This Bank Is Helping More Low-Income Americans Buy Homes

Home buyers on a budget may now be in line for assistance.

Buying a home can be a challenge even in a normal housing market (as opposed to today's market, where home prices keep soaring and low inventory is giving sellers a major advantage). And while there are programs available to borrowers with limited funds for a down payment, like FHA loans, qualifying for a mortgage on a lower income can be difficult.

As such, low-income buyers have long struggled to become homeowners. But some banks are trying to change that.

More options for low-income buyers

In September, existing home sales rose 7% compared to the previous month. However, first-time home buyers made up only 28% of those transactions, according to the National Association of Realtors. But low-income buyers may soon have more options available to them.

Some financial institutions are introducing programs designed to help buyers on a limited income purchase a home. Bank of America is one of them, and its Bank of America Community Homeownership Commitment has the goal of helping more than 60,000 buyers purchase homes through 2025.

So far, Bank of America has helped 29,000 buyers purchase homes and has given out $270 million in grants. Among those 29,000 buyers, about 85% are first-timers.

Bank of America's program offers a couple of options to help low-income buyers. Its Down Payment Grant program gives eligible buyers 3% of a home's purchase price, up to $10,000, toward a down payment. And that sum doesn't have to be repaid.

Meanwhile, its America's Home Grant program provides a lender credit of up to $7,500 toward closing costs. That grant also doesn't have to be repaid, and it can be combined with the Down Payment Grant.

Low-income buyers should explore their options

If you're grappling with a limited income, you don't necessarily have to write off the idea of buying a home or qualifying for a mortgage. Rather, it pays to explore the programs that may be available to you.

While homeownership isn't for everyone, there are numerous perks to be reaped. For one thing, property owners get a chance to build home equity. That equity can be turned into cash when a home is sold, and it can also be borrowed against in the form of a home equity loan or line of credit (HELOC).

Plus, homeownership can result in more financial stability. And there are tax benefits to be enjoyed when you purchase a home, like the ability to deduct the interest you pay on your mortgage as well as your property taxes.

A number of big lending institutions outside of Bank of America offer programs to help low-income buyers. Wells Fargo offers forgivable down payment loans through its NeighborhoodLIFT program, which is available in certain areas. And this year, JP Morgan Chase expanded its $5,000 grant program to help buyers in minority neighborhoods cover their down payments and closing costs. As more programs along these lines are introduced, it could become even easier to purchase a home on a limited income and enjoy the many benefits that come along with it.