In an attempt to attract more first time home buyers that typically flock to the FHA loan and the low 3.5% down payment, Bank of America has announced a lower 3% down payment for a mortgage.
On February 22, 2016 CNN/Money reported that Bank of America has a New 3% Down Payment on Mortgage Loans,
Good news for first time home buyers with a new 3% down payment loan from Bank of America
Kathryn Vasel of CNN Money reported, "If you're looking to buy a home but don't have the 20% down payment sitting around, Bank of America is now offering mortgages with as little as 3% down. The new loan program is aimed at helping low- and moderate- income borrowers get home loans for up to $417,000.
To qualify, borrowers can't make more than the median income for their area and need a credit score of at least 660. And the home must be the applicant's primary residence. Low down payment mortgages aren't exactly new. But borrowers won't have to pay private mortgage insurance with this loan. Most loans with less than 20% down, like those backed by the Federal Housing Administration, also require monthly insurance premiums on top of the mortgage payments. The premiums are used to help protect the lender in case the borrower can't make payments. As with most mortgages, applicants must still have a debt-to-income ratio of no more than 43%. But Bank of America will also consider non-traditional forms of credit -- like daycare expenses, health club memberships and rental history -- to help determine credit history."
If you are ready to buy, start with a prequalification from a lender. Bank of America's 3% down may be a good place to start. FYI, in Arizona there are still free grants available to buyers using a FHA, VA or USDA loan for down payments and/or closing costs.
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