A proof of funds (POF) letter is a document sellers often require to confirm that a buyer has the cash needed to close a deal. If you’re making a cash offer, it’s almost always required. If you’re financing a home, sellers may still ask for proof that you can cover your down payment and closing costs.
In competitive markets or bidding wars, a proof of funds letter can make your offer stand out by showing you’re financially prepared and unlikely to run into last-minute issues. Below, we’ll explain what a proof of funds letter is, who needs one, what counts as acceptable funds, and how it compares to a mortgage pre-approval — so you can submit a stronger, more credible offer.
What is a proof of funds letter?
A proof of funds letter is an official document from a bank or financial institution confirming that you have enough liquid assets available to complete a real estate purchase.
“Liquid” means the money is readily accessible — such as cash in a checking, savings, or money market account. A proof of funds letter does not guarantee financing or replace a mortgage pre-approval. Instead, it reassures the seller that the portion of the purchase you’re paying out of pocket is already available.
Most proof of funds letters are valid for 30–90 days so sellers can be confident the information is current.
Who needs a proof of funds letter?
You’ll typically need a proof of funds letter if the seller requests it — which is common in competitive markets.
You’re most likely to need one if:
- You’re making an all-cash offer (almost always required)
- You’re financing a home and need to prove funds for your down payment and closing costs
- You’re buying an investment property, where sellers expect stronger financial documentation
Some buyers may not need a POF letter if they’re using loan programs that cover most upfront costs (such as VA or USDA loans), but requirements vary by seller.
Pre-approval letter vs. proof of funds letter
A mortgage pre-approval and a proof of funds letter serve different but complementary purposes.
- A pre-approval letter shows that a lender is willing to finance part of your purchase, pending underwriting.
- A proof of funds letter shows you already have the cash needed for the remaining portion of the deal.
Sellers often prefer to see both, especially when deciding between similar offers. Together, these documents signal that your financing is solid and your transaction is less likely to fall through.
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What counts as proof of funds?
The proof of funds must be a liquid asset.
Typically accepted:
- Checking or savings accounts
- Money market accounts
- Cash equivalents
- Some lines of credit (if immediately accessible and documented)
Usually not accepted:
- Stocks, bonds, or mutual funds (unless liquidated)
- Retirement accounts (401(k), IRA)
- Cryptocurrency
- Equity in another property (unless converted to cash)
When in doubt, ask your agent or lender what the seller is likely to accept.
Proof of funds letter template
Proof of funds can be in the form of a letter from your bank stating that you are in good standing with the institution and that the amount of money requested is available.
Your bank should have a template for proof of funds already available. It should include:
- Your name
- The available balance (or minimum confirmed amount)
- Date of verification
- Bank contact information and authorized signature
You can also use recent bank statements (typically the last 1–3 months), but it’s smart to redact full account numbers and other sensitive details.
Here is a template of what the proof of funds letter should say:
Date
To whom it may concern,
We confirm that [Name of Company/Individual] has available the sum of [sum] as of this date. Should you require verification of the above mentioned funds, please contact us at your convenience.
Yours truly,
[Authorized Officer]
Date: _____
Contact Info: __________
An alternative to the proof of funds letter is a bank statement (typically containing the last three to six months of transactions) that shows you have the money and it is available for you to use.
The proof of funds must be a liquid asset. This means it can't be in the form of stocks, bonds, or other forms of real estate—unless the real estate is a rental income. The funds can be in the form of a line of credit, however. All the seller needs to see is that you are able to pull the money out at any time and use it.
When should I get my proof of funds letter?
You’ll want to request your proof of funds letter shortly before you make an offer on a house. You want the letter to be as up to date as possible. You also don't know the exact amount you are going to need to prove you have available until you make your offer.
If you are making several offers, talk to your bank. They may require a small fee for each letter. All in all, if you have your proof of funds letter and your pre-approval letter, you should be set to make a strong offer on what is hopefully your future home.
FAQ
How recent does a proof of funds letter need to be?
Most sellers and listing agents want a proof of funds letter that’s recent, typically issued within the last 30 to 90 days. The closer the letter date is to when you submit your offer, the better. An outdated letter may raise concerns about whether the funds are still available.
If you’re actively house hunting or submitting multiple offers, ask your bank how quickly they can reissue updated letters as needed.
Can I redact information on my proof of funds letter or bank statement?
Yes — and you should. It’s common (and recommended) to redact sensitive details, such as:
- Full account numbers
- Transaction history not relevant to the balance
- Online banking login information
Sellers only need to see that the required funds are available. They don’t need access to your full financial history.
Does a proof of funds letter guarantee my offer will be accepted?
No. A proof of funds letter doesn’t guarantee acceptance, but it strengthens your offer by showing the seller that you’re financially prepared and less likely to run into funding issues.
Sellers still consider other factors, such as:
- Purchase price
- Contingencies
- Closing timeline
- Competing offers
In competitive markets, having both a proof of funds letter and a mortgage pre-approval can make your offer stand out.
Can gift funds be used as proof of funds?
Sometimes, but it depends on the seller and your lender. Gift funds may be acceptable if the money is already deposited into your account and clearly documented.
If you’re financing the purchase, your lender may also require:
- A signed gift letter
- Proof of the donor’s ability to give the funds
- A paper trail showing the transfer
Always confirm with your lender and agent before relying on gift funds as proof.
Is a bank statement the same as a proof of funds letter?
Not exactly. A proof of funds letter is usually preferred because it’s:
- Official
- Written on bank letterhead
- Easy for sellers to review
That said, many sellers will accept recent bank statements (typically 1–3 months) as proof of funds, especially if the balances are clear and sensitive details are redacted.
Do I need a proof of funds letter for every offer I make?
Not always, but it’s smart to have one ready. Some sellers only ask for a mortgage pre-approval, while others require both documents upfront, especially in competitive markets.
If you’re submitting multiple offers at different price points, you may need updated proof of funds letters showing different amounts.