The required elements
A compliant employment letter should be on official company letterhead and include your job title, length of employment, employment status, and current annual salary or hourly wage. It needs to be signed by someone in HR or management, along with a contact phone number the lender can verify.
Employment status matters
Lenders treat permanent, probationary, and contract employees differently. If you're still in a probationary period, some lenders will hold off on approval until it ends, while others require a letter confirming the probation will be waived or has already passed.
- Permanent full-time is viewed most favourably
- Probationary status may require extra conditions
- Contract employees often need a history of renewals
Variable income and overtime
If part of your income comes from bonuses, commissions, or overtime, the letter should state the average amount over the past two years. Lenders are cautious about counting variable income at full value unless there's a consistent track record.
What to avoid
Skip generic templates that don't match your actual pay stubs, and don't have the letter dated too far in advance of your closing. Lenders often want a letter dated within 30 days of funding to confirm your employment hasn't changed.
Frequently asked questions
- Can I write my own employment letter?
- No, it needs to come from your employer on their letterhead, though you can provide them a template with the required details to speed things up.
- What if I recently changed jobs?
- Lenders will still want an employment letter from your new employer, and some may ask for a short history of employment in your field to show income stability.
- Do part-time workers need anything different?
- Part-time employees often need to show a history of consistent hours, sometimes over one to two years, since income can vary more than with full-time roles.