What is a proof of funds letter?

In this article:

For most of us, buying a house is the largest purchase we'll ever make. With that in mind, it's no surprise that the process requires quite a bit of paperwork, including the verification of your finances. A proof of funds letter (POF letter) is a letter from the bank that shows that you have enough money to cover the down payment and closing costs, giving the seller certainty that you can complete the sale. It’s different than preapproval, which shows proof of your financing.

When and why you need a bank letter

In real estate, a proof of funds document signals that you have serious interest in buying the property, and you'll typically need to get one as you start house hunting. The seller’s agent may be required to present it when you put in an offer on a home, making it easier for them to determine if you are a serious buyer or not. The agent who's helping you find a house may also ask to see a proof of funds letter before they agree to submit offers on your behalf.

In some cases, you'll be asked to provide a recent bank statement in place of or in addition to your proof of funds letter. Before you give any financial statements to a third party, make sure you black out any sensitive information like your account number.

What counts as proof of funds?

Any money you have stashed away for your home purchase in a checking or savings account can be used for your proof of funds letter. You can also use other assets as proof of funds so long as they are liquid assets that can be easily withdrawn. That means an open line of credit or money market account will count, while mutual funds, stocks, and bonds won't since they aren't liquid and there's a process involved in cashing them out. 

Proof of funds letter vs. pre-approval

POF letters are often required regardless of how you're financing your home purchase. That means you need one whether you're a first-time home buyer getting a mortgage loan for your starter home, a seasoned real estate investor buying their umpteenth investment property, or even a cash buyer. The proof of funds shows that you can cover the down payment and close on the deal. 

To prove that you have enough financial coverage for the total purchase price of the home, you'll need to show a pre-approval letter. Sometimes called a pre-qualification, this will show how much money a mortgage lender is willing to give you for your home purchase. Getting a mortgage pre-approval letter is slightly more involved since you'll need to find a lender and provide some information about your finances, like your debt and credit score.

How to get a proof of funds letter

You'll usually get a proof of funds letter from the institution where your money is being held —  most often that's a bank. As we mentioned earlier, it's best to start the process of getting your letter before you start house hunting. That way, you'll be ready to make an offer as soon as you find your dream home.

Consider combining your funds into one account if your money is spread out across multiple ones. This step can help simplify your proof of funds process, and potentially your mortgage application later on.

Once you've consolidated your funds, contact the bank or financial institution that holds your money to issue a proof of funds letter that you can use when making offers. Most places, even online banks, have their own template or form for this because funds documents are commonly requested. If they don't, then you can find a sample letter online for them to copy. 

Just make sure that the funds document is written on bank letterhead, signed by a bank official, and states how much money you have available in your accounts. If possible, ask the bank to list the exact amount you'll need at closing, this way the seller won't know you can afford more than what you're offering them. If you have more questions about what's acceptable as proof of funds, you can always reach out to your real estate agent.

You may find websites that offer instant proof of funds letters; these are actually what’s known as hardmoney lenders, which issue a loan for potential homebuyers who don’t have the funds along with the letter to show proof. 

POF letter for homeowners

If you're already a homeowner, your future house hunting budget may be locked away in your current home equity. Because these funds are difficult to access, they may not count as proof of funds. If you're worried about selling your home so you can access these funds, consider working with Orchard.

We'll help you buy and sell at the same time and even make an all-cash offer towards your new home.

Guaranteed your home sale— and so much more

On top of Orchard’s Home Sale Guarantee, we list, prep, and show your old home after you’re all moved out.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Sell for more with value-boosting improvements

When you list with Orchard, we’ll get your home show-ready and make repairs to increase your home’s value at no upfront cost.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Buy a new home knowing you’ve sold your current one

Orchard guarantees your home will sell, so you can buy your next one worry-free.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Guaranteed your home sale— and so much more

On top of Orchard’s Home Sale Guarantee, we list, prep, and show your old home after you’re all moved out.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

How much can I make selling my home?

Use our home sale calculator to estimate your net proceeds.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Don’t navigate the market alone

Our Home Advisors are experienced local agents who know how to sell for top dollar and help win your dream home.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Let’s match you with a real estate agent

All Orchard Home Advisors are experienced agents who know your local market inside and out. Request a consult today.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Close faster with a cash offer

Did you know cash offers are 4x more likely to be chosen by a seller? Let us help you make one on your next home.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Know what your home is really worth

Get the most accurate free home valuation — in minutes

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Curious what your monthly mortgage payment would be?

Orchard Home Loans shops the market to find your best rates.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Stand out to sellers with a cash offer

A cash offer is 4x more likely to be chosen by a seller. Get qualified today.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Don’t miss out on your dream home

Make a cash offer now, and Orchard will sell your old home after you move.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

Your dream home is waiting for you

Tell us your must-haves to see personalized home recommendations that meet your criteria.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Closing Fees
$0
$0
$0
$0
Other Costs to Consider
$0
Orchard can help you avoid overpaying additional selling and moving costs
$0
$0
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Estimated Net Proceeds
$0
Home Sale Price
$0
Total Cost to Sell
$0
Get my free valuation
Orchard is 30% more accurate than leading estimates.

The stress-free way to buy and sell

With Orchard, secure your dream home before you list. Avoid home showings, rentals, and double moves.

Learn More