Proof of Funds (POF)

Introduction to
Proof of Funds (POF)

Proof of Funds (POF) is a document or set of documents that verify an individual or entity has sufficient funds available for a specific transaction. Typically, POF includes bank statements, security statements, or custody statements, demonstrating that the funds required for a transaction are both accessible and legitimate.

Key Points

  • Definition: Proof of Funds is used to confirm the availability of funds for a transaction.
  • Common Documents: Bank statements, security statements, and custody statements are typical forms of POF.
  • Typical Use: Often required for large transactions like purchasing a house.
  • Required Information: Documents must include the bank’s name and address, total balance amounts, and signatures from authorized bank personnel.
  • Mortgage Applications: Both Proof of Funds and Proof of Deposit are usually required when applying for a mortgage.

Why Proof of Funds is Important

When making substantial purchases, such as buying a home, sellers or lenders often require Proof of Funds. This document ensures that the buyer has the necessary funds readily available and legally accessible, often verified through a bank. For home purchases, POF confirms that the buyer can cover the down payment and closing costs.

What Information is Needed in a Proof of Funds Document?

A Proof of Funds document should include:

  • Bank’s Name and Address: The institution holding the funds.
  • Official Bank Statement: A detailed statement showing available funds.
  • Account Balances: Balances in checking and savings accounts.
  • Total Balance: The total amount of funds available.
  • Signature: Signed by authorized bank personnel.

If funds are distributed across multiple accounts, proof is needed for all of them. It might be simpler to consolidate funds into a single account for ease of documentation.


Securing Your Proof of Funds

Once obtained, keep your Proof of Funds document secure. Be cautious when sharing it, as it contains sensitive financial information. Ensure you provide it only to trusted parties.

Proof of Funds (POF) vs. Proof of Deposit (POD)

  • Proof of Deposit (POD): Verifies that funds have been deposited into an account and shows where the funds originated.
  • Proof of Deposit (POD): Verifies that funds have been deposited into an account and shows where the funds originated.
When applying for a mortgage, you may need both POF and POD. POF shows you have the funds, while POD demonstrates where those funds came from.