How To Get A Letter Notarized

What Is a Letter of Income Verification, and When Do You Need One?

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Looking for a new place to live is a process that can take its fair share of planning. You'll want to set a budget, determine the features and layout you need, research neighborhoods and start touring homes — among plenty of other steps. Once you've found your dream place, you're one key stage closer to getting everything finalized and making your move. But you'll need to get quite a few things settled before you're in the clear, including some important paperwork.

Whether you're looking to buy or rent a new house or apartment, you might have already started bracing yourself for the paperwork the process typically entails. Some of these documents are pretty straightforward and customary, like a lease or a mortgage application. But before you reach that point, a few lesser-known documents can also come in handy — including a letter of income verification. We'll help you get a handle on what a letter of income verification is, how it's beneficial and when you'll need one, all so you can navigate the process smoothly.

What Exactly Is a Letter of Income Verification?

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A letter of income verification is also sometimes known as a proof of income letter or a letter of employment. As you may have already guessed from the names alone, the purpose of this kind of letter is to prove that you work where you claim to and make the amount of money that you said you make on your application.

Common reasons you might need letter of income verification include the following:

It's part of the application process when you're applying to rent a home or apartment.
It's part of the application process when you're applying for a major loan such as a mortgage or an auto loan.
You're requesting a loan payment deferral or reduction from a lender.
You're supplying information as part of a background check for a potential employer.

While you won't always be asked to provide a letter of income verification in these situations, they are fairly common requests. When you're applying for a loan of any sort or to rent a home, it's important that the person or bank who's approving your application can verify your financial information.

Unfortunately, sometimes people attempt to lie their way into their dream home or car, only to wind up in trouble down the road when they can't afford to pay their rent or loan payments. Income verification letters are a simple way for landlords or lenders to avoid winding up on the losing side of these situations by making sure you have the financial resources available to afford your payments.

If a potential loan or rental falls through due to your income, it may end up being a blessing in disguise in the long run. Not only is an income proof letter a way for a lender or landlord to protect themselves, but it's also meant to protect you from getting into a tricky financial situation later on.

How Do You Get an Income Proof Letter?

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If you find yourself in need of a proof of income letter, you'll need to get one from your employer. If there is one, start by contacting the human resources department at your company. Someone there will be able to tell you what steps you need to take next.

While you never have to tell your employer why you're requesting the income verification, you may need to fill out an employment verification request form or supply the name of the party or company for whom your employer is preparing the letter. Some companies have policies that may require you to give written consent before they can send your information to the lender or landlord.

Many companies use templates that your supervisor can simply fill out and sign. You can also find a variety of income verification letter templates online. Just make sure that someone from your company signs the letter after filling out and printing it if they aren't going to mail it on your behalf.

If you do plan to have your company mail the letter on your behalf, make sure that you can provide all of the information needed to do so. This includes things like the name, address and contact information of the person or organization that needs the letter. The typical letter of income verification letter includes basic information about your work with the company, such as:

Your employer's company name and address
Your name and job title
Sometimes your job description
Your employment dates
Your current salary

What Happens If You're Self-Employed?

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While getting an income verification letter is relatively straightforward if you work for another person or company, what can you do if you're self-employed? Keep in mind that you do still work for someone — it just happens to be yourself. In this case, you'll be the one responsible for preparing the letter and will simply explain and verify that you're self-employed.

You'll want to include the same type of information as a traditional employer would, along with a few extras, such as:

Your name and the name of your business
Details about how long you've been self-employed and what type of work you do
A breakdown of your income — if you're a freelancer who may not make the same amount of money each month, try to provide an average of your income for the previous six months
Your name and signature
Your contact information
Any other information that's been specifically requested

If you're an independent contractor and you've been working with a particular client on a long-term basis, consider asking them to provide an income verification letter on your behalf. There are many free templates online that you can fill in yourself and simply ask the person you've been working with to verify with their signature. If you're not sure which route to go, it never hurts to ask the lender or landlord whether they'd prefer one (or several) from your long-term clients, one you provide yourself or a blend of the two.

In some situations, you may also need to provide other evidence of your income, so it's always wise to be prepared. Make sure that you always maintain copies of your latest tax returns, 1099 forms, payment stubs and bank statements. There may be certain landlords or lenders who prefer this information to an income verification letter altogether after you explain that you're self-employed.Whenever you're asked to provide proof of income or employment, never be afraid to ask the questions you need to in order to get a better idea of the type of documents that'll best fit your situation.