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No down payment, credit score requirements

  • Putting together a home down payment can be a major hurdle for some buyers.
  • Bank of America aims to help by initiating home loans that require no upfront payment.
  • No minimum credit score is required, but factors such as rent and insurance premiums are considered.

Imagine getting your dream home mortgage approved with no down payment, closing fees or minimum credit score.

Bank of America launches new homes aimed at bridging the racial homeownership gap by offering affordable mortgages to qualified first-time homebuyers of all races After announcing loan plans, it could become a reality for borrowers in 21 cities.

Community Affordable Loan Solutions are available in designated markets. This includes historically black and Hispanic neighborhoods in Charlotte, North Carolina. Dallas; Detroit; Los Angeles; and Miami. This plan does not require mortgage insurance or a minimum credit score, instead using credit guidelines based on factors such as rent, utility bills, phone and car insurance payments. must complete a homebuyer certification course before applying.

“Homeownership strengthens our communities and helps individuals and families build wealth over the long term,” said AJ Barclay, head of neighborhood and community lending at Bank of America. Our community affordable loan solutions will help more Black and Hispanic families realize their dreams of sustainable home ownership.”

The Community Affordable Loan Solution is a measure of the Equal Credit Opportunity Act passed by Congress in 1974 to prohibit discrimination in the lending process. But since 2017, black homeownership rates have been nearly 30% lower than those of whites. U.S. homeownership rates skyrocketed in 2020, but data shows the gap is widening. According to the National Association of Realtors, homeownership rates in the United States are currently at 65%, but black ownership lags far behind at 43%. The percentage of white Americans is 72% and the percentage of Hispanic and Asian Americans is over 50%.

Removing the Three Major Barriers to Homeownership

U.S. home prices have fallen to their lowest level in 33 years as inflation and rising interest rates push up the cost of owning a home.

Homeownership is becoming increasingly out of reach for many Americans, especially black borrowers — most of whom earn less than the average American income.

“As the gap between black and white American homeownership rates widens, it’s important to understand the unique challenges faced by minority homebuyers,” said vice president of demographic and behavioral insights at the National Association of Realtors. said Jessica Lautz at the residence. study. “The affordability and low inventory of housing have made it even harder for all buyers to get into home ownership, but it’s even harder for black Americans.”

A major obstacle for blacks to owning a home is lack of credit because they cannot get loans.

A study conducted by the mortgage market LendingTree found that while people of all races are being denied mortgages, “the percentage of black homebuyers whose mortgage applications are denied is the largest percentage of the total population.” was found to be significantly higher than According to the company, the rejection rate for black borrowers is twice as high as his overall rejection rate for borrowers.

“People with low credit scores generally have a harder time getting mortgage approvals because lenders use credit scores to figure out how likely borrowers are to repay what they owe,” says LendingTree. Senior economist Jacob Channel told Insider . is often found.”

In recent years, Americans and housing professionals have sought alternatives to credit evaluation in the mortgage lending process, as historical economic racism often puts people of color at a disadvantage. rice field.

By ditching credit scores and instead focusing on rentals and car payments, Bank of America’s plan is to improve approval rates for people of color and ultimately move toward America’s dream of homeownership. You can give it a better shot.

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