What Is Proof of Funds in Real Estate?

Proof of funds (POF) verifies that a buyer has enough liquid money to complete a purchase—either the full price (cash offer) or the down payment and closing costs for a financed offer. Sellers often require POF with an offer to show the buyer is ready to perform.

✅ What Counts as Proof of Funds

  • Bank or credit union statement: checking/savings or money market showing available balance.
  • Official bank letter: on institution letterhead confirming the available balance and account holder name.
  • Brokerage statement (liquid funds): cash or cash-equivalents; note that volatile assets may be discounted.
  • Seasoned funds: large recent deposits may need sourcing; avoid transfers that raise questions close to closing.

POF typically accompanies the offer and helps protect everyone once escrow opens.

POF vs. Pre-Approval: POF shows cash on hand. A mortgage pre-approval shows a lender’s preliminary approval to loan. Financed buyers are often asked for both: POF for down payment/closing costs and pre-approval for the loan.

💡 Why Proof of Funds Matters

  • Stronger offers: Sellers can trust a cash or well-funded buyer and move faster toward closing.
  • Earnest money confidence: Buyers show they can cover the earnest money, down payment, and closing costs.
  • Fewer delays: Verified funds reduce last-minute issues on the settlement statement.

📍 FSBO Tips for Proof of Funds

  • Request POF with the offer: note it in your purchase agreement or counter.
  • Redact safely: show name, institution, date (within 30 days), and available balance; mask full account numbers.
  • Cash offers: require POF for the entire purchase price plus fees; for financed buyers, POF should cover down payment and costs.
  • Match timelines: coordinate POF review with financing contingency deadlines.

🧩 Quick Myths About Proof of Funds

  • “A screenshot is always fine.” ❌ Many sellers prefer official statements or bank letters.
  • “Crypto counts the same as cash.” ❌ Volatile or restricted assets may not be accepted without liquidation.
  • “POF replaces the loan letter.” ❌ Financed buyers usually need both POF and a lender pre-approval.