Bank of America recently announced a trial program that offers zero-down mortgages in minority communities in certain metro areas across the country. This initiative joins a growing number of programs from big banks that seek to narrow the widening gap between white and minority homeownership.
US homeownership rates soared during the pandemic, but most of these gains were not among Black or Hispanic buyers. Historically, white Americans have the highest rate of homeownership at 72.1%, according to a study by the National Association of Realtors. Black and Hispanic homeowners have the lowest rates at 43.4% and 51.1% respectively and have faced discriminatory lending practices.
Hispanic homeownership has risen slightly over a decade, but Black homeownership has decreased, dropping to 40.9% in 2019 from 42.4% in 1960, according to Census data.
Let’s look at programs designed to lessen that difference and what zero-down mortgages offer potential first-time and minority homebuyers.
Zero-Down Mortgage Programs Available in Minority Communities
In recent years, several major banks have been fined or settled lawsuits over unfair and predatory lending practices with minority customers.
Now many financial institutions are seeking to address racial disparities in homeownership through grants, partnerships and other long-term investments in minority communities.
Bank of America
Bank of America’s Community Affordable Loan Solution aims to help first-time homebuyers in minority neighborhoods by removing barriers to homeownership — like having enough cash for a down payment.
Not only can you get a mortgage without a down payment, but there are no closing costs, required minimum credit score or mortgage insurance.
Instead, Bank of America will rely on a track record of on-time payments for rent and utilities and have applicants complete a homebuyer certification course to determine eligibility. Applicants won’t be verified based on race, according…