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Realtor asking for proof of funds

Family standing in front of their new homeWhen you make an offer on a house, it's customary to present the home seller with a pre-approval letter from a lender. The pre-approval letter should state that you are likely to be approved for a mortgage. Lately, home sellers are also requesting a proof of funds (pof) letter to back up the pre-approval letter and loan estimate.

The proof of funds letter is obtained from the buyer's bank, investment account(s), retirement accounts (i.e 401K, IRA, etc), which is proof that the buyer has sufficient funds to cover the purchase.

A Proof of Funds letter should include the following:

  • An official bank statement, either printed at a branch or as an online statement
  • Balance of funds in checking or savings account
  • Balance of total funds in the account
  • Copy of an online banking statement
  • Includes the date that the funds were in the account
  • The signature of an authorized bank employee or notary may be requested
  • The bank’s name and address

Is a proof of funds letter necessary?

The reasoning behind a proof of funds letter is to reassure the home seller and listing agent that the prospective home buyer has enough money to purchase the home. However, acquiring mortgage financing is more complex than providing bank statements to the seller. As an example, what happens if the home buyer has sufficient cash to pay for the down payment and closing costs but doesn't have a job? What if the buyer was involved in a car accident and is being sued? Numerous situations can stop a mortgage application. Meeting the cash requirement is just one component of loan approval. Is a proof of funds letter(s) necessary?

Rotating question markFrequently Asked Questions About Proof of Funds

Q. Do you need proof of funds to make an offer on a house?
A. There is no legal requirement to present the home seller with a proof of funds letter, however, the real estate agent usually encourages the seller to request a POF along with a pre-approval letter

Q. How to get a proof of funds letter
A. Simply request a proof of funds letter/statement from your bank or credit union