Proof of Deposit (POD)

What Is Proof of Deposit (POD)?

Proof of deposit (POD) is either a verification that a mortgage borrower has the funds for down payment or that the dollar amount of a check or draft deposit is correct.

Understanding Proof of Deposit

Proof of deposit (POD) has two main applications with respect to finances. The first is verification that funds have been deposited into a bank account. This is commonly used when applying for a mortgage to buy a house. The mortgage company will want to see that the borrower has accumulated the necessary reserve amount in order to provide the down payment for the home. To verify this, the borrower will need to provide POD to the mortgage company. This can be obtained from the bank. This may also be known as proof of funds (POF)

The second meaning of proof of deposit is to verify that the dollar amount of a check or draft being deposited is correct. Proof of deposit is accomplished when the amount written on the check is compared with the amount on the deposit slip. This is the second step in the check presentation process for payment after checks have been sorted by a reader-sorter machine.

When buying a home, the mortgage lender may ask the borrower for proof of deposit. The lender needs to verify that the funds required for the home purchase are accumulated in a bank account and accessible to the lender.

During times of tight credit, the lender may also want to see evidence of how the funds came to be deposited into the bank account and where the money came from. This is because certain lenders place a limit on the amount of gift money that can be used as a down payment on a house.

Proof of deposit also occurs when the amount written on the check is compared to the amount on the deposit slip.

Some lenders may have additional requirements for proof of deposit. Some may request copies of bank statements or a letter from the person who provided any gift money that has been deposited into the account.

A lender may also want to see proof of several months of cash reserve on hand in another account to ensure the borrower can still pay the mortgage if they lose their income stream. Without adequate proof of deposit, a lender may refuse to finalize a mortgage or allow a potential buyer to use the funds from the account to pay closing costs on a property.

Fast Fact

Some mortgage lenders limit the amount of gift money that can be put toward a down payment for a house. These lenders might also want to see proof of where the money deposited originated.

Deposit Accounts

When dealing with deposits into an account, the proof of deposit process follows after checks have been separated by a sorting machine into either an "on us" category or "on them" category. This proof of deposit procedure is called "check proofing" and is done after the routing and account numbers have been recorded by the sorter.

How can you prove what you have on deposit?

Lenders or other parties will request and review recent official bank statements.

What sources count toward proof of deposit?

Bank accounts (checking or savings), CDs, brokerage accounts, money market accounts, and other cash equivalents. Assets such as retirement accounts, mutual funds, and permanent life insurance will not typically qualify as POD.

Why do you need POD for a mortgage?

Without proof of deposit, a borrower can lie or misrepresent the funds they actually have available to purchase a home.