Purchasing a home is one of the most significant financial decisions we will make in our lives. To make sure the process is successful, you may be asked to provide a proof of funds letter or document with your offer.

Providing proof of funds is a normal part of purchasing property. This is handy to have on hand when making an offer on a home, in case the seller asks for it.

buying a home

Proof of funds shows sellers that a buyer has the funds to make a purchase

When providing a seller with a proof of funds letter and documentation, you are showing them that the funds you have are accessible and you have the legal right to use them. Proof of funds is especially important for the seller and your lender to view so they know you can afford the costs of purchasing a home.

Proof of funds is different from a pre-approval

If you have your pre-approval letter, why do you need proof of funds? Haven’t you already secured the go-ahead?

Proof of funds is different from a pre-approval in that when you are pre-approved, the lender is telling you how much they are willing to lend to you. To close the deal with the seller, they may ask you to provide proof that you have the money necessary to move forward with the purchase of a property. Your real estate agent can help facilitate this conversation with them.

Your bank will help provide you the documents you need

When requesting proof of funds, your bank will often have their own template for the proof of funds letter. Together with your real estate agent, they will also help you understand what documents qualify for POFs, including, but not limited to:

  • Bank statements
  • Security statements
  • Custody statements

Regardless of what documentation is used, it all must include the following:

  • Account holder’s name
  • Current balance of all available funds
  • Notarized signature of a bank official

If you have a pre-approval from one of our loan officers, chances are your finances are squared away for the home purchase. The proof of funds letter is just extra security that can help you win the offer, so it doesn’t hurt to have one in hand.

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The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.