Getting a mortgage loan is an exciting yet daunting process. As a homebuyer you need to submit several documents to your lender to prove your eligibility and ability to repay the loan. One such document is the employment verification letter. This letter validates your employment status and income level to the lender.
At first glance, the employment verification letter may seem like another piece of mundane paperwork. But it plays a pivotal role in your mortgage approval So let’s understand what an employment verification letter entails and how to get it right
What is an Employment Verification Letter?
An employment verification letter is a formal document issued by your current employer to validate your employment status and income to the mortgage lender. It provides proof of your job stability, position, salary, and other income details.
Lenders require this letter to mitigate lending risk and ensure you can make timely mortgage payments. It gives them confidence in your ability to repay the home loan.
The letter must be printed on the employer’s letterhead and signed by an authorized representative like the HR manager. It should also include relevant contact information of the employer.
Why Do Lenders Need This Letter?
There are a few key reasons why lenders mandate employment verification letters:
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To confirm your current employment and income level. The lender needs to check you have a stable job and steady cashflow.
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To verify the continuity of your employment. The letter states your job start date, which indicates longevity.
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To authenticate your employment information. It validates details like job title, income, bonuses, and deductions you stated in the mortgage application.
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To evaluate income stability. The lender assesses income consistency to determine your debt-to-income ratio.
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To check that your income can support mortgage repayments. The lender ensures you can make timely loan payments every month.
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To mitigate lending risk. Validating employment lowers the risk of payment default or foreclosure.
What Details Must the Letter Include?
The employment verification letter should provide specific details about your job for mortgage approval. Here are the key components it must cover:
1. Employer Information
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Company full name, address, phone number and website.
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Name, position and contact details of the representative signing the letter.
2. Your Employment Details
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Full name as per company records
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Job title and department
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Employment start date
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Employment type (full-time, part-time, contract)
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Work location if multiple branches
3. Income Details
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Salary amount and frequency (monthly/bi-weekly)
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Regular employment income over the last 2 years
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Bonus, overtime, commissions earned
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List of payroll deductions like taxes, 401k, insurance etc.
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Any other compensation – allowances, reimbursements
4. Declaration
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Statement verifying all information is true and accurate
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Date of issue and signature of employer representative
How to Get an Employment Verification Letter?
Here are the typical steps to get a satisfactory employment verification letter:
1. Inform your employer – Tell your manager or HR department that you need the letter for a mortgage application. Give them a heads up on the lender’s requirements.
2. Provide key details – Give accurate inputs on your job title, income, start date, etc. to include in the letter.
3. Use the standard template – Most lenders have a sample template. Use it to ensure all required information is covered.
4. Follow up on receipt – Politely follow up with the employer to get the final signed letter fast.
5. Review before submitting – Check all your personal, job and income details are correct.
6. Submit to lender – Provide the original hard copy to your lender along with other documents.
What If You’re Self-Employed?
Being self-employed or an independent contractor makes getting a verification letter tricky. Instead, you can submit alternate documents to the lender:
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Tax returns for last 2 years
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1099 Forms
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Business tax returns
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Business bank statements
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Accountant’s letter verifying income
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Executive summary about your business
Employment Letter Tips for Approval
Follow these top tips for a smooth mortgage process:
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Check lender requirements – Each lender may need specific inputs in the letter.
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Make requests well in advance – It can take several days to receive the letter from an employer.
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Submit an original copy – Lenders usually don’t accept photocopies or digital copies.
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Keep information consistent – Data in the letter should match your mortgage application.
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Recheck before sending – Double check all details and calculations.
Common Employment Verification Letter FAQs
Q: Can the letter be an email instead?
A: Lenders prefer a signed letter on the company letterhead. But some may accept an email from the official HR email ID.
Q: Does the letter have an expiry date?
A: Most lenders require the letter to be no more than 30-60 days old when submitted.
Q: What if my employer refuses to give the letter?
A: You can request your lender if any alternate documents like pay stubs can be provided instead.
Q: Can the lender do employment verification directly?
A: Yes, many lenders independently verify employment by calling or emailing the employer as an additional check.
Q: What if I have changed jobs recently?
A: Submit verification letters from both employers if you’ve changed jobs within the last 6-12 months.
Get Your Mortgage Loan Effortlessly
The home loan process can be confusing and tiring for first-time buyers. An employment verification letter is a mandatory document needed to prove your income source. Make sure you follow the steps above and provide an accurate letter from your employer. This will help you sail through the mortgage approval seamlessly.
With some care and planning, you can get a verification letter promptly without any hiccups. Partnering with the right lender also makes a big difference. The ideal lender will help and guide you with their mortgage process requirements. They will enable you to become a proud homeowner as soon as possible!
Will all lenders require a letter to verify my employment?
No, but most lenders will require some sort of verification. Aside from a letter, your lender may call or email your employer or give you a form for them to fill out and sign.
If your lender lets you know that they’ll be calling your employer to verify your employment, let your boss know to expect the call. It’s also a good idea to ask your employer if they need any information from you and thank them for helping you.
Speed up your home loan application by making sure your lender has everything they need.
A verification of employment letter is a document provided by your employer that confirms your current employment status and income. Some lenders will need to verify your employment when you apply for a mortgage, line of credit, lease or loan.