If you can’t provide proof of funds for a real estate purchase, don’t despair! This common hurdle has solutions. Strategies like co-buying, using gifted funds, tapping retirement accounts, or leveraging a mortgage pre-approval can help. Even short-term loans or liquidating assets can work. Clear communication with sellers and agents about your financial plan is crucial.
But what happens if you don’t have the full amount readily available? Let’s break it all down—from understanding what counts as POF to creative and legitimate strategies for making your offer more credible.
What Is Proof of Funds?
Proof of Funds refers to documentation that verifies you have the financial resources necessary for a real estate transaction.
This is typically required when:
- Making a cash offer
- Submitting an offer with a financing contingency
- Participating in competitive markets, where sellers want confirmation you’re a serious buyer
Common Types of Acceptable Proof of Funds:
- Recent bank statements
- Investment account statements
- A certified letter from a financial institution
- Escrow account balances
- Retirement account summaries (in some cases)
Why Is Proof of Funds So Important?
- For Sellers: It shows you’re a serious buyer who can close quickly
- For Lenders: It assures them you can cover the down payment and closing costs
- For Real Estate Agents: It gives confidence that the transaction won’t fall through
Example: If you’re buying a $450,000 home with 20% down, you’ll need to show at least $90,000, plus $15,000–$20,000 for closing costs.
Can’t Show the Full Amount? Here’s Why That’s Common
Many buyers, especially first-timers or investors expanding their portfolio, don’t have the full amount sitting in a checking account. That’s understandable—funds might be:
- Tied up in investments
- Coming from a future asset sale
- Gifted from family
- In a retirement account or overseas
Rather than walk away, consider these alternative strategies to demonstrate financial readiness.
8 Effective Strategies If You Don’t Have the Full Amount for POF
1. Partner With a Co-Buyer or Financial Investor
Co-buying is an increasingly popular strategy, especially among:
- Family members
- Friends
- Business partners
By partnering with someone who can provide the POF, you boost your credibility and increase your purchasing power.
Benefits:
- Higher loan eligibility
- Shared expenses and risks
- Greater flexibility in negotiations
Make sure to formalize agreements regarding ownership percentages, responsibilities, and exit strategies.
2. Utilize Gift Funds (Properly Documented)
If a family member or close friend is helping you with funds, you can use gift money as POF—as long as it’s clearly documented.
What you’ll need:
- A gift letter stating the money does not need to be repaid
- Documentation of the transfer into your account
- Statements from both accounts showing the movement of funds
Fannie Mae allows 100% of the down payment to be gifted for primary residences.
3. Access Your Retirement Accounts
You may be able to tap into your 401(k) or IRA to boost your POF, especially if you’re a first-time homebuyer.
- IRA Withdrawal: Up to $10,000 penalty-free for first-time homebuyers
- 401(k) Loan: Borrow up to 50% or $50,000, whichever is less (must repay)
Keep in mind:
- This can affect your long-term retirement savings
- Some plans have strict repayment terms
4. Get Pre-Approved and Show That Instead
A mortgage pre-approval letter can sometimes serve as partial proof of your financial situation. While it doesn’t replace liquid POF, it demonstrates creditworthiness and financing ability.
Pair this with:
- A letter of explanation about pending fund transfers or asset sales
- A timeline for when full POF will be available
5. Apply for Down Payment Assistance (DPA) Programs
Thousands of local and national programs offer financial help to qualifying buyers—especially first-time and low-to-moderate-income households.
Types of Assistance:
- Grants (non-repayable)
- Forgivable second mortgages
- Deferred-payment loans at 0% interest
These funds can often be used toward down payment and closing costs, reducing your POF burden.
6. Use a Bridge Loan or Personal Loan (Strategically)
A bridge loan is a short-term financing solution used to cover a funding gap, often while waiting to sell another property or receive liquid funds.
Alternatives include:
- Low-interest personal loans
- HELOC (home equity lines of credit) if you already own a property
Lenders may not count all loaned money as POF, so clarify with your mortgage officer.
7. Sell Non-Liquid Assets and Document the Timeline
Assets such as:
- Stocks or bonds
- Cryptocurrency
- Vehicles
- Business equity
…can be liquidated to meet POF requirements, but you must document:
- The current value
- A plan and timeline for liquidation
- Proof that the proceeds will be available before closing
Example: Selling $20,000 worth of Tesla stock? Submit brokerage statements showing account value and trade history.
8. Communicate With the Seller and Real Estate Agent
Transparency is key in real estate. If you’re working on getting funds together, communicate with the seller’s agent and offer an explanation.
Tips:
- Include a pre-approval letter
- Offer a timeline for full POF
- Consider including an earnest money deposit as a good faith signal
This human approach can keep you in the running—even if your documentation is pending.
Sample POF Scenarios and Solutions
Situation |
Required Funds |
Recommended Strategy |
| First-time buyer, short $15K | $75,000 | Gift funds + DPA |
| Investor buying $300K cash | $300,000 | Partner investor + asset liquidation |
| Buyer waiting on stock sale | $60,000 | Statement + letter of intent to liquidate |
| $400K home with 10% down, low savings | $40,000 | IRA withdrawal + DPA + personal loan |
Final Thoughts
If you don’t have the full amount to show for POF, it’s not the end of the road. In fact, it’s more common than you think. With the right combination of strategy, creativity, and documentation, you can still secure your dream home or investment property.
Key Takeaways:
- Explore gift funds, DPA programs, and asset liquidation
- Consider partnering with a co-buyer or investor
- Always communicate proactively with agents and sellers
- Use pre-approval letters to strengthen your credibility
- Tap into tools and consult real estate professionals for personalized guidance