September 24, 2022

You can expect more banks to start offering mortgages that don't require some first-time buyers to save up a large down payment — part of an effort to close the racial and ethnic homeownership gap, which is a big piece of the racial wealth gap.
Driving the news: Bank of America's recently announced "zero down payment" loans for first-time homebuyers in predominately Black and Hispanic neighborhoods who meet certain income requirements.
Details: Bank of America's "zero down payment" loans are a bit of a misnomer. They do technically require a down payment, but the bank is offering grants of as much as $15,000 to cover it.
What they're saying: "There are a handful of banks that are interested in this," said Liam Reynolds, a research assistant at the Urban Institute who co-wrote a piece about these types of programs earlier this year.
Why now: The programs are gaining traction now partly because of the renewed focus on racial equity coming out of the protests of 2020 and because of the White House's support, Reynolds said. "It has certainly helped that the administration has encouraged them so much."
BofA also has a separate, and very similar program, launched in 2019, that offers down payment grants in 69 markets across the country.
State of play: These programs allow lenders to target neighborhoods that are predominantly Black or Hispanic.
Zoom out: The origins of the racial homeownership gap lie with the actions of the federal government and the private sector. Through redlining, they worked in concert to exclude majority Black neighborhoods from mortgage lending.
Go deeper: Race and housing in America.

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