The initiative, called Community Affordable Loan Solution, aims to provide eligible individuals and families with mortgages that can help them obtain affordable loans to ultimately buy a home, Bank of America said.
The mortgages will first be rolled out in the neighborhoods of Charlotte, Dallas, Detroit, Los Angeles and Miami, according to NBC News.
“Homeownership strengthens our communities and can help individuals and families build wealth over time,” said A.J. Barkley, the bank’s neighborhood and community lending manager. “Our affordable community loan solution will help make the dream of sustainable homeownership accessible to more Black and Hispanic families, and it’s part of our broader commitment to the communities we serve.”
Eligibility for the Affordable Community Loan Solution will be based on factors such as timely payment of rent, utilities, phone and car insurance – no minimum credit score will be required.
Loans also won’t require mortgage insurance, which is usually an additional cost for buyers who pay less than 20% of the purchase price.
Before applying for the new program, first-time home buyers will need to complete a homebuyer certification course provided by the bank and federally licensed housing counseling partners, the company said.
The initiative comes as the racial gap in homeownership in the United States remains wide.
According to the National Association of Realtors (NAR), the homeownership rate for white households in 2020 was 72%. For Hispanic and Black households, the rate was about 51% and 43%, respectively.
Black homeownership also fell lower in 2020 than in 2010, in part due to the pandemic, the NAR said.