By Marina Pitofsky via USA Today
Bank of America this week announced that it will be launching a mortgage option for first-time home buyers offering no down payments, no closing costs and no minimum credit score.
The “Community Affordable Loan Solution” will be available to some individuals and families looking to purchase homes in “designated markets, including certain Black/African American and/or Hispanic-Latino neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami,” Bank of America in a news release Tuesday.
The program does not require mortgage insurance – a cost buyers can face if they put down less than 20% of a home’s purchase price – or a minimum credit score, the banking giant said this week. A credit score is a number between 300 and 850 that seeks to measure a person’s creditworthiness.
The program considers financial factors such as payments for rent, utilities, and more. Eligibility is also based on income and home location, and people must complete a homebuyer course from Bank of America and Department of Housing and Urban Development-approved partners.
Bank of America confirmed to USA TODAY that it does not have a limit on the number of loans that will be involved in the program. Properties involved in the program must be located in census tracts that are more than 50% African American and/or Hispanic Latino.
But people do not need to be Black or Latino to qualify for the program, according to the bank.
“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 the Tuesday statement. “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.”
There is no minimum or maximum loan size for the program, Bloomberg reported.
The gap in homeownership rates between Black and white families in the United States has been larger in recent years than when it was legal to discriminate against homebuyers based on race, according to a study from the Urban Institute.
In 1960, rates of white homeownership reached 65%, while rates of Black homeownership reached 38%. The Fair Housing Act, which lawmakers enacted in 1968, barred property owners, financial institutions and others from discriminating based on a person’s race.
In 2018, 72% of white households owned a home, compared to 42% of Black households, 57% of Asian households and 47.5% of Hispanic American households.
Contributing: Swapna Venugopal Ramaswamy, USA TODAY
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