A proof of funds letter looks like a short, formal one-page document printed on a bank’s official letterhead. It states the account holder’s name, the current balance of liquid funds, the date the balance was verified, confirmation that the money is available for immediate use, the institution’s contact information, and the signature of the bank officer who authorized it. The format is deliberately plain so a seller or their attorney can read it at a glance and call the bank to confirm it is real.
The Elements That Appear on the Page
Formatting varies by institution, but the same data points show up on every legitimate letter:
- The account holder’s full legal name, matching government-issued identification.
- The account balance, stated in a specific currency (typically U.S. dollars).
- The date the institution verified the balance. Most sellers expect this date to fall within 30 to 90 days of the transaction.
- An availability statement confirming the funds are accessible for immediate withdrawal or transfer and are not pledged against other obligations.
- The bank’s name, branch address, and direct contact information so the recipient can independently verify the letter.
- The printed name, title, and signature of the bank officer who issued the letter, such as a branch manager or relationship officer.
You can usually choose whether to disclose your full balance or ask the bank to confirm only that you hold at least a specific minimum amount. Showing just enough to cover the purchase price is a common approach that satisfies the seller without revealing your total wealth.
How a Legitimate Letter Looks Physically
The appearance of the document signals whether it is genuine. A real proof of funds letter is printed on the institution’s official letterhead, which includes its registered logo, branch address, and phone number at the top of the page. Those details exist so the recipient can call the bank directly and confirm the letter came from the branch it claims to.
At the bottom, a signature block identifies the specific bank officer who authorized the verification: their printed name, their title, and often a direct phone number alongside the handwritten signature. Many institutions add physical security features as well, such as an embossed seal or watermark, to deter forgery.
A letter that arrives on plain paper, has no identifiable officer, or lacks contact information for the branch should be treated as a red flag. So should a document that looks like it was assembled in a word processor rather than generated by the bank.
Electronic Verifications
Paper letters are increasingly supplemented by electronic verification. Services such as Plaid and similar third-party APIs connect to a bank’s system and pull account balances in real time, replacing the physical document. Some sellers and title companies accept these digital verifications, especially in fast-moving markets. Many sellers still prefer a signed letter on official letterhead, so confirm what your specific transaction requires before relying on an electronic verification alone.
What Balance the Letter Can Show
The number on the page must reflect liquid capital, meaning money you can access quickly without penalties, waiting periods, or third-party approval. Accounts that generally qualify include:
- Checking and savings accounts.
- Money market accounts.
- Certificates of deposit, which are technically liquid because you can cash them out early, though an early withdrawal penalty may apply.
- Stocks held in taxable brokerage accounts. Since the SEC shortened the standard securities settlement cycle to one business day (T+1) in May 2024, publicly traded shares can be sold and settled faster than before.1SEC.gov. Shortening the Securities Transaction Settlement Cycle
- U.S. Treasury bills, which can be sold before maturity.
Retirement accounts such as 401(k)s and IRAs generally do not count unless the money has already been withdrawn and deposited into an accessible account. Early withdrawals from these accounts often trigger income taxes and a 10 percent penalty if you are under 59½. Real estate, fine art, jewelry, and business equipment are illiquid and should not appear on a valid letter.
Only a regulated financial institution that actually holds your money can issue the letter. That typically means a commercial bank, a credit union, or a brokerage firm holding assets in liquid accounts. A letter from a financial advisor or accountant who merely believes you have sufficient assets, but does not hold them, will usually be rejected because they cannot independently verify the balance.
How It Differs From a Mortgage Pre-Approval Letter
Buyers sometimes confuse the two documents, and the confusion can delay a transaction. A proof of funds letter confirms you already have cash available. A mortgage pre-approval letter states that a lender is willing to provide you a loan up to a certain amount based on a preliminary review of your finances.
If you are making an all-cash offer, the seller wants a proof of funds letter, because no loan is involved. If you are financing the purchase, the seller usually wants a pre-approval letter plus a proof of funds letter covering the down payment and closing costs. They look different, say different things, and are issued by different parties.
Acceptable Alternatives to a Bank Letter
A signed letter on official letterhead is the gold standard, but some sellers and lenders accept other documentation:
- Recent official bank statements showing the account balance, at least the last four digits of the account number, and the statement period. Fannie Mae’s guidelines for mortgage verification accept bank statements as long as they clearly identify the financial institution, the borrower as the account holder, and the ending balance.2Fannie Mae. Verification of Deposits and Assets
- Certified financial statements prepared by a CPA, which may be accepted for commercial transactions.
- Official investment account statements from a brokerage showing liquid holdings.
Screenshots of online banking portals are generally not accepted. They lack institutional branding, are easy to alter, and cannot be independently verified. Documents should be generated directly by the financial institution.
If you are providing statements, redact sensitive information consistently. Show only the last four digits of the account number and use clear redaction marks so the document looks intentionally edited rather than damaged. Confirm that the redaction method permanently removes the underlying data, because a black box drawn over text in a PDF editor often leaves the original numbers accessible through copy-and-paste. Do not over-redact; removing the institution’s name or the transaction history can cause the document to be rejected.
Reasons a Letter Gets Rejected
Even a legitimate letter can be turned down for problems that are visible on its face:
- An outdated verification date. If the balance was confirmed too long before the offer, the seller has no assurance the money is still there.
- Non-liquid assets folded into the balance. Retirement accounts, home equity, or other restricted holdings should not be part of the figure.
- An issuer that does not hold the funds. A letter from an advisor, accountant, or attorney who cannot verify the balance from their own records is insufficient.
- Missing information, such as no verification date, no availability statement, or no officer signature with contact details.
- A balance below the purchase price. A letter showing $180,000 will not support a $200,000 cash offer.
If a letter is rejected, you will need to request a corrected version from the institution, which adds days to the timeline and can jeopardize the deal. Reviewing the document for each of the elements above before you send it is the simplest way to avoid that.