Letter of explanation (LOE)
A written statement from the borrower explaining an unusual item in the application: a large deposit, a credit inquiry, a gap in employment, a recent address change, or a derogatory credit item. LOEs are requested by underwriters to document that unusual items have a reasonable, documented explanation.
How does this affect your loan? Estimate self-employed qualifying income with the DTI calculator, or read the self-employed mortgage guide.
Related terms
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Educational definition only — not financial, legal, or tax advice. Programs and limits change; verify current terms with a licensed professional.