Proof of Funds (POF)

Introduction to Proof of Funds (POF)

Proof of funds (POF) refers to a document or documents that demonstrate a person or entity has the ability and funds available for a specific transaction. Proof of funds usually comes in the form of a bank, security, or custody statement. The purpose of the proof of funds document is to ensure that the funds needed to execute the transaction fully are accessible and legitimate.

Key Points

✓ Proof of Funds refers to a document that demonstrates the ability of an individual or entity to pay for a specific transaction.
✓ A bank statement, security statement, or custody statement usually qualify as proof of funds.
✓ Proof of Funds is typically required for a large transaction, such as the purchase of a house.
✓ Basic information, such as the bank name and address, bank statement, total balance amounts, a bank personnel’s signature, is required on the proof of funds document.
✓ Proof of Funds and proof of deposit are often both needed when applying for a mortgage.

Understanding Proof of Funds (POF)

When an individual or entity is making a large purchase, such as buying a home, the seller usually requires proof of funds. This ensures not only that the buyer has the money available to make the purchase, but also has legal access to the funds, as the proof of funds comes from a verified authority, such as a bank. Particularly for the purchase of a home, the seller and/or mortgage company wants to see if you have enough money for the down payment and the closing costs.

It’s important to note that in the majority of instances, the proof of funds must refer to the liquid capital, primarily cash. Certain investments, such as retirement accounts, mutual fund accounts, and life insurance, do not qualify as proof of funds.

Key Elements in a Proof of Funds Document
Safeguarding Sensitive Financial Information

Requirements of a Proof of Funds (POF) Document

When providing a Proof of Funds Document, there is certain information that is required to be included. The following are some of the most common pieces of information that will need to be disclosed on a proof of funds document:

Bank’s name and address
Official bank statement
Balance of funds in the checking and savings accounts
Balance of total funds
Signature of authorised bank personnel

If the funds you plan to use for the purchase are spread across multiple accounts, you will need this information for all of them. It may be easier to move all of your funds into one account, therefore having to provide this information only once, and making the total amount of funds available easier to follow. It is possible to get a proof of funds document within a day or two from most banks.

Once you have your Proof of Funds Document in hand you want to ensure that it is secure at all times. Some con-artists planning a financial scam may seek / request a proof of funds to make sure that they are concentrating their efforts on someone with significant financial worth. In addition, it contains important financial information that should be safeguarded. Therefore, it is important to make sure that you only give proof of funds to trusted individuals whom you have thoroughly investigated.