Proof of income letter from an employer: template and what it must say

A proof of income letter is the employer’s own written account of what it pays you. It answers one question for the reader: how much does this person earn, and how steadily? A landlord or an agency often accepts it with a pay stub; a lender treats it as a supporting piece.

The letter differs from an employment verification letter, which confirms that you work there and since when. A proof of income letter goes further into pay: the base rate, the hours, and any overtime, bonus or commission.

For a mortgage, a letter on its own rarely carries the file. Fannie Mae’s guide asks for the latest paystub, dated no earlier than 30 days before the application, with year-to-date earnings (Fannie Mae Selling Guide B3-3.2-01, Standards for Employment and Income Documentation). Send the letter with that stub, not instead of it.

HR, payroll or the business owner writes and signs it, on letterhead, as the employer’s statement. The employee asks for it and passes it on, or gives HR the recipient’s address. In a small business with no HR, the owner or office manager signs. If you work for yourself, nobody can sign one for you, so use your tax returns and a profit and loss statement instead.

1. Email HR or payroll with the purpose, the recipient and the date you need it by.
2. Say which pay details the recipient asked for, such as hourly rate and average hours, or bonus history.
3. Offer HR the template on this page so they only fill the brackets.
4. Check the letter is on letterhead, dated, signed, and gives a contact who will answer a verification call.
5. Send it with your most recent pay stub, so the figures can be checked against each other.

• A letter typed by the employee and signed by a coworker instead of HR, payroll or the owner.
• An hourly rate with no hours, so the reader cannot work out monthly income.
• Bonus or commission folded into the base pay instead of shown on its own line.
• No phone number or email for verification.
• An offer letter with conditions still open, such as a pending background check.

A reader checks the letter line by line against the pay stub. Year-to-date earnings are the gross pay since the start of the calendar year, and they are the figure readers compare first. Leave nothing they would have to guess.

The pay clause is the one that changes most from person to person. Pick the version that fits.

• Salaried: state the annual salary and the pay frequency, for example "an annual salary of $[amount], paid twice a month".
• Hourly: state the rate and the average weekly hours over a stated period, such as the last three months. Hours are what turn a rate into an income.
• Commission or bonus: give the base, then each year’s commission or bonus as separate amounts. Readers average variable pay, so two years of history helps.
• Part time or seasonal: say so, and give the months worked each year.

A non-contingent offer is one with no conditions left open, such as a background check or a license still pending. Fannie Mae’s guide accepts a signed, non-contingent offer that names the position, the type and rate of pay, and the start date (Fannie Mae Selling Guide B3-3.3-03, Employment Offers or Contracts). It applies only to the purchase of a one-unit home you will live in, paid on fixed base pay, from an employer that is not a relative or a party to the sale (Fannie Mae Selling Guide B3-3.3-03, Employment Offers or Contracts).

Timing matters too. Under that guide, the start date must fall no earlier than 30 days before the note date or no later than 90 days after it (Fannie Mae Selling Guide B3-3.3-03, Employment Offers or Contracts). Landlords set their own rules, but many want the start date and salary in writing.

Expect the reader to check. A lender confirms your job close to closing: Fannie Mae asks lenders to verify employment no more than 10 business days before the note date (Fannie Mae Selling Guide B3-3.1-04, Verbal Verification of Employment). The check may be a call, a written request or a verification vendor, so HR should know it is coming.

If any figure on the letter differs from your stub or W-2, the reader will ask why. Fix errors before you send it, and tell HR if your hours or pay are about to change.

• Fannie Mae Selling Guide B3-3.2-01, Standards for Employment and Income Documentation: The latest paystub must be dated no earlier than 30 days before the loan application and show year-to-date earnings; a W-2 transcript, Form 1005 or the final paystub can stand in for a W-2.
• Fannie Mae Selling Guide B3-3.3-03, Employment Offers or Contracts: For a purchase of a one-unit principal residence, with the borrower not employed by a family member or interested party and qualified on fixed-base income only, a fully executed non-contingent offer naming position, pay type, rate and start date can support income; the start date must be no earlier than 30 days before and no later than 90 days after the note date.
• Fannie Mae Selling Guide B3-3.1-04, Verbal Verification of Employment: For borrowers using employment-related income, the lender must verify employment no more than 10 business days on or before the note date, with listed extensions.