Bank of America is helping Black and Hispanic first-time homebuyers with a zero down payment mortgage
Bank of America is providing a trial mortgage program for first-time buyers that has a zero down payment mortgage that does not have closing expenses, or minimum credit scores, to increase the number of first-time Latino and Black homebuyers and close the ownership gap between whites and minorities.
According to Bank of America, the proposed mortgage program, termed the Community Affordable Loan Solution, is accessible in several census-designated cities, including Hispanic and Black neighborhoods in Miami, Charlotte, Detroit, Dallas, and Los Angeles.
Why a zero down payment mortgage program?
The new loan program doesn't require mortgage insurance or the minimum credit score that lenders traditionally impose on clients who pay 20% of the loan amount. Rather than relying on a typical credit score, first-time home buyers will be assessed based on their track record of vehicle insurance, on-time rent, phone, and utility payments.
The initiative intends to provide more affordable mortgages and eliminate the racial home buying inequality between Latino or Black and White Americans.
According to Bank of America's head of neighborhood and community lending, AJ Barkley, the program's objective is to assist families and people—particularly Hispanic and Black people—in owning a home and building wealth over time.
She explained in an interview that it enables us to develop minority areas and noted that anyone wishing to purchase a property in one of the specified neighborhoods might apply for financing under the program. She said that in addition to providing educational tools to assist customers in understanding the procedure, the bank planned to extend the initiative to more locations in the future.
Requirements for qualifying
According to Barkley, to be eligible for the zero down payment mortgage by Bank of America, borrowers must receive certification and counseling from the US Department of Housing and Urban Development.
The bank has already dealt with bad loans that it charged with failing to adequately examine and assess the debts, employment, credit information, income, and other data about the borrowers.
She said they would evaluate applicants to ensure the borrower had proven their capacity to pay it back.
Applicants are not required to disclose their race, and US Census data will be utilized to establish if the majority racial group in eligible communities is Hispanic or Black.
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