Why Sellers Should Request a Proof of Funds Letter Up Front
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Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
If you’re selling your home, one of your biggest concerns is whether a buyer can actually follow through on their offer. Will they really have the money to close? Or are you about to waste valuable time with someone who can’t deliver?
That’s where a proof of funds letter comes in. While some sellers wonder if it’s “weird” or too aggressive to ask for one early and up front, in reality, it’s a standard step that helps you separate serious buyers from those who may not be financially ready — or an overly optimistic buyer who may be all talk and no trousers.
In this post, we explain the proof of funds letter from a seller’s perspective, and how it can give you peace of mind before you commit to a deal.
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What is a proof of funds letter?
A proof of funds letter is a document from a bank or financial institution verifying that a homebuyer has sufficient cash available to cover the purchase price if paying in cash, or at least the down payment and closing costs if financing.
Also known as a POF, this letter can help assure you and your agent that the buyer has the financial capability to complete the sale, especially if it’s a cash offer or when a strong cash position can give a buyer an advantage.
Why proof of funds matters to home sellers
When you accept an offer, you’re taking your home off the market and investing time and energy in the closing process. A proof of funds letter helps protect that investment — and your time.
It verifies that the buyer truly has the ability to close, cutting down the risk of last-minute surprises and a pending home sale that falls through. It also shows that the buyer is serious and prepared, which can help you prioritize their offer over others.
For cash deals, this step is even more critical. Without a proof of funds letter, you could spend weeks waiting on a buyer who never actually had the means to purchase your home.
When should sellers ask for a proof of funds letter?
The safest time to request proof of funds is before you formally accept an offer — meaning you have not yet signed the purchase agreement. That way, you’re not committing to a deal until you know the buyer has what it takes to close.
In competitive markets, some sellers — with guidance from their agents — may ask for proof of funds even earlier, such as before showings or when reviewing multiple offers at once. Far from being “weird,” this up-front step saves time and weeds out buyers who aren’t ready.
What should you look for in a proof of funds letter?
Not every letter gives you the clarity you need. When one is presented, check that it’s tied to the actual buyer making the offer and that it comes from a credible financial institution.
The document should show that the buyer has access to enough funds for the full purchase price if it’s a cash offer, or for a significant down payment if they’re financing. It should also be recent — ideally within the last 30 to 60 days.
If a letter seems vague, outdated, or incomplete, talk it through with your agent. An experienced agent will know whether to push back for more detail or consider it a red flag.
Not just a bank statement: While some transactions may use a bank statement as proof, a bank-certified POF letter is generally considered more reliable because it’s issued directly by the institution.
Proof of funds vs. mortgage preapproval
It’s easy to confuse proof of funds with a mortgage preapproval letter, but each plays a different role in your decision-making.
A preapproval indicates that a lender believes the buyer qualifies for a loan up to a certain amount. It’s a good sign, but it doesn’t guarantee your buyer has cash available right now.
A proof of funds letter, on the other hand, shows that money is already in place. If you’ve received a cash offer for your home, the POF is even more important to have up front and early.
For financed purchases, you may see both documents: a preapproval for the mortgage and proof of funds for the down payment. Together, they show you that the buyer is financially ready on all fronts.
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Calculate typical earnest money amounts
Another way buyers demonstrate financial readiness is through earnest money — a good-faith deposit held in escrow until closing. The exact amount can vary, but it usually falls between 1% and 3% of the purchase price. In especially competitive markets, buyers may go higher to stand out.
Use our Earnest Money Calculator below to see what these amounts might look like for your home.
Common questions from sellers
Is asking for proof of funds up front awkward?
Not at all. It’s a common request, especially when cash is on the table. Serious buyers expect it and usually provide it quickly.
What if a buyer pushes back or refuses?
That should raise concern. A qualified buyer won’t hesitate to back up their offer. If someone resists, lean on your agent’s guidance before moving forward.
Is a proof of funds letter required for every homebuyer?
Not necessarily. Buyers using traditional financing may only need to show they have enough in their account to cover the down payment and closing costs, often with a simple bank statement. Another exception might be a buyer using a VA loan, which often doesn’t require a down payment at all. For all-cash offers, however, a proof of funds letter is expected.
Can I ask the buyer to provide updated proof of funds during the transaction?
Yes. If the process drags on, or if the initial documentation is several months old, it’s reasonable to ask for updated proof. A fresh letter gives you assurance that the funds are still available and ready to be used at closing.
How long is a proof of funds letter valid?
There’s no hard rule, but most sellers and agents prefer documentation that’s no more than 30 to 60 days old. The fresher the letter, the more confidence you can have that the money is truly available.
Key takeaways for sellers
A proof of funds letter isn’t just another piece of paperwork — it’s one of the best tools you have to make sure you’re dealing with serious buyers. It confirms the money is there, helps prevent wasted time, and gives you confidence when choosing between offers.
There’s no need to feel uncomfortable about asking for it. Most buyers expect the request, and a good agent can handle it smoothly on your behalf.
If you’d like expert guidance on how to request and review proof of funds — along with help evaluating offers, negotiating terms, and steering your sale to the finish line — HomeLight’s free Agent Match platform can connect you with a trusted local agent who knows your market inside and out.
Need a fast cash offer? For sellers who want speed above all else, HomeLight’s Simple Sale platform connects you with vetted cash buyers who already have proof of funds in hand
Header Image Source: (Jan Walter Luigi/ Unsplash)
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