Proof of Funds (POF)

What is Proof of Funds (POF)?

Proof of Funds (POF) is a letter or documentation that certifies that an individual, institution, or corporation has sufficient funds (money) to complete a transaction. A POF is typically issued by a commercial bank or custody agent to provide confidence or assurance to another party – typically a seller – that the individual or entity in question has sufficient funds to complete an agreed-upon purchase.

Proof of Funds (POF) for a Home Buyer

The seller of a home or piece of real estate will often request a Proof of Funds from the buyer in order to hold it for them while they wait for the transaction to close. The POF is required because without it there is no certainty that the buyer will be able to complete the transaction.  This poses a risk to the seller, as taking the house off the market and then having the deal fall through would be a major setback.

Proof of Funds Letter

A proof of funds letter may be required from a bank. The letter is used to verify that the party who claims to have the money actually has it.

Items that must be included in a Proof of Funds Letter include:

• Bank’s name and address
• Official bank statement
• Copy of money market statement and balance
• Balance of funds in checking and savings accounts
• Bank certified financial statement
• Copy of an online banking statement
• Signature of an authorized bank employee

Below is an example of what a personal banker might write in a Proof of Funds letter.

POF Example

Proof of Funds (POF) for Immigration

A Proof of Funds letter can be required for immigration into a country.  For example, the Government of Canada requires that Canadian Visa applicants show they have enough money to support themselves and their families if they wish to enter under a specific immigration program.

The money cannot be borrowed from another person and the money must be able to be drawn for living expenses.

Requirements for an official POF letter include:

• Printed on the financial institution’s official letterhead
• Contact information of the bank
• The individual’s name
• List of all debts, obligations, credit card balances, and loans
• Account numbers
• Date each account was opened
• Current balance of each account
• Average balance for the past six months

Additional Resources

Thank you for reading this guide to POF requirements and letters from banks. To continue learning and advancing your career, these additional CFI resources will be helpful:

• Fund of Funds
• Private Equity Funds
• Simple Interest
• Financial Analyst Certification
• See all commercial lending resources