Could this end up benefiting you?
- Not having a down payment fund is a barrier to home ownership for many.
- A lender is making no down payment loans more and more accessible to borrowers.
- Bank of America’s affordable community lending solution will benefit aspiring first-time homeowners.
Buying a home can be a challenge for many reasons – and not just when the market is running low on inventory, which it has been since late 2020. Often people struggle to buy because they can afford monthly mortgage payments (which are often comparable or sometimes less than rents), they do not have sufficient funds to put down a down payment.
There are now some mortgage loan programs that allow buyers to finance a home with no down payment. The VA loan program, for example, allows buyers to buy a home without a down payment, but eligibility for this program depends on whether you are a member of the military (or a former member or spouse of a former member).
But now, a lender is launching a new program aimed at making home ownership more accessible to a wider range of borrowers. And if others follow suit, it could help more minorities and underrepresented people take this important step.
Launch of a new $0 down payment program
Bank of America is moving forward with a $0 mortgage program called Community Affordable Loan Solution. Not only will buyers be able to move forward with no down payment, they also won’t have to deal with closing costs on their mortgages.
The affordable community loan solution will be available in select cities – Charlotte, Dallas, Los Angeles, Miami and Detroit. And it’s meant to target black and/or Hispanic and Latino communities in those cities. Qualifying for a $0 down payment mortgage will depend on factors such as income and location. Unlike conventional mortgages, there will be no minimum credit score requirement to qualify.
In addition, no mortgage insurance will be required. This is a good thing, as it can be an additional ongoing expense for homeowners.
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Borrowers will still need to meet certain criteria
Although Bank of America’s new loan program does not require a minimum credit score, applicants will be required to show a history of timely bill payments, including rent, utility bills, and utility bills. insurance. Additionally, while the program will target neighborhoods with minorities, applicants do not need to be black or Hispanic/Latino to qualify for a $0 down payment loan. Applicants must also complete a homebuyer certification course.
A step in the right direction
The National Association of Realtors found earlier this year that the homeownership rate among black Americans is nearly 30 percentage points lower than that of white Americans. The hope is that by opening up the option of $0 loans, it will help people of color and minorities overcome the barriers that previously prevented them from buying homes.
While it’s more than possible to do well financially as a renter, homeownership has long been said to promote financial stability. And so the fact that more people have the chance to buy a house is a very positive thing.
Those who own homes have the opportunity to leverage the equity they build in those properties. It’s money that can be used in a pinch to avoid costly debt – an option tenants don’t take advantage of, even if they’ve always paid well on time.
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