Buy A House With No-Down Payment?

Bank of America introduces a new program to expand home ownership in minority communities 

The “Community Affordable Loan Solution” program aims to make it easier for Black and Latino communities to purchase their first home. The program, announced recently by Bank of America, will begin rolling out as a trial in predominantly Black and Latino communities in Charlotte, Dallas, Detroit, Los Angeles, and Miami. 

Black and Latino communities have traditionally faced more challenges when purchasing a home than their white and Asian counterparts, and this new program aims to make home ownership easier. The eligible areas must be more than 50% Black or Latino. However, it should be noted that Bank of America has stated that people do not need to be Black or Latino to qualify for the program, as the program is based on income and location. 

Candidates will not be evaluated on their credit history but on their previous payment histories, such as paying their rent, utilities, and auto insurance on time. There is no minimum or maximum loan size nor a cap on the number of loans offered. The loans will require no down payment, no minimum credit scores, and no mortgage insurance. The plan could be expanded into other cities if the trial is successful. 

Bank of America head of neighborhood and community lending, AJ Barkley, said the bank was using metrics other than credit scores to evaluate people’s ability to own a house, “people can use other mechanisms to define their creditworthiness, buy a home and build their wealth.” He added that this program was aimed at strengthening the communities where it is being rolled out, “Homeownership strengthens our communities and can help individuals and families to build wealth over time. 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.” 

Over the last few years, the Black homeownership rate has remained at about 42% which is the lowest it has been since 1970, whilst the white homeownership rate reaches 73% which was a record high. The pandemic only seemed to make this gap worse, with rising home prices and a low supply making it even more difficult to become home owners. 

Nonetheless, the Community Affordable Loan Solution is a step in the right direction for aspiring home owners who may previously have only dreamed of becoming a home owner.