The Easy Guide to Writing a Letter of Explanation (LOE) 

If you’re applying for a mortgage and your lender asks for a Letter of Explanation (LOE), don’t panic! It’s just a simple letter where you explain something in your financial history — like a late payment, a big deposit, or a job gap. It’s totally normal and way more common than you might think.Think of it like this: your lender is trying to connect the dots. You’re just helping them see the full picture.

Why Would a Lender Need an LOE?

Some typical reasons include:

• Late or missed payments
• Big, unexplained deposits
• Gaps in your employment history
• Changes in your income
• Credit issues (like a past bankruptcy)

They’re not judging you — they just need to understand what happened and whether it’s likely to happen again.

What to Include in Your Letter

When writing your LOE, make sure you cover these basics:

✅ Your full name and contact information
✅ Date you’re writing the letter
✅ Loan application number (if you have one)
✅ A short, honest explanation of the situation
✅ What caused it, and if it’s been resolved
✅ Supporting documents (if you have them)
✅ A polite closing and your signature

Tips to Make It Easy

Be brief: Stick to the facts. A few sentences are usually enough.

Be honest: It’s better to be upfront now than have issues later.

Be professional: Even though it’s casual writing, keep it respectful and clear.

Stay positive: Focus on what’s changed for the better.score, and financial profile to help you understand your loan options early on. A strong pre-approval helps you stand out in multiple-offer situations and gives you confidence during your home search.

Quick Example

Subject: Letter of Explanation for Employment Gap

Dear [Lender Name],

I am writing to explain the gap in my employment from March 2023 to July 2023. During this time, I took a break to care for a family member. I returned to full-time employment in August 2023 and have been steadily employed since.

Thank you for considering this explanation. Please let me know if you need any additional information.

Sincerely,
[Your Name]

Ready to Become a Homeowner? Let’s Talk

At BluPrint Home Loans we’re here to make the mortgage process smooth, simple, and stress-free. Need help writing your LOE or gathering the right documents? We’ve got your back — just give us a call!

Ready to move forward? Give us a call!