It will serve as proof and confirmation that you have funds set aside for the impending transaction, which is critical in evaluating if you are able to purchase the desired home. You can give this statement to the current estate owner, who will likely evaluate it together with other paperwork and accept your offer to purchase their home. To give the financial institution enough time to compile this declaration, get a Commercial Proof of Funds Letter a week before you submit an offer to purchase to a real estate seller. If you are looking for a house and planning to pay already, a Proof of Funds is frequently requested by a seller of a property or piece of real estate in order to retain it for them while they wait for the deal to finish. The POF is essential because there is no way of knowing whether or not the buyer will be able to complete the transaction without it. This puts the seller at danger, because pulling the house off the market and then having the agreement fall through would be a big setback. Are you looking for a Proof of Funds Letter that you can use to prove the amount of money that you have? You came to the right place, scroll down below to download our printable and editable letters.

35+ SAMPLE Proof of Funds Letters in MS Word | PDF

What Is a Proof of Funds Letters?

Proof of funds (POF) is a document or set of documents demonstrating that a person or organisation has the ability and funds to complete a transaction. A bank, security, or custody statement is generally used as proof of funds. The proof of funds document’s goal is to ensure that the money required to complete the transaction is completely available and legitimate. The seller frequently wants proof of finances when an individual or corporation makes a big transaction, such as purchasing a property. This assures that the buyer not only has the money to complete the purchase, but also that he or she has legal access to the cash because the proof of funds comes from a trusted source, such as a bank. The seller and/or mortgage company want to know if you have enough money for the down payment and closing costs, especially when buying a home. It’s vital to remember that evidence of money in most cases must refer to liquid capital, typically cash. Retirement accounts, mutual fund accounts, and life insurance are examples of investments that do not qualify as proof of funds.

Elements That Should be Included In a Proof of Funds Letter:

Just like any other letters there are things and elements that should be included and observed when writing one. Listed below are the elements that should be included when you are writing your Proof of Funds Letter.

 Name and address of the bank. The name and address of the financial institution holding the requested funds should be entered first. This is done to make it clear who is handling the money. This kind of information is also useful when the time comes to make any references.  Statement from the bank. This letter is followed by an official bank statement. This statement guarantees that the funds in the bank account are available. For consistency, all of the facts and figures in the letter must be mirrored in the statement.  Money Market Statement and Balance Copies. It’s possible that some account holders have multiple accounts with the same financial institution. They, too, must be taken care of if and when this occurs. If necessary, details on these extra bank accounts should also be provided.  Financial Statements Certified by a Bank. The information provided by the bank must be validated in order for them to have the official status that they are meant to have. This certification should ideally be performed by a government person, preferably from the state.  A copy of a statement from your online banking account. If the bank provides services over the internet, it should also provide a copy of an online banking statement to back up the data it keeps to verify the account balance. The goal is to give more credibility to the information supplied.  An authorized bank employee’s signature is required. The signatures of authorized bank workers must, of course, be present on the paperwork. These signatures must be accompanied by the bank authorities’ designations. The two are the final pieces of evidence that the letter or statement is genuine. 

Mistakes That Should Be Avoided In A Proof of Funds Letter:

During the writing of this letter, mistakes are unavoidable. In this part, we’ll look at examples of these blunders, as well as how to avoid them:

 Inadequate funds. The most common blunder is requesting verification when there are insufficient funds in the account to do it in the first place. The verification does not serve its purpose in this scenario, and the asking corporation or entity declares it null and void.  Non-disclosure of any and all data. It’s possible that there are sufficient finances, but that not all of the necessary information about such funding is provided. In this case, the inquiring entity will almost always insist that they be provided in their entirety before any further action can be taken.  There aren’t any applicable verifications. Before these documents may be acknowledged as genuine, they must be confirmed. They don’t always have this suitable verification. They are rendered null and worthless to the degree that they lack verification if and when this happens. Before going, they are frequently returned for the same.  Actions taken at an inopportune time. Everything has to happen in a certain amount of time. This is due to the fact that the necessary bits of information will inevitably change over time. As a result, even if all of the required pieces of information are provided and the document is certified, if these events occur beyond a certain period of time, the document will still be useless.   Unofficial Papers are used. This document must be printed on the issuing bank’s official letterhead to be considered official. If any other paper is used to draft it, it may lose its official status once more. To avoid ambiguities, it is critical that everything is adequately taken care of. 

How To Write a Proof of Funds Letter?

You will almost certainly need to verify your financial capability before making significant purchases such as homes and automobiles. That necessitates the writing of a letter to that effect. The ‘proof of funds letter,’ as it is known, is written by a bank and addressed to the seller of an expensive item. It is usually accompanied by bank statements and other financial verification documents. Knowing how to draft this letter is unquestionably a crucial step toward receiving the benefits it may provide. This section of our discussion will now be devoted to just that:

Step 1: Examine the client’s account

Begin by looking for the account information for the person whose funds you want to verify. Simply check the impacted person’s database to ensure that the outstanding balance is equal to or more than the amount requested. Proceed only if the prerequisite is met.

Step 2: Other Commitments should be double-checked

It’s possible that the client has sufficient funds in his bank account at the time, but he must also satisfy other financial obligations. If that’s the case, your accessible amount may never be enough to cover the commitment you’re looking for. In that case, you might want to skip the verification entirely.

Step 3: Write the letter

Now is the time to get serious about writing the letter. To draft the letter, you must, of course, adopt a formal tone and structure. Ordinarily, this is a very serious letter. Also, utilize the institution’s official letterhead if you’re writing the letter on their behalf. Then:

Step 4: Signing of the letter

You must, as always, sign the letter to give it the formal status it needs in order for it to be considered overall binding. This signature should be accompanied with the official date on which the letter was written and will be referred to in the future. Close it with a title like “Loan Administrator” or “Assistant Vice President,” or anything like.

Step 5: Notarize the Paperwork

Some jurisdictions may need the letter to be notarized in addition to being signed and dated. Check to see if yours does, in fact, require it. Before submitting the document to the seeking authorities, go ahead and do so.


What is the significance of having a proof of funding letter?

A proof of funds letter may be requested by a seller for any bidder, but it’s especially critical if you’re making an all-cash offer on a home. If a mortgage firm has pre-approved you for a loan, the preapproval letter you receive is often enough proof to send with your offer to a seller. As an example, in the last year, I’ve bought two investment properties: one was a triplex that I financed with a 20 percent down payment and the other was a single-family home that I bought out of foreclosure for cash. In the instance of the triplex, I submitted my mortgage pre-approval, and the seller never even asked for a proof of funds letter (although my lender certainly checked my bank account to verify that I had funds to close). In the instance of the cash purchase, however, the real estate broker I dealt with required a proof of funds letter before the contract could be completed.

What “funds” do you have access to in order to close?

A proof of funds letter is typically required to prove cash and/or other readily liquidated assets with low volatility in value. Money market accounts, for example, count. Your borrowing capacity under an open line of credit can also be used as cash available to closure. In most circumstances, providing more than one proof of funds letter is permissible if your closing monies come from multiple accounts. Investments, on the other hand, are rarely used as proof of funds. You may be able to use the balances in your investment accounts as a source of cash to close or demonstrate that you have appropriate reserves when applying for a mortgage. A proof of funds letter, on the other hand, must indicate a cash balance (but it could potentially be a cash balance in a brokerage account).

Is it necessary for real estate investors to obtain a Proof of Funds letter in order to purchase a property?

No, you don’t always need a Proof of Funds letter. It may not be necessary if you are purchasing from a homeowner who is not represented by an agent. When an agent is present and numerous offers are being considered, the agent will request Proof of Funds. When the property is owned by a bank, a real estate company, or is listed on the MLS, an agent will be present. Agents are aware that not all offers are genuine, and they may not take an offer with unconfirmed money seriously in the seller’s best interests.

When is it appropriate to obtain a Proof of Funds?

Before placing an offer on a home or property, you need to receive a Proof of Funds. Turnaround time varies from one to four business days depending on the type of property transaction (personal or investment) and the institution that will be giving you with your letter. Although some agents may provide a 24-48 hour window after an offer is made to acquire a Proof of Funds letter, it is advisable to obtain the Proof of Funds prior to shopping and making an offer.