Proof of Funds When You're Using a Private Lender

Sellers and listing agents want to know your offer will actually close. With a cash buyer, that's a bank statement. When you're using a private lender, the picture has two parts: the lender's money and your own.

What sellers are really asking

A classic proof of funds is a recent bank or brokerage statement, or a bank letter, showing enough liquid cash to buy the property. When you finance, most of the purchase money comes from the lender. So the seller needs to see that a lender has looked at the deal, and that you have the cash for your share.

Part one: a letter from your lender

Many private lenders issue a pre-qualification or pre-approval letter. It usually states that the lender has reviewed the basics of the deal and the borrower and is prepared to move forward, subject to underwriting. It may name the property, the purchase price or a maximum loan amount.

It is not a commitment to lend. It does show the seller that financing is already in motion.

To get one, send a scenario: the address and property type, your contract price, the rehab or build budget, the after-repair value (ARV), your estimated credit range, your recent track record and your entity. A deal-specific letter is more persuasive than a generic one. Policies differ, so ask any lender up front what its letter states and who can request one.

Part two: your own cash

Lenders rarely fund 100% of a deal. You'll typically need cash for the down payment, closing costs, points, any part of the rehab not funded, and any reserves the lender requires. Keep a recent statement ready to show you have it. Sellers' agents may ask, and your lender will verify it during underwriting either way.

At RSC Private Lending, proof of funds is one of the documents we typically request, along with property details, the purchase agreement, a scope of work for rehab and borrower information. We do not require cash reserves on Fix & Flip, New Construction or Mid-Construction loans.

Example, round numbers only. You offer $250,000 on a flip with a $60,000 rehab budget. Say your lender's term sheet funds $225,000 of the purchase and all of the rehab. You still need $25,000 for the rest of the purchase, plus roughly $15,000 for closing costs and points, plus a cushion for holding costs. Show the seller the lender letter and a statement covering at least $40,000, and your offer looks real.

When it matters most

• Multiple offers, where the seller is comparing certainty, not just price
• Off-market and distressed sellers who need a sure close
• Short deadlines where financing must be lined up in advance
• Any time you're asking a seller to accept a lower price in exchange for speed

What this means for you

Get your financing reviewed before you make the offer, not after. Pair a deal-specific lender letter with proof of your own cash, and you'll compete on equal footing with cash buyers more often.

Send us your deal before your next offer for a term sheet in 24 hours. Subject to underwriting.