February 23, 2016
A new mortgage product unveiled by Charlotte, North Carolina-based Bank of America will allow borrowers to make as little as a three-percent down payment, and cuts the Federal Housing Administration out of the process. The new loans could be cheaper than those offered through the FHA, mainly because it lets borrowers avoid buying private mortgage insurance.
BofA says an alternative is needed to help credit-worthy borrowers with a track record of paying debts on time. The new loans will be backed in a partnership with Freddie Mac and the Self-Help Ventures Fund, a Durham, N.C.-based nonprofit.
Loan production for the new program will be capped at $500 million annually, and BofA says three out of four mortgages in the new program would have likely received FHA backing.