Real Estate Investors: How to Write a Proof of Funds Letter

If you are buying short sales from banks, one of the requirements of most banks is a proof of funds (“POF”) letter. If you use a traditional lender, it is generally easy to obtain a standard pre-approval letter. But what if you are going to use private lenders or hard money lenders to get a proof of funds letter?

I have put together several examples for you to use in different circumstances, depending on whether you are using private lenders for hard money lenders.

A typical POF letter from a private lender might look like this:

To whom It May Concern:

My name is Sammy Lender (“Lender”) and I am a private investor. Mr. Joe Real Estate Investor (“Borrower”) has private funds available for the purchase of a single family home at 123 Main Street, Anywhere, USA. The Borrower has an approved availability of funds in the amount of $ ____________________.

The borrower (s) have immediate access to these funds subject to normal terms and conditions prior to closing. These funds are immediately available for wire transfers as per the Borrower’s instructions or disbursement instructions.

In case you want to verify these funds, please direct your calls to the contact information provided below and we will do our best to assist you for the benefit of our Borrower.

Sincerely

Sammy Lender

A POF letter from a hard money lender might read something like this

To whom It May Concern:

This letter is to confirm a positive employment relationship between xxxxxx Funding, LLC (“Lender”) and Joe Real Estate Investor (“Borrower”). Within the guidelines of the lenders, the lender will provide the borrower with the amount of funds up to $ xxx,000 to purchase real estate located at 123 Main Street, Anywhere, USA The borrower has been pre-qualified for a quick cash closing .

Cordially,

Both are examples for you to use or modify according to your needs. Most banks should accept them to meet the POF letter requirement.