Does a Bank Statement or 1099 Mortgage Require a CPA Letter?

The Quick Read: Usually no: a CPA letter is not a universal requirement for these self-employed loans, and it mostly serves as an optional tool that can replace the lender’s default expense assumption on business statements, or as one accepted proof of a two-year self-employment history on some programs. Personal-account files rarely need one.

• On business bank statements, the letter is usually optional. It can swap in your real expense ratio for the lender’s default.
• On personal bank statements, lenders generally apply no expense factor, so the letter adds little.
• On 1099 programs, the 1099 forms and year-to-date records drive income. A CPA letter is one acceptable way to prove work history.
• A letter can hurt you when your real costs run higher than the default.
• A DSCR loan (one that is reviewed on the property’s rent, not your personal income) needs no CPA letter at all.

Key Terms Defined

CPA letter: a signed letter from a CPA, enrolled agent, or qualifying tax preparer. It certifies a fact about your business, such as its expense ratio or how long you have operated.

Expense factor: the percentage a lender subtracts from business-account deposits to estimate your real operating costs. It is lender-set, and it varies by program and business type.

Bank statement loan: a mortgage that is reviewed around documented income under the applicable program, subject to lender guidelines. The lender averages your deposits over 12 months instead of reading traditional personal-income documentation.

1099 loan: a mortgage for contractors and freelancers that builds income from 1099 forms plus year-to-date documentation.

Profit-and-loss (P&L) program: a separate product where a CPA or enrolled agent prepares a P&L statement. The lender uses that statement as the income figure.

DSCR loan: a loan for investment property that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR stands for debt service coverage ratio.

Bank Statement Loan or 1099 Loan: Where Does the Letter Fit?

The letter plays a different role in each product. On a bank statement loan, it is a lever on the expense factor. On a 1099 loan, it is one of several ways to prove you have been working for yourself.

Here is how a bank statement file works. The lender takes 12 months of statements, business or personal. It strips out transfers between your own accounts, loan proceeds, refunds, and one-time credits. On business accounts, it subtracts an expense factor from what is left. It then divides by the number of months to get qualifying monthly income.

The expense factor is a conservative placeholder. It is not a measurement of what your business actually spends. A CPA letter is the usual way to replace the placeholder with a measured number.

A 1099 file runs differently. Income is typically built from your 1099 forms plus year-to-date documentation, and exact periods follow each program sheet. The lender also wants proof that the work is real and ongoing. A CPA letter confirming your history can do that job. So can a business license, client contracts, or traditional personal-income documentation showing Schedule C. The letter generally does not drive the income figure on a 1099 file. The 1099s do.

Do Personal Bank Statements Need a CPA Letter?

Generally no. On personal statements, most programs Lendmire places files with apply no expense factor, so there is no ratio for a letter to adjust.

A sole proprietor who deposits client payments into a personal account is the typical case. The lender may still ask you to trace deposits back to your work. A letter is not the usual way to do that. A couple of invoices and the matching deposits usually answer the question.

Business statements are different. An LLC or corporation owner who runs everything through a business account faces the expense factor. That is where the letter earns its keep.

When Does a CPA Letter Help, and When Can It Hurt?

A letter helps when your real costs run well below the lender’s default factor. It hurts when they run at or above it. The letter certifies the truth, and the truth can cut either way.

Think of an asset-light consultant who bills hours and pays for software and a phone. Their actual expenses are lean. A certified ratio below the default raises qualifying income. That can change borrowing power in a real way.

Now think of a contractor who buys materials, pays subs, and fuels trucks. Their real costs may match or exceed the default. A letter may not help, and it could lower the income figure. You also paid for it. The cost is out of pocket whether the result helps or not.

There is a quirk on owner-occupied cash-out loans. Through select lenders, a fixed expense ratio supports up to 80% LTV on a cash-out refinance of a primary residence or second home. An accountant-prepared ratio caps at 75% LTV, by loan size and credit. So the letter can trade leverage for income. If you need every point of LTV, run the fixed-ratio version first. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.

Lendmire has covered the mechanics in depth in a piece Expense Factor vs CPA Letter on a Bank Statement Loan for a 1099 Earner.

A Quick Decision Checklist

You probably want a letter if:

• You deposit through a business account, and an asset-light business keeps your real costs low.
• A lender or broker has confirmed the letter would replace a default that is higher than your costs.
• The program you want asks for it to prove a two-year business history, and you have no license or returns that do the job.

You probably do not need one if:

• You qualify on personal-account statements.
• Your real expenses sit near or above the default.
• You can prove work history with a license, contracts, or traditional personal-income documentation.
• You are buying a rental and can qualify on the property’s rent through a DSCR loan.

Four Borrowers, Four Answers

The freelance designer on a personal account. Deposits flow into personal checking, and no expense factor applies. No letter. Keep invoices handy to trace the deposits.

The LLC consultant on a business account. The default factor will trim deposits, and real costs are modest. A letter is worth pricing out, especially if the difference in qualifying income decides the file.

The recent W-2 worker who switched to 1099 contracting. Work history is the issue here, not expenses. A letter confirming your history may help on programs that accept it. Some programs want a longer track record regardless, and treatment of W-2 workers paid on a 1099 varies by program.

The new entity owner. A newly formed LLC may have a short statement history. A letter can document that the business existed in a prior form. The lender decides whether that history counts.

What the Letter Must Say and Who Can Sign

Most lenders want the same handful of elements. The letter should carry:

• The preparer’s name, license number or PTIN, signature, and date.
• Letterhead.
• Your business name and EIN.
• A specific certified expense percentage, if the letter is for the ratio.
• The review period it covers.

Who can sign depends on the program. Many accept a CPA, an enrolled agent, or a qualifying tax preparer. Others narrow the list. Do not assume it has to be a CPA, and do not assume any signer is accepted. Lenders set their own acceptance criteria, and a vendor claiming universal acceptance is making a marketing claim.

Ask for the lender’s exact wording before you call your accountant. Some professionals will not sign broad assurances. A letter built on the lender’s requested language saves a rewrite.

Lenders generally do not expect the letter to mirror your traditional income documentation line by line. It relies on information a professional reviewed. A wide gap between the two invites questions, though.

What If Your CPA Won’t Sign, or You Don’t Have One?

You still have options. Start with the lender’s list of accepted signers, because an enrolled agent or another qualifying preparer may satisfy the requirement.

If you only need the letter to prove work history, swap in another document. A business license, client contracts, or returns showing Schedule C often work.

If you need the ratio and no one will certify it, skip the letter and accept the default factor. Or move to a program that does not use your personal income at all. Self-written letters are generally not accepted, because lenders want an independent, licensed professional behind the number.

Why You See Conflicting Answers Online

Some pages say a letter is required. Others say optional. Others say you may be asked. They are all describing different programs.

A lender that uses a P&L program needs a CPA-prepared document. A lender that uses a bank statement program with an optional ratio override treats the letter as a choice. A lender that wants proof of a two-year history may list the letter beside a license and conventional personal-income paperwork. Across the wholesale network Lendmire works with, the pattern is consistent: the letter is a program-level and document-level tool, not a blanket rule.

No federal rule mandates a CPA letter. The CFPB’s ability-to-repay rule says a lender must verify the income or assets it relies on, using reasonably reliable third-party records. It does not say which records. A tax-return transcript is permitted but not required, since the Cornell Legal Information Institute copy of the rule uses the word may. The expense factor is not a federal number either. The lender sets it, and the codified text in the eCFR never fixes one.

Non-QM does not mean no documentation. The lender still has to defend the income number. A CPA letter is one way to turn deposits into income a lender can stand behind.

Before you pay for anything, ask your loan officer these questions:

1. Is a letter required, optional, or only needed for work-history proof?

2. Does this program apply an expense factor to my account type?

3. Who may sign, and do you have required wording?

4. Does the letter change my maximum LTV on this transaction?

How Occupancy and Leverage Change the Picture

Occupancy decides which rules apply to your loan. An owner-occupied bank statement file, meaning a 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 a business-purpose loan and is exempt from TRID.

Leverage differs too. On a primary residence, select lenders offer up to 90% LTV on a purchase or rate-and-term refinance, and the strongest files earn the top of that range. An asset-depletion alternative, which is reviewed against liquid assets, runs up to about 80% LTV on a primary residence. Owner-occupied cash-out stays at the 80% and 75% ceilings above. Investment-property cash-out tops out around 75% LTV. Investment purchase leverage on bank statement documentation varies by lender, so treat it as a question for your file.

Loan sizes typically run from $125,000 to $3,500,000, and reserves commonly sit around six months of the housing payment. All of this is typical, subject to lender guidelines, credit approval, and property review. Consumer-lane bank statement loans are available in 16 states.

Bank Statement Loan or DSCR Loan for an Investor?

If you are buying a rental and happen to be self-employed, you may have a choice. A bank statement loan tests your personal income and debt. A DSCR loan tests the property. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. There is no personal income documentation, so there is no CPA letter and no expense factor.

DSCR is not a free pass. Credit, reserves, and source of funds are still verified. It tends to suit investors with heavy existing debt, because personal debt-to-income is not part of the test. A bank statement program fits better when you want a primary residence or second home, or when the rental’s own rent would not carry the payment.

For the full picture on how DSCR works, see Lendmire’s complete DSCR loans guide. For a side-by-side look, read how DSCR and bank statement loans compare for investors.

Bank statement documentation describes how income is proven. It does not make the review lighter. Credit, assets, the property, and reserves all get a full look.

Prepare your statements before you apply. Incomplete packages are a common reason a file stalls. If a letter is in play, request it early so the file is not waiting on a signature.

This article is educational, not legal or tax advice, and tax treatment varies, so consult a qualified professional such as an attorney or CPA about your own situation.

Next Step

Investors can reach the team at 828-256-2183.

About Lendmire

Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB, Regulation Z § 1026.43

2. Cornell Legal Information Institute, 12 CFR 1026.43

3. eCFR, 12 CFR 1026.43