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Bank of America offers no down-payment mortgages to minorities

By: April Carson

Bank of America Corp. is starting a program to help first-time homebuyers in Black and Hispanic neighborhoods by offering mortgages that don’t require down payments, closing costs or minimum credit scores. This will hopefully narrow the gap between White and minority ownership , as these have been considered longtime obstacles.

Customers will not be regarded for a mortgage based on their credit ratings, according to BofA. Customers' history of keeping rent, utility, phone and automobile insurance payments on time will be considered rather than their credit scores. The program will be tested in Dallas; Detroit; Los Angeles; Miami; and Charlotte, North Carolina - all areas with primarily Black and Hispanic residents. BofA will not say how large the program will be or whether it may be expanded to additional cities.

AJ Barkley, who is the head of neighborhood and community lending at BofA, stated in an interview that the Charlotte-based bank is willing to look beyond credit scores. By doing this "people can use other mechanisms to define their creditworthiness, buy a home and build their wealth."

US homeownership had its steepest annual jump on record during the pandemic, yet it is still below where it was a decade ago for African Americans. Also, Black and Hispanic buyers were more likely to be denied mortgages than White and Asian applicants, as per the National Association of Realtors. Moreover, approval rates for people seeking to lower mortgage payments via refinancing also differ by race; Bank of America approved 66% of refinancing applicants but 78% of White ones in 2020 according to Bloomberg data.

Following George Floyd's murder in 2020, the US Department of Justice slammed lenders for engaging in practices that discriminated against minority borrowers, and banks and other businesses committed to do more to eliminate racial disparities. In addition to a $15 billion program that offers down-payments and closing-cost assistance to lower-income individuals, BofA has another program with the aim of giving out $15 billion more in mortgages to low income buyers up until May 2027.

"We want to help close the opportunity gap that exists in this country," said Michelle Moore, head of consumer lending at Bank of America. "These investments will help us provide access to safe, affordable and sustainable homeownership for everyone."

Although no-down-payment mortgages help those with lower incomes to buy homes, they come with certain risks. If the housing market decreases in value, homeowners who don't have much equity could stop making mortgage payments altogether, which would ruin their credit scores and leave lenders stuck with foreclosed homes. With BofA's program, however, homebuyers are given down-payment grants of $10-$15 thousand dollars so they instantly have equity in their property.

“Lower-down-payment loans perform worse, all things considered — but not all things are equal,” said Laurie Goodman, an Urban Institute fellow who is speaking generally about such programs and not BofA's in particular. “There is a way to provide these loans where the risk isn't as high; other variables may compensate for a lack of a down payment; and there's an argument for taking on "a somewhat higher risk of failure" so that people can achieve financial independence.”

Bank of America's program is not without its critics, however. Some argue that it is simply a way for the bank to make money off of low-income homebuyers who may not be able to afford their mortgage payments in the long run.

To qualify as a borrower, the following guidelines must be met:

To qualify for the Bank of America offering, borrowers must be certified by the US Department of Housing and Urban Development and undergo counseling, said. In the past, when Countrywide Financial Corp. left sour loans behind for the bank to deal with, it was accused of not verifying or analyzing data like employment, income credit information, liabilities and other borrower data points properly.

“We will check to see if applicants have the potential to pay back,” she added. “What we don't want to happen with this program is for people to get stuck in homes they can't afford.”

The new offering will be available to eligible neighborhoods that the US Census data determines to be predominantly Black or Hispanic, Barkley said. There is no minimum or maximum loan size for this Federal Deposit Insurance Corp. “special purpose credit program” and applicants do not need to disclose their race.

This is not the first time Bank of America has dipped its toes in the no-money-down mortgage pool. The bank offered a similar program during the housing crisis to help struggling homeowners keep their homes.

Meanwhile, Bank of America announced a lending program to assist black and female-owned firms. According to a press release, borrowers who have been historically disadvantaged will be able to apply for down-payment grants of up to $25,000 to assist with commercial real estate purchases. The properties must initially be located in Atlanta, Chicago, Charlotte, Dallas or Los Angeles opportunity zones, but the program is scheduled to expand next year.

The new initiative is part of Bank of America’s $1.25 billion commitment to support black communities, which was announced in June. The bank has also provided $50 million in capital to black-owned businesses and $10 million for black entrepreneurship programs since the George Floyd protests began.

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About the Blogger:

April Carson is the daughter of Billy Carson. She received her bachelor's degree in Social Sciences from Jacksonville University, where she was also on the Women's Basketball team. She now has a successful clothing company that specializes in organic baby clothes and other items. Take a look at their most popular fall fashions on

To read more of April's blogs, check out her website! She publishes new blogs on a daily basis, including the most helpful mommy advice and baby care tips! Follow on IG @bossbabymav



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