Despite mortgage rates being near all-time lows, one of the biggest challenges in buying a new home is the upfront costs. Bank of America’s Community Homeownership Commitment addresses this barrier by providing grants toward down payment and closing costs, along with low down payment mortgage options. Initially launched in 2019, Bank of America has already helped nearly 21,000 individuals and families purchase a home through affordable loans and over $180 million in down payment and closing cost grants.
Last month, the bank announced it is tripling this initiative to provide $15 billion through 2025, aiming to help more than 60,000 individuals and families purchase homes.
The program includes two proprietary homebuyer grant programs to help prospective buyers with the upfront costs of homeownership:
- Down Payment Grant program helps customers overcome the biggest barrier to homeownership – down payment. Eligible buyers can receive 3% of the home’s purchase price up to $10,000, whichever is less, to be used toward their down payment. No repayment is required.
- 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 funds do not require repayment and can be combined with Down Payment Grant funds to lower the cost of homeownership.
When the grant programs are used together, homebuyers receive on average of about $14,000 to help with their home purchases. The grant programs are often used in combination with low down payment mortgages to significantly reduce the upfront funds required to purchase a home. Low down payment loans are competitive, fixed-rate mortgages with down payments as low as 3%, requiring lower-cost – or even no – mortgage insurance. Today, nearly 85% of these loans go to first-time homebuyers.
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