8 Proof of Funds Letter Templates – Samples

A proof of funds letter is a document that verifies that an individual has enough financial resources to complete a transaction, for example, buying a property or investing in a business. The letter may be issued by a financial institution, such as a bank or a custody agent. 

Evidence of sufficient funds is usually requested when making a large transaction like buying real estate. This guarantees not only that the buyer has the money available to make the purchase but also that he has legal access to the funds. Particularly for the purchase of a home, the seller or mortgage company wants to see if you have sufficient money for the down payment and the closing costs. 

This article provides an extensive guide on how to compose a letter that verifies the availability of sufficient funds in your account. It will also discuss specific considerations when writing this letter and provide a sample you can refer to when writing it. 

Apart from the detailed guide, we have also provided free downloadable templates, which you can customize according to your specific requirements. 

Following are proof of fund letter templates:

What Funds Qualify as POF

Several different types of documents are acceptable as proof of sufficient capital. In some cases, a printed bank statement will suffice. A certified financial statement or a copy of a money market account’s balance may also be acceptable. Sometimes, a letter from your bank or financial institution stating the exact amount of accessible or liquid funds that you have available might be sufficient.

It is important to note that your funds must be liquid to qualify as evidence of capital. This means that mutual funds, life insurance, another person’s bank account, shares, bonds, etc. do not qualify as POF.

Items that Must Be Included in a POF Letter

The letter typically includes information about the amount of funds available, the total balance in your bank accounts (both checking and savings accounts), bank statements, certified financial statements, verification of the date when the funds were present in your account, and the authorized signature of the bank employee. 

There are various types of documents that can serve as proof of sufficient capital for making large transactions.

The following are the most common types:

POF letter from a hard money lender

A “proof of funds” letter issued by a hard money lender states that its client is pre-approved to purchase a property within a certain price range. In many ways, it is similar to the letters issued by conventional lenders. These money lenders, however, can provide POF when the borrower’s credit rating is poor or the house does not qualify for conventional financing. The fact that a POF from a hard money lender is typically issued quickly and can be used when the seller needs to sell the property quickly is another important factor why they may be approached to issue a verification letter for funds.

POF letter for commercial real estate

When an investor wants to purchase real estate property for commercial use, they would also need to show proof of capital to acquire the property. There are three possible documents that can be used as a POF for commercial real estate transactions: 

• Bank Statements or Bank Verification
• Brokerage Account Statements or Verification
• Escrow Account Verification

POF letter from banks

This is the most common type of document to confirm the availability of funds. A bank’s letter confirming funds in someone’s account is not a guarantee of payment and is subject to verification. 

POF letter from a private lender

A proof of funds document issued by a private lender demonstrates that a buyer can access a certain amount of funds from a private lender, such as an individual investor or a private investment firm. It details a statement from the private lender verifying the availability of the funds and confirming that the said funds can be used for the intended purpose of the transaction. The private lender issues it to reassure potential borrowers or partners that the lender can complete a purchase.

Why a Buyer Needs a Proof of Funds Letter?

A real estate POF letter assures the seller that the buyer has enough funds to make an offer on a property. In most situations, sellers or real estate agents would not even consider a purchase offer without proof of sufficient capital, as this document conveys the seriousness of the buyer. The buyer may also use this letter to influence the deal and negotiate a better price. It demonstrates the creditworthiness of a buyer and therefore is a vital document to include with any real estate offer. 

To ease the process of writing a proof of funds letter, you can download a template from this website and edit it according to your requirements. However, if you want a more personalized letter, follow the following steps to write an accurate letter for verification of funds:

Mention the date

Include the date to prove the letter’s validity and demonstrate that the funds were accessible on that day.  Present this date in a format that is easy to understand and interpret, for example, January 1, 2023. 

Example:

Proof of Funds Letter
[Date]

Provide the header

At the top of the letter, provide the bank’s name and contact information. A header allows the buyer or seller to contact you with questions.

Write this information in the format shown below:

[Bank Name]
[Bank Address]
[Bank Phone Number]

Specify the name of the account holder

In the first paragraph, specify the name of the account holder for whom the letter is being issued. Including the account holder’s name is important as it helps establish the identity of the individual that has access to the funds and can use them.

For example:

This letter is to confirm that [Name of Account Holder] has access to the funds in the account [Account Name] held at [Bank Name].

Include the amount of money

Specify the amount of money in the account to establish the financial capacity of the individual or entity seeking to use the funds. Write this amount correctly, as it should reflect the current balance of the account from which the buyer will draw funds. Remember to specify the currency in which the funds are held to maintain the accuracy of the document. Also, remember to include a statement of the date in the letter. 

Present this amount as shown below:

The account holder has access to $[amount of funds] in a [type of account] account held at our bank as of this date.

Mention any limitations

Mention any limitations or conditions that apply to the use of the funds. These limitations could be liens, debt obligations, etc. You may also mention any withdrawal restrictions. For example, you can specify the maximum amount allowed to be withdrawn per day or per month

A limitation may be presented as shown below:

These funds are free from any obligations, such as liens or debts.

Sign the letter

Any official or legal document must be duly signed to verify its authenticity. Provide your signature to confirm that the information in the letter is accurate and true. This establishes the credibility of the letter. By signing the letter, you are officially confirming the contents of the letter to be true and accurate.

Provide this signature in the format shown below:

Yours Sincerely
[Your Name]
[Your Signature]

Provide your designation

Include your designation after your name and signature to confirm your identity as an employee of the financial institution and to confirm that you are authorized to issue such documents. Ensure that your designation is accurate and matches your actual job title or position.

Mention your designation in the format shown below:

[Your Designation]

Note: Consult with the seller if they require a notarized letter. Generally, the proof of funds letter does not need to be notarized as long as it meets other requirements. However, in some cases, the seller may require a notarized letter when the purchased property is of significant value.

Difference Between Proof of Funds and Pre-Approval Letter

A “proof of funds” document confirms the availability of a certain amount of capital that is actually available in someone’s bank account. It also confirms that the individual can easily access these funds without any restrictions. 

On the other hand, a mortgage pre-approval letter is a conditional commitment from a lender to lend a certain amount of money to a borrower if they decide to buy real estate. This document is based on the lender’s review of the borrower’s financial information and credit history, indicating that the borrower is likely to be approved for financing up to a certain amount if they decide to buy a house. 

Although both financial documents are used for real estate purchases, the difference is that the POF document is only issued when the individual actually owns the funds, whereas the preapproval letter is only an assurance from a lender and does not imply that the individual actually owns the funds. The availability of funds is contingent upon the purchase of the property only. 

• A proof of funds letter confirms the availability of a certain amount of money a buyer needs to purchase real estate.
• A seller can request this letter to buy a property or invest in a business.
• Only liquid assets can qualify as evidence of sufficient funds.
• The document by the bank to verify the amount of capital in someone’s account must include the name of the account holder, amount of funds available, type of account, name of the financial institution, and any limitations that may apply to the funds.
• You can use a template from this website to help you save time to compose such a document. Most of the information is already pre-filled, and you can also edit it to include your relevant information.
• A POF document differs from a pre-approval letter, as it confirms the availability of funds in an individual’s bank account, whereas a pre-approval letter is a commitment by a lender to loan money to a borrower for purchasing real estate.