top of page

The Comprehensive Guide to CPA Comfort Letters for Mortgage Lending

The Comprehensive Guide to CPA Comfort Letters for Mortgage Lending

Mortgage lending often involves the request of CPA comfort letters by lenders, a practice standing at the crossroads of legal and professional standards violations [1]. These letters seek to reassure lenders on matters like the borrower's down payment source and business solvency without overstepping federal, state laws, and professional standards [1].

However, creating a comfort letter that provides no assurance yet offers some comfort to lenders represents a potential solution, despite the significant risks of legal liability and license revocation CPAs face [1] [2]. The American Institute of CPAs (AICPA) actively works to mitigate these risks by advising against solvency verification requests, underscoring the complexity and caution required in drafting such letters [2].

Understanding CPA Letters and Their Importance

Understanding the significance and application of CPA comfort letters in the mortgage lending process is crucial for both lenders and borrowers, particularly those who are self-employed or do not have traditional employment verification methods. Here's a breakdown of key points:

  • Verification of Financial Information:

  • CPA letters are essential for verifying an individual's income and expenses, crucial for mortgage or rental applications [6].

  • These letters include basic information such as the applicant's income, expenses, employment status, and years in business, offering a snapshot of financial health [6].

  • Regulatory Compliance and Ethical Standards:

  • CPAs are bound by professional standards and ethical guidelines, ensuring that the information provided is accurate and reliable [4].

  • They must obtain written permission from the client before sharing any information, safeguarding client privacy and compliance with regulations [4].

  • Role in Mortgage Approval:

  • Comfort letters serve as a bridge for self-employed individuals or those without traditional employment verification, confirming the existence and legitimacy of the borrower's business and its income generation capacity [8].

  • While not legally binding, these letters provide factual information that can influence the approval process, potentially securing better loan terms or lower rental rates for the applicant [7].

CPA comfort letters are a pivotal tool in the mortgage lending process, facilitating the verification of income sources and financial stability, thereby aiding in the approval process for loans and rentals.

Process of Obtaining a CPA Letter

To embark on the journey of obtaining a CPA comfort letter, individuals must follow a structured process that ensures both compliance and accuracy. Here's a step-by-step guide:

  1. Select a Qualified CPA: Choose a CPA who is not affiliated with automated tax services like TurboTax to ensure a personalized and compliant service [10].

  2. Documentation Preparation: Bring along your tax returns from the past five years when meeting with the CPA. This historical financial data is crucial for the CPA to review and verify the consistency of Schedule C income, particularly for those in the real estate business [10].

  3. CPA Review and Letter Drafting: The CPA will assess your tax returns to confirm the consistent reporting of Schedule C income over the specified period. Following this, they will draft a letter stating this consistency over the past five years. Be prepared to discuss the fee for this service, which varies based on the CPA's rates and the complexity of your financial situation [10].

Upon obtaining the letter, it can then be submitted to lenders or any requesting entity as a testament to your financial history and stability [10]. Additionally, it's important to be aware of alternatives and limitations to comfort letters, such as providing tax forms directly to lenders or opting for a CPA response that minimizes liability without making assurances [4]. In cases where a more formal attestation is needed, CPAs might follow attestation engagement procedures, though this can be a more costly and time-consuming option for clients [4].

How CPA Letters Facilitate Mortgage Approval

In understanding how CPA letters facilitate mortgage approval, it's essential to recognize their role in the lending process:

  • Verification of Financial Health: A CPA letter provides a third-party verification of a borrower's income and expenses, crucial for lenders assessing loan applications. This includes basic information about the applicant, such as income, expenses, employment status, and business longevity, offering lenders a snapshot of the borrower's financial situation [6].

  • Influence on Loan Terms: By verifying a borrower's financial information, CPA letters can help applicants qualify for lower interest rates, better loan terms, and reduced rental rates. This is particularly beneficial in competitive markets like New York or New Jersey, where such letters are often a requirement by banks, mortgage companies, and landlords [6].

  • Comprehensive Financial Assessment: The content of a CPA comfort letter typically extends to verifying the borrower’s income and expenses, confirming assets and liabilities, and assessing cash flow and repayment capabilities. This independent assessment provides lenders with a detailed picture of the borrower’s financial standing, thereby supporting the mortgage approval process [11].

Overcoming Common Challenges with CPA Letters

Overcoming common challenges with CPA letters involves navigating a landscape fraught with potential legal liabilities and professional standards violations. Here are strategies for both CPAs and borrowers to mitigate these risks:

  • For CPAs:

  • Limit Assurance: Avoid providing any form of assurance on matters of solvency. Instead, focus on services like auditing, reviewing, or compiling personal financial statements without implying solvency [4].

  • Direct Documentation: Offer to send a copy of the client’s tax return directly to the lender, confirming only the preparation of the document, not its contents [5].

  • Client Consent: Always obtain client consent before sharing any information, adhering to ethical standards and privacy laws [6].

  • Suggested Wording: Use suggested wording for comfort letters that clearly states the CPA's role in preparing tax forms without implying audited representations [11].

  • For Borrowers:

  • Challenge Unreasonable Requests: Push back against lender demands for comfort letters, especially if they seem excessive or unnecessary [7].

  • Alternative Documentation: Suggest providing direct tax forms or other financial documents to the lender, bypassing the need for a comfort letter [9].

By employing these strategies, CPAs can minimize their risk of legal liability and professional standards violations, while borrowers can navigate lender requests more effectively [4] [5] [6] [7] [9] [11].


Through the exploration of CPA comfort letters within the realm of mortgage lending, it's evident that these documents play a crucial role in bridging the gap between lenders' need for reassurance and borrowers' quest for loan approval. The delicate balance of providing sufficient information while adhering to legal and professional standards underscores the complexity of drafting such letters. By adhering to guidelines set forth by entities like the AICPA and employing strategic practices, both CPAs and borrowers can navigate the intricacies of the mortgage approval process more effectively, ensuring compliance and minimizing risk.

The potential for CPA comfort letters to influence loan terms favorably, coupled with their role in substantiating the financial health of borrowers, cannot be overstated. As professionals and clients alike strive towards successful mortgage engagements, the value of expertly crafted comfort letters becomes increasingly clear. Should you find yourself in need of a CPA letter to bolster your mortgage application, don't hesitate to [call us at (954)546-3582]. By doing so, you leverage the power of in-depth financial assessment and expert verification to navigate the complex waters of mortgage lending with confidence and clarity.


What exactly is a CPA comfort letter provided to lenders?A CPA comfort letter is a document issued by a tax professional to a lender or another third party upon a client's request. It aims to offer additional details or confirmation about the financial status of an entity or individual.

What is the typical cost of obtaining a CPA letter for mortgage purposes?The fee for obtaining a CPA letter for a self-employed individual's mortgage, home loan, or income verification is typically $375.00.

Are there alternatives to using a CPA letter when applying for a mortgage?Yes, small business owners can use other methods to substantiate their financial information for mortgage applications instead of a CPA comfort letter. Providing lenders with tax return copies or financial statements is one such alternative.

In the context of real estate, what does a comfort letter entail?Within real estate, a comfort letter is a tri-party agreement between the property owner, the lender, and the licensor. It gives the lender assurances that, in case of a foreclosure, they will be able to retain the license of the hotel brand or similar entity. This agreement may have different purposes depending on the context.


[1] -[2] -[3] -[4] -[5] -[6] -[7] -[8] -[9] -[10] -[11] -[12] -[13] -[14] -


bottom of page