second home, or a file where debt-to-income decides. A rental purchase on DSCR terms qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, so no personal-income number gets built and no CPA letter is needed.

Occupancy also decides the disclosure regime. An owner-occupied bank statement file is a consumer mortgage. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose. Investment cash-out on this documentation tops out around 75% LTV, and investment purchase leverage varies by lender.

A self-employed investor may use both products on different deals: a bank statement loan for the home they live in, DSCR for the rentals. The complete DSCR loans guide covers the rental side. For the second-home angle, see Lendmire’s piece Does a CPA Letter Raise Income on a Second-Home Bank Statement Loan?.

Most non-QM loans cost more than conventional financing, per Experian and others. If a borrower can qualify with traditional personal-income documentation, that route deserves a look first.

Common Mistakes and Red Flags

• Ordering a letter before anyone runs the real ratio
• Assuming any accountant’s note will do
• A letter period that does not match the statements
• Ignoring large unexplained deposits that the underwriter will remove
• Treating the factor as fixed, or as a federal rule
• Expecting a letter to help a DSCR file
• Assuming non-QM means light documentation. It still requires verification of the income relied on.

One practitioner pattern worth knowing: on files with seasonal deposits, the lookback window and the certified ratio interact. A ratio certified for the same months as the statements keeps the numbers consistent. A BiggerPockets thread shows investors comparing notes on a path where a tax professional confirms the expense ratio, though that is anecdotal and program-specific.

What the Decision Looks Like in Practice

Start with the books, not the letter. Have the preparer calculate the true expense ratio for the statement window. If it sits well under the default factor, the letter is worth requesting. If it sits near or above, skip it. Then match the file to a program that permits an override, check the preparer’s credentials against that program’s list, and confirm the period lines up.

Lendmire is a broker arranging financing through select lenders in its wholesale network, and qualification is on documented income under the applicable program, subject to lender guidelines. This is not a commitment to lend. Tax treatment varies; consult a qualified professional.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.

References

1. HousingWire non-QM guide

2. CFPB ATR/QM Small Entity Compliance Guide

3. Experian: what is a bank statement loan

4. BiggerPockets bank statement loans thread