Bank of America is a strong option if you’re looking for a well-known, established financial institution with a large variety of home loan products. Bank of America is one of the world’s leading financial institutions, serving corporations, governments, small and mid-size businesses, and individuals. It offers fixed- and adjustable-rate mortgages, jumbo loans, a low-down-payment mortgage, FHA and VA loans, and doctor loans, in addition to refinances and home equity line of credit loans (HELOCs).
Best for: Account holders with large balances and low- to mid-income borrowers
Current account holders and low- to middle-income homebuyers especially benefit from a Bank of America home loan through fee discounts and grants for eligible borrowers. Here are the benefits for both:
Current account holders
Bank of America Preferred Rewards customers with a three-month combined average daily balance of at least $20,000 can save on the mortgage origination fee, which many lenders charge to process applications and underwrite and fund loans. This fee is usually 0.5% to 1% of the loan. Here’s what you can save with Bank of America, depending on your balance:
- Save $200 if you have a balance of $20,000 and less than $50,000
- Save $400 if you have a balance of $50,000 and less than $100,000
- Save $600 if you have a balance of $100,000 and less than $1 million
Low- to middle-income borrowers
Bank of America offers resources for homebuyers with low to moderate incomes. In most cases, you must be an owner/occupant and meet income and geographical requirements. To determine whether you qualify, you can start an application with Bank of America. Here are some of the programs offered:
- America’s Home Grant: Qualified borrowers receive $7,500 in closing cost assistance that doesn’t need to be repaid.
- Down Payment Grant: Eligible homebuyers receive a grant of up to 3% of the home’s purchase price, up to $10,000, to be used for the down payment. Funds don’t need to be repaid.
- Community Affordable Loan Solution: This fixed-rate loan comes with a down payment requirement as low as 3%.
Bank of America
4.1
Credible Rating
Min. Credit Score
620
Days to Close
4-6 weeks
Pros and cons
More details
Methodology
To determine the best mortgage companies, Credible evaluated lenders based on several different categories: rates and fees, reputation, eligibility, efficiency, customer experience, and discounts and perks. We also looked at the types of loans offered by each lender for research purposes only, they did not factor into the overall score. We assigned a score out of five stars to each lender based on our findings.
Learn more about our expert lender ratings by checking out our Mortgage Lender Rating Methodology.
Bank of America: Pros and cons
Before you take out a Bank of America mortgage, consider the benefits and drawbacks:
Pros
- Variety of home loans: Bank of America has fixed-rate mortgages, adjustable-rate mortgages (ARMs), jumbo loans, low-down-payment mortgages, FHA and VA loans, and doctor loans where student loan debt may be excluded from the debt calculation.
- Low rates: Bank of America mortgage rates are competitive or slightly lower than the national average.
- Online option: Bank of America offers a Digital Mortgage Experience that allows you to get prequalified for a mortgage, apply for a mortgage loan, or refinance an existing mortgage online.
Cons
- No USDA loans: Bank of America doesn’t offer USDA loans, which are for low- to moderate-income borrowers who buy in a rural area. These loans are backed by the U.S. Department of Agriculture.
- Slower pre-approval: Some financial institutions can pre-approve you in as little as one day, but it can take up to 10 days to get a pre-approval letter from Bank of America.
- Stringent requirements: Bank of America, being a large national bank, may have stricter underwriting criteria than a local bank or credit union.
What to consider before applying
Before applying for a mortgage, try to boost your financial profile so you’re more likely to meet lender requirements. Here are some of the most common qualifications:
- Credit score: It can be easier to qualify for lower interest rates if your credit score is in the mid-to-high-700s and above. If your credit score is between 620 and the mid-700s, you may not be eligible for the best rates. If your credit score is below 620, you might not qualify for a conventional loan until you raise your score. If you need help improving your credit score, contact a housing counseling agency approved by the Department of Housing and Urban Development.
- Debt-to-income ratio (DTI): Lenders also look at how much you make compared to your monthly debts to determine whether you can afford a monthly mortgage payment, via DTI calculations. You can determine your DTI by adding up your monthly debt payments and dividing that number by your gross monthly income. For example, if your monthly debt payments (including your mortgage) equal $3,500 and your gross monthly income is $10,000, your DTI would be 35% — 3,500 divided by 10,000 equals 35%. Most lenders consider a DTI below 36% good. Some loan programs, such as FHA loans, allow a DTI of up to 50% in some cases. If your DTI is higher than that, you’ll probably need to find a way to earn more money or reduce your debt to be approved for a mortgage loan.
- Down payment: Making a down payment of 20% shows the lender you’re invested in the property, and could make you eligible for lower mortgage rates. You can qualify for many mortgage loans with less than 20% down, but you might have to pay for private mortgage insurance.
Expert Tip:
“In addition to saving up for the down payment, you'll need to budget for closing costs, which are typically between 3% and 5% of the loan amount. For a $300,000 loan, closing costs could be between $9,000 and $15,000.” — Valerie Morris, Editor, Mortgages
How to apply for a loan with Bank of America
Bank of America offers the Digital Mortgage Experience, which you can use when you’re ready to apply for a mortgage loan. Here’s how the application works:
- Log in or create an account: Borrowers who are not Bank of America customers must set up an account and provide their name, phone number, email address, current address, citizenship status, Social Security number, birth date, level of schooling completed, marital status and whether they have any dependents.
- Provide documentation: Be prepared to provide W-2s for the last two years, pay stubs for the past 30 days, complete bank statements for the last two months, tax returns, most recent quarterly profit/loss statement (if self-employed) and a copy of the signed purchase and sales agreement.
- Read and sign disclosure forms: These should tell you the cost of the loan and your total monthly payments, so review them carefully.
- Wait for approval: During this step, the underwriter reviews the documents you've provided to determine whether you qualify for the mortgage you're seeking.
- Close on your loan: You’ll get a closing date, and you’ll likely meet at a title company or an attorney’s office to sign paperwork and complete the transfer. Your loan officer will tell you what to expect.
Tip:
You can also meet in person with a home loan specialist at a Bank of America branch or call 800-579-9365 to speak with a home loan specialist about applying for a home loan.
How to qualify for a loan with Bank of America
Qualifying for a loan with Bank of America depends on how much you want to borrow, as well as your credit score, DTI and down payment. If your credit profile isn’t in the best shape, you could still qualify for a loan product with less strict requirements, such as a VA loan, available to veterans and active service members, or an FHA loan, which is backed by the Federal Housing Administration.
How to refinance with Bank of America
Bank of America’s Digital Mortgage Experience also lets you refinance your mortgage loan. You can also meet in person with a home loan specialist at a Bank of America branch or call 800-579-9365 to speak with a home loan specialist about refinancing a home.
How Bank of America compares
Bank of America offers online tools, a wide variety of home loan options and special programs. It also has discounts available for account holders who meet requirements, such as having a sufficient account balance to qualify for a discounted origination fee. Borrowers who are looking for a USDA loan, however, will have to look elsewhere. To find out if a Bank of America mortgage is right for you, take a look at how it compares to other lenders.
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