Bank of America has announced a pilot program to offer zero down payment mortgages to residents in select cities. The program also includes zero closing costs for residents in Dallas, Detroit, Los Angeles, Miami and Charlotte, NC.
The bank said the program, called the Community Affordable Loan Solution, “aims to help eligible individuals and families obtain an affordable loan to purchase a home.”
“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” said AJ Barkley, head of neighborhood and community lending for Bank of America. “Our Community Affordable Loan Solution will help make the dream of sustained homeownership attainable for more Black and Hispanic families, and it is part of our broader commitment to the communities that we serve.”
Potential homebuyers will not have to purchase mortgage insurance, which is a fee typically charged to buyers who put down less than 20% of the purchase price, and there is no minimum credit score required.
Eligibility will be determined by other factors such as timely rent payments, on-time utility bills, phone and auto insurance payments. Also, prospective buyers must complete a homebuyer certification course provided by Bank of America and by approved housing counseling partners before they apply for the loan program.
Bank of America said it will make a down payment on behalf of borrowers with grants of $10,000 to $15,000, depending on the city, that will give borrowers immediate equity in the home.
According to a report by the National Association of Realtors, white households are now 40% more likely to be able to afford to buy a home compared with Black households. Currently, the homeownership for white households is 72.1%, 51.1% for Hispanic households, and 43.4% for Black households.
"During the pandemic, rising home prices and low housing supply have disproportionately impacted Black households more than any other race/ethnic group," the report stated. The NAR also noted that the Black homeownership rate was lower in 2020 than it was in 2010.
Bryan Greene, Vice President of Policy Advocacy at the National Association of Realtors explained that Black homebuyers face various obstacles in the housing market.
"Black Americans have fewer resources today and greater financial burdens than white Americans as a legacy of exclusion and discrimination in the housing market and in most facets of American life,” Greene said. “As a consequence, disadvantage compounds disadvantage, while advantage begets more advantage.”
Applicants do not have to be Black or Hispanic to qualify for the product, a representative from the bank said.
