In a nutshell:
When you make an offer, sellers will require you to submit proof of funds. If you're buying a house with a mortgage, it shows them that you have the cash available for your down payment and closing costs. If you're paying all cash, your proof of funds shows you actually have the money.
So, what qualifies as proof of funds?
- Original or online bank statements (not just a screenshot of your balance)
- Copy of a money market account balance
- Certified financial statements, such as an income or cash flow statement that's been signed off on by an accountant
- An open equity line of credit
What doesn't qualify as proof of funds?
- Borrowed money from a relative that isn't under your name (ex: if it's still sitting in their bank account)
- Proof of income (W-2 forms, paystubs)
In order to be valid, proof of funds should be recent, clearly show the balance, and be in the name of the person making an offer.
How much should my proof of funds be?
Your proof of funds should show that you have the cash to provide the down payment and closing costs based on your offer price.
For example, if you are making an offer on a $500,000 house and plan to put 20% down, your proof of funds should be enough to safely cover $109,000 at close -- $100,000 for your down payment, and $9,000 for an assumed average closing cost for this home price.
If you plan to make an all-cash offer, your proof of funds must show that you have your entire offer price & closing costs.
Why do sellers ask for proof of funds?
It shows sellers that you're a serious buyer who has the liquid funds (AKA cash) to deliver on the offer you're making. It gives them evidence that your offer is legitimate.
How can I keep my proof of funds safe and secure?
Your financial documents live securely in the Financial Docs section of your Open Listings account. If you're uploading docs for a co-buyer, please make sure that co-buyer is added to your account. You can attach multiple statements as a .zip file.
When you upload proof of funds to your Open Listings account, we take your privacy very seriously. We use Amazon-grade security to store your documents and encourage you to black out any sensitive information, such as account numbers or social security numbers. We can also redact information for you.
Here are some examples of proof of funds that we accept:
Please reach out if you need any additional help or have any more questions on uploading proof of funds.