Financial Statement Requirements for Mortgage License Applications

Financial Statement Requirements for Mortgage License Applications

In numerous states across the United States, individuals are required to furnish financial statements as an essential component of their mortgage license application as well as with their annual license renewal. In certain instances, the state requirements may allow the applicant to submit a financial statement certified by an executive officer of the company. Many states require that the financial statements be prepared by a certified public accountant. In cases where audited financial statements are not mandatory, compiled or reviewed financial statements may be accepted. The applicant may also be required to have a minimum net worth depending on the type of application and the state licensing requirements. It is important for applicants to understand the financial and other prerequisites so that the licensing process will proceed more smoothly.

Financial Statement Requirements by State and License Type

We have compiled a list of various mortgage license types by state within the U.S., outlining the financial statement requirements for the application process and the minimum net worth criteria. Generally, states require an annual renewal of mortgage licenses and may require that financial statements be submitted on an annual basis.  The financial statement criteria for annual renewals are also noted in the list of mortgage license types by state.  Most states are using the Nationwide Multistate Licensing System (NMLS) for the license application, renewal, amendment, and surrender processes.  The NMLS website has new application checklists that identify financial and other requirements and a webpage for annual renewals.  Links to the NMLS website and various state mortgage licensing information websites have been provided as a reference tool in the listing mentioned above.

Financial statements include a balance sheet, income statement, statement of equity, statement of cash flow, and relevant disclosures and are generally required to be prepared in accordance with accounting policies generally accepted in the United States of America (U.S. GAAP).

Audit, Review, or Compilation Financial Statement – Which One Do You Need?

Audit, review, and compilation are three very different levels of service under which a certified public accountant (CPA) can prepare your company’s financial statements.  Your decision on what level you will need to obtain a mortgage license will be based on the licensure requirements of the state or states that you want to operate in.  A description of the types of financial statements is summarized below.


Audits are the highest level of service in which the CPA firm will issue an opinion on whether your financial statements are fairly presented and free from material misstatement.  The opinion provides reasonable but not absolute assurance as the audit procedures are designed based on the CPA’s assessment of risk and developing an understanding of your business and its environment including the impact of any existing internal controls within your company that the CPA might consider in designing the audit procedures.  Based on the information obtained and audit risks assessed about your business and its accounting policies and practices, audit procedures are designed and include the examination of evidence on a test (not 100%) basis regarding amounts and disclosures in your company’s financial statements. Upon completion of the audit, the auditor issues an opinion, which can either be “unqualified” (indicating the statements are accurate), “qualified” (indicating some concerns or limitations), “disclaimer of opinion” (when the auditor cannot provide a definitive opinion), or “adverse” (indicating significant noncompliance issues).


Reviews are substantially less in scope than an audit and include the CPA’s performance of analytical procedures and inquiries of appropriate people within your company.  Review procedures are performed to provide limited assurance as to whether the CPA is aware of any material modifications that should be made to your company’s financial statements.  When the review is completed, the CPA will provide a conclusion (not an opinion) either that they are not aware of any material modifications, or if the CPA was aware of an issue with the financial statements, the CPA would issue a “qualified” conclusion and would add an additional paragraph to identify the basis for the “qualified” conclusion.


Compilations are financial statements prepared based on your accounting records and information provided by your company. The CPA firm provides no assurance regarding the amounts nor the disclosures in the financial statements.

Financial Statement Requirements for Mortgage License 2

Expert Guidance from Certified Public Accountants

As experienced CPAs, we can assist you in determining whether your organization complies with the minimum net worth requirements for your mortgage license. If your organization falls short of these requirements, our accountants can offer guidance on how you may be able to meet the mortgage license net worth thresholds. Once a determination is made that your business’s net worth meets the minimum requirements, our CPAs can go over with you the financial statement preparation and audit, review, or compilation process to develop a plan for providing you with the financial statement product that you need in a timely and efficient manner.

If you require audited, reviewed, or compiled financial statements for your mortgage license application in any U.S. state or territory, our team of CPAs is available to assist you.

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Whether you know exactly what accounting service you need or have a tough question, The Innovative CPA Group team is here and ready to help. Let’s collaborate to accomplish your personal or business goals.

2023-11-08T18:28:51+00:00November 8th, 2023|Audit, Business|

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