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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 bankCommercial BankA commercial bank is a financial institution that grants loans, accepts deposits, and offers basic financial products such as savings accounts. 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 bankerPersonal Banker Job DescriptionPersonal bankers offer help in managing and overseeing the financial needs of a client’s personal bank account. Personal Banker Job Description details include Aid customers in opening, managing and optimizing their bank accounts and other products, pursue leads and potential customers 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 FundsFund of Funds (FOF)A Fund of Funds (FOF) is an investment vehicle where a fund invests in a portfolio composed of shares of other funds rather.
- Private Equity FundsPrivate Equity FundsPrivate equity funds are pools of capital to be invested in companies that represent an opportunity for a high rate of return. They come with a fixed
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- Financial Analyst CertificationBecome a Certified Financial Modeling & Valuation Analyst (FMVA)®CFI’s Financial Modeling and Valuation Analyst (FMVA)® certification will help you gain the confidence you need in your finance career. Enroll today!