Mortgage programs for minority homebuyers
Underserved buyers may be eligible for low down payment loans, grants and credits
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Minority groups often face unique challenges when buying a home. Fortunately, there are specialized mortgage programs designed to help underserved buyers overcome these hurdles. Evan Harlow, real estate agent at Maui Elite Property, told us, “A lot of buyers assume they make too much money or the process will be too complicated, so they never even apply for these programs.” He emphasized that many of these programs are built for middle-income earners, not just low-income families.
“If you ask the right questions and work with a knowledgeable agent and lender, you might be surprised at how many doors open,” he said.
Many programs are designed to give underserved buyers a fair chance at approval and affordable homeownership.
Jump to insightNACA is a mortgage program that offers zero down payments, no closing costs and below-market interest rates.
Jump to insightGovernment-backed loans through the FHA, VA and USDA make it easier to qualify with low down payments and flexible credit rules.
Jump to insightState, local and bank grants can cover thousands in down payment and closing costs.
Jump to insightOvercoming barriers to homeownership
For many underserved buyers, the path to homeownership has been shaped by barriers like redlining, limited credit access and higher loan denial rates. These challenges have made it harder to qualify for mortgages and afford up-front costs.
The good news is that finding the right support can help you navigate those barriers. Working with a real estate agent or lender who understands assistance programs can help you find grants and navigate your options. Specialized programs also reduce barriers by easing credit requirements, lowering down payments and offering financial aid, giving more buyers a better chance at approval.
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Loan programs for minority homebuyers
Buying a home can seem out of reach when you think about how much cash you need up front. The good news is that there are several loan programs for minority homebuyers that can take some of that weight off.
Neighborhood Assistance Corporation of America (NACA)
NACA is one of the most well-known mortgage loan programs for minority homebuyers because it completely removes common roadblocks. A loan from NACA requires zero down payment, no closing costs and no private mortgage insurance (PMI). It also doesn’t consider your credit score. On top of that, NACA offers below-market interest rates, which means you save money both up front and over the life of the loan.
Bank of America: Community Homeownership Commitment
Bank of America’s Community Homeownership Commitment program offers products and resources that help low- to moderate-income borrowers buy homes of their own.
Through this program, you could qualify for a lender credit of up to $7,500 that can be put toward nonrecurring closing costs, like title insurance and recording fees, or to permanently buy down the interest rate. You may also be eligible to receive a grant of up to 3% of the home’s purchase price, up to $10,000, which can be used for a down payment in some locations.
Fannie Mae HomeReady
Fannie Mae’s HomeReady program is designed for homebuyers with limited savings who have a credit score of at least 620. You can put down as little as 3%, and it offers a $2,500 credit to eligible first-time buyers.
Unlike traditional mortgages, Fannie Mae’s HomeReady program takes positive rent payment history into account when reviewing loan applications, making it easier for more people to qualify. However, you can’t earn more than 80% of your area’s median income.
Freddie Mac Home Possible
Home Possible works a lot like HomeReady, but it’s offered through Freddie Mac. This program allows a 3% down payment and has flexible income guidelines. Like Fannie Mae’s HomeReady program, 100% of your down payment or closing costs can come from gift money if you’re buying a single-family home. Home Possible requires a higher minimum credit score than HomeReady, with a cutoff of 660.
Government-backed mortgage assistance
Government-backed mortgages are supported by federal agencies, which makes lenders more willing to approve applications from buyers who might otherwise get turned away. These mortgages are especially popular with first-time and minority buyers because they offer lower down payments and flexible guidelines.
FHA loans
An FHA loan is a mortgage insured by the Federal Housing Administration. These loans are one of the easiest ways to get started with homeownership. You can buy a house with as little as 3.5% down, and the credit score requirements are much more forgiving compared to conventional loans. Plus, FHA loans let you use gift money or grants to help with your down payment, which makes buying a home even more doable.
However, if your credit score is lower than 500, you won’t be eligible. If it’s between 500 and 580, you’d have to put at least 10% down.
USDA loans
A USDA loan is a mortgage offered by the United States Department of Agriculture to low-income residents living in rural or suburban areas.
USDA loans require no down payment, which means you can finance the entire purchase price of your home. They also feature low interest rates and allow closing costs to be rolled into the loan so you don’t have to worry about draining your savings. Plus, USDA loans don’t require you to pay for PMI, which is usually required with low- or no-down payment mortgages.
VA loans
VA loans are special loans offered by the Department of Veterans Affairs to help service members, veterans and surviving spouses afford homeownership.
These loan programs require no down payment as long as the sales price doesn’t exceed the appraised value, and they don’t require PMI. They also limit the closing costs you may be charged and allow you to prepay your mortgage without a penalty.
Down payment and closing cost assistance programs
If you aren’t able to qualify for loans that reduce up-front costs, down payment assistance and closing cost programs can help you cover these expenses.
- America’s Home Grant: The America’s Home Grant from Bank of America gives eligible buyers up to $7,500 to put toward closing costs or to buy down their interest rate. America’s Home Grant is free money that doesn’t have to be repaid.
- Homebuyer Access Grant: This program provides up to $10,000 in down payment assistance for eligible buyers through Wells Fargo.
- Dream. Plan. Home. Closing Cost Credit: This credit offers up to $5,000 toward closing costs through Wells Fargo. Buyers who qualify can combine this credit with the Homebuyer Access Grant for a total of up to $15,000.
Wells Fargo lets you combine its $10,000 Homebuyer Access Grant with its $5,000 Dream. Plan. Home. Closing Cost Credit.
- State and local programs: States like North Carolina and California offer versions of down payment and closing cost assistance. For example, the NC 1st Home Advantage program provides up to $15,000 in down payment assistance, and CalHFA offers a deferred-payment junior loan to first-time homebuyers that can be put toward down payment and closing costs.
- Section 184 Indian Home Loan Guarantee Program: This U.S. Department of Housing and Urban Development program assists Native American homebuyers, offering low down payment requirements and more flexible underwriting standards.
- Native American Direct Loan (NADL): This VA program is available to Native American veterans and to veterans married to Native Americans. It requires no down payment in most cases and provides direct loans for homes on federal trust land.
FAQ
Is there a mortgage program with no closing costs for minorities?
Yes, some lenders and housing agencies offer programs that include no closing costs or closing costs paid by the lender to reduce or eliminate up-front fees. For example, Bank of America’s Community Affordable Loan Solution offers a bank-provided down payment and no closing costs for first-time homebuyers.
How can I qualify for a 0% down payment mortgage?
Each 0% down payment mortgage program has its own income, location and credit requirements, so you’ll need to confirm you meet those before applying.
The two most common 0% down payment mortgages are VA loans and USDA loans. To qualify for these, you’ll need to be an eligible veteran, active-duty service member, surviving spouse or a low- to moderate-income buyer in eligible rural and suburban areas.
How do government-backed loans assist minority homebuyers?
Government-backed loans, such as those from the FHA, VA and USDA, make it easier for underserved buyers to qualify for a mortgage by requiring lower down payments and offering more flexible credit guidelines. For example, FHA loans allow down payments as low as 3.5% for buyers with credit scores of 580 or higher, which is considered fair credit.
What are the eligibility criteria for down payment assistance programs?
Each down payment assistance program has its own rules, but most look at a few key things. Your income usually has to fall below a certain level, and some programs are only for first-time buyers (meaning you haven’t owned a home in the last three years). You may also need a credit score of 620 or higher to qualify.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Neighborhood Assistance Corporation of America, “Access NACA’s Best in America Mortgage.” Accessed Aug. 28, 2025.
- Bank of America, “Bank of America’s Community Homeownership Commitment.” Accessed Aug. 28, 2025.
- Fannie Mae, “HomeReady Mortgage.” Accessed Aug. 28, 2025.
- Freddie Mac, “Home Possible.” Accessed Aug. 28, 2025.
- U.S. Department of Housing and Urban Development, “Let FHA Loans Help You.” Accessed Aug. 28, 2025.
- U.S. Department of Agriculture, “Rural Development Single Family Housing Guaranteed Loan Program.” Accessed Aug. 28, 2025.
- U.S. Department of Veterans Affairs, “VA Home Loans.” Accessed Aug. 28, 2025.
- Bank of America, “America’s Home Grant Program.” Accessed Aug. 28, 2025.
- Wells Fargo, “Get help with your down payment and closing costs.” Accessed Aug. 28, 2025.
- North Carolina Housing Finance Agency, “NC 1st Home Advantage Down Payment.” Accessed Aug. 28, 2025.
- California Housing Finance Agency, “Loan Programs.” Accessed Aug. 28, 2025.
- U.S. Department of Housing and Urban Development, “Section 184 Indian Home Loan Guarantee Program.” Accessed Aug. 28, 2025.
- U.S. Department of Veterans Affairs, “Native American Direct Loan.” Accessed Aug. 28, 2025.
