Bank of America is tripling the amount of money it’s dedicating to help low- and moderate-income borrowers purchase homes to $15 billion through 2025, the mortgage giant announced Wednesday.
In 2019, the bank launched an affordable homeownership initiative, called the Community Homeownership Commitment, pledging $5 billion over the next five years with the goal of assisting more than 20,000 individuals and families buy homes.
D. Steve Boland
Because of low interest rates and sky-high demand resulting in a booming mortgage market, BofA was able to meet that goal early, President of Retail D. Steve Boland told Reuters.
“I’m pleased to say that we’ve gotten a lot further than that and we already have done over $5 billion to help create 21,000 new homeowners to the commitment,” Boland said.
Now, the lender is adding an additional $10 billion to the initiative with the aim of helping more than 60,000 low- and moderate-income homebuyers through low down payment loans and down payment and closing cost grants.
“Homeownership is an incredibly powerful force, helping families to build wealth over time and strengthening our communities,” Boland said in a statement.
“It can be challenging to save enough to buy a home, so it’s no surprise that we’ve seen an overwhelmingly positive response to our programs. We are excited about our goal of helping an even greater number of homebuyers to prepare for homeownership now and in the future.”
So far, in addition to affordable mortgages, the initiative has provided more than $180 million in down payment and closing cost grants, the company said.
BofA has two grant programs, neither of which require repayment. Its down payment grant program offers eligible buyers in more than 260 cities and counties 3 percent of the home’s purchase price up to $10,000, whichever is less, to be used toward their down payment. The average down payment grant is $7,400 and 88 percent of recipients are first-time homebuyers, according to a BofA fact sheet.
The lender’s America’s Home Grant program offers a lender credit of up to $7,500 that can be used towards non-recurring closing costs, like title insurance and recording fees, or to permanently buy down the interest rate. The average grant amount under this program is $6,400, according to the fact sheet.
The two grant programs can be used together for an average total grant of about $14,000, BofA said. They can also be used in combination with low-down payment, fixed-rate mortgages with down payments as low as 3 percent that require either lower-cost or no mortgage insurance. Nearly 85 percent of those loans go to first-time homebuyers, the company said.
“Today, half of Bank of America’s home loans are to low- and moderate-income or multicultural families and communities,” the company added.
The lender’s listing site, the Bank of America Real Estate Center, allows potential homebuyers to filter real estate listings to identify grant-eligible properties. The lender also offers a First-Time Homebuyer Online Edu-Series, available in English and Spanish, which offers educational videos on options for affordable homeownership and the process of buying a home, including preparing finances, getting pre-approved, finding a home and applying for a mortgage.
According to BofA, the affordable homeownership initiative complements the $1 billion, four-year commitment to help advance racial equality and economic opportunity the lender made last summer. That program focuses on closing the racial wealth gap in black and Latino communities with a focus on affordable housing, health and healthcare, jobs and re-skilling and small business, the lender said.