Bank of america no money down mortgage

CHARLOTTE, N.C. (WBTV) - Becoming a homeowner is tough.

“It’s crazy right now.” Tia Fesperman, a broker with Links Realty Group said.

Fesperman is helping people from all walks of life secure their first home in Charlotte. So, her ears perked up when she heard about the new Bank of America Community Affordable Loan Solution.

“Very good marketing, it’s very good marketing,” Fesperman said.

The Community Affordable Loan Solution is for first-time home buyers. According to a Bank of America spokesperson, it’s piloted for Black and Latino communities as designated by the US Census. Anyone from any race or ethnicity can apply and eligibility is based on income and home location. And instead of looking at credit, the bank uses data sources like on-time rent and utility payments to demonstrate a borrower’s ability to repay.

Fesperman says at face value the program looks great, but she has three questions she encourages potential borrowers to ask.

First, what does your good faith estimate look like?

“What a good faith estimate gives you is APR, payments, principal insurance versus taxes, and insurance, if you have mortgage insurance,” Fesperman said.

“What’s the debt-to-income ratio? Meaning how much debt can I have and still qualify for this loan?” Fesperman said.

Finally, what could disqualify you from this loan?

WBTV spoke to new homeowner Sophia Loney who just finished the home hunting, and buying process. Her advice to those just jumping into the waters...do your research first.

“Do your research on the lenders and the builders. There is a lot of cut-throat business in the housing market I had to learn but there are some beautiful parts that you don’t have to push yourself away from it,” Loney said.

Bank of America says they are paying the down payments through $10,000, non-repayable grants.

Copyright 2022 WBTV. All rights reserved.

Illustration: Sarah Grillo/Axios

Banks are trying to make it easier for certain Miami residents to become homeowners.

What's happening: Miami is one of five cities where Bank of America recently announced it's offering "zero down payment" loans for first-time buyers in predominantly Black and Hispanic neighborhoods who meet certain income requirements.

Why it matters: It's part of an effort, along with similar programs from JPMorgan Chase and TD Bank, to close the racial and ethnic homeownership gap, Axios' Emily Peck writes.

• Back in 2020, BofA and JPMorgan both pledged to spend billions of dollars on racial equity.

Details: These loans technically require a down payment, but the bank is offering grants of as much as $15,000 to cover it. That gives buyers a measure of equity right off the bat.

• These are different from zero-down loans that, along with questionable underwriting standards, helped make such a mess in the run-up to the Great Recession.
• BofA also has a separate but similar program, launched in 2019, that offers down payment grants in 69 markets across the country. That grant program has stricter criteria.

How it works: These programs allow lenders to target neighborhoods that are predominantly Black or Hispanic.

• The banks use what's called a special purpose credit program (SPCP), a policy made possible by the 1974 Equal Credit Opportunity Act, that permits lenders to discriminate to help disadvantaged borrowers.
• Federal regulators across several agencies have issued guidance on SPCPs over the past year or so, encouraging their use.

Zoom in: A Bank of America spokesperson tells Axios that the program is available in Miami, Miami Beach and Kendall.

• In Miami, the Black homeownership rate is 46.8%, the Hispanic homeownership rate is 51.1%, and the white homeownership rate is 62.6%, according to an analysis of census data by Stacker.

The big picture: Historically, majority-Black neighborhoods were excluded from mortgages — a practice known as redlining.

• Black buyers couldn't get the federally backed mortgages that helped so many white Americans buy homes and create generational wealth.
• The practice was outlawed in 1968, but its legacy haunts the housing market to this day.

🌱

Support local journalism by becoming a member.

Learn more

More Miami stories

No stories could be found

Get a free daily digest of the most important news in your backyard with Axios Miami.

🌱

Support local journalism by becoming a member.

Learn more

Bank of America said it is now offering first-time homebuyers in a select group of cities zero down payment, zero closing cost mortgages to help grow homeownership among Black and Hispanic/Latino communities.

The option will first become available in certain neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami. The new mortgage, called the Community Affordable Loan Solution, aims to help eligible individuals and families obtain an affordable loan to purchase a home, the bank said.  

Applicants do not have to be Black or Hispanic to qualify for the product, a bank representative said. 

“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” AJ Barkley, head of neighborhood and community lending for Bank of America, said in a release. “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 loans require no mortgage insurance — the additional fee typically charged to buyers who put down less than 20% of the purchase price — and no minimum credit score. Instead, eligibility will be based on factors like timely rent payments and on-time utility bill, phone and auto insurance payments. Prospective buyers must also complete a homebuyer certification course provided by Bank of America and federally approved housing counseling partners before they apply for the loan program, the bank said.

The racial gap in homeownership rates in the U.S. remained substantial in 2020, the most recent year for which National Association of Realtors data are available.

For white households, the homeownership rate was 72.1%. That compares with 51.1% for Hispanic households and 43.4% for Black households. The Black homeownership rate was lower in 2020 than it was in 2010, the NAR said.

"During the pandemic, rising home prices and low housing supply have disproportionally impacted Black households more than any other race/ethnic group," the NAR said in a report. White households are now 40% more likely to be able to afford to buy a home compared with Black households, the association said.

Bank of America and other major financial institutions like Wells Fargo have checkered histories when it comes to mortgage lending to people of color and prospective buyers who have disabilities.

Bank of America's Countrywide Financial, a subprime lender it purchased in 2008, was fined $335 million in 2011 over claims that it charged Black and Hispanic homebuyers higher interest rates than white applicants.

In 2012, Wells Fargo agreed to pay $175 million to settle claims that it targeted people of color with risky home loans that were more expensive. And the city of Miami sued JPMorgan Chase in 2014, accusing the bank of predatory lending in communities of color.

Rob Wile is a breaking business news reporter for NBC News Digital.

Can I get a mortgage with no money in the bank?

What credit score is needed for bank of America Mortgage?

What kind of credit score do you need to buy a house with no down payment?

How do I get a zero