Episode 122

My Thoughts on Bank of America’s No Money Down Mortgage Loan

Bank of America recently announced a new no money down mortgage program for first-time home buyers, called the Community Affordable Loan Solution™. Tune in to learn about this new program, and to hear my thoughts on no money down mortgage loans.

What We Know So Far:

This program is for first time homebuyers. While Bank of America has not yet defined what first time homebuyer means for this program, when you look at current traditional lending guidelines, it is for home buyers who have not owned a primary residence in the last three years. There are no specific guidelines out just yet, but once that is released we will have more clarification. Next up, the press release states a zero-down payment on the mortgage and no closing costs, which means you would be able to finance 100% of the cost of the home. This loan is going to have zero PMI which stands for private mortgage insurance. Typically, if you put down less than twenty percent on your home loan, you will pay a private mortgage insurance payment in addition to your mortgage, taxes, and insurance. With zero PMI programs you typically see higher interest rates, however, no rates for this program have been published yet, so we don’t know what those will be. The press release also states there will be no minimum credit score, which is very interesting, but they will be verifying alternative methods of credit history, such as auto insurance and utilities. Lastly, the program qualification is based off income and location. While the income requirements have not been released, the locations will be Charlotte, Dallas, Detroit, Los Angeles and Miami.

How is This Different From 2008?

Many people are concerned that this could lead to a repeat of the 2008 crisis. One main key difference between 2008 and the Community Affordable Loan Solution™ from Bank of America, is that they are going to verify income. This sounds logical but believe it or not, in 2008 there were loans that did not verify income. This was a major contributing factor to the 2008 loan crisis because people were incentivized to purchase a home they couldn’t afford. In 2008, banks were not requiring any type of documentation as far as income and assets on some programs, so they had no way of knowing whether individuals applying even qualified. This caused a complete disaster for banks, businesses, and millions of homeowners.


In this episode, Luis speaks about the following and more:

  • Bank of America’s Community Affordable Loan Solution™
  • What private mortgage insurance is and how it can increase your mortgage payment
  • What debt-to-income-ratio is and how it’s used to determine if you qualify for the loan
  • How you can qualify for a home you cannot afford