Bank of America is introducing a zero down payment, zero closing cost mortgage solution for first-time buyers geared towards underserved communities.
The Community Affordable Loan Solution will roll out in designated markets, including certain Black and Hispanic/Latino neighborhoods in Charlotte, Dallas, Detroit, LA, and Miami.
It is a Special Purpose Credit Program that operates off of factors like timely rent, utility bill, phone, and car payments. It does not require mortgage insurance and a minimum credit score. Eligibility is based on income and home location.
Prospective buyers have to complete a homebuyer certification course from approved counseling partners prior to application.
The program is in addition to BoA’s existing Community Homeownership Commitment program, which aims to help 60,000 individuals and families buy homes by 2025.
“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.”
The hot-housing market has put pressure on all homebuyers, but first-timers and buyers of color have been particularly impacted.
Home equity has soared since the pandemic began, giving current homeowners a financial boost but pushing the dream of homeownership out of reach for many.
However, while the current market is giving immense leverage to some families, others are finding themselves pushed even farther from the dream of owning a home.
The share of first-time buyers has dropped from 45% in 2019 to 37% in 2021. Nearly three in ten (29%) of Americans hoping to buy their first home aren’t sure if it’s a good time to do so, according to TD Bank’s First-Time Homebuyer Pulse. Seven out of ten are concerned about the economy, and 67% are concerned about their ability to afford a home.
“First-time homebuyers are feeling anxious and unprepared in this highly competitive housing market,” researchers wrote.
This problem is exacerbated for families of color who have missed out on opportunities to build generational wealth thanks to racist practices such as redlining.
“[I]t’s an economic disaster for Black families who are unable to achieve homeownership,” Cy Richardson, the senior vice president for programs at the National Urban League, told the New York Times.
White households own homes at a 30-point higher rate than Black households.