Bank of America Mortgage Review: Top Lender for Affordable Mortgages

Bank of America offers the selection of home loans that you'd expect from a big national lender. It also specializes in low down payment home loans. Some borrowers will even qualify for free money toward their home purchase. Plus, Bank of America has great customer reviews and consistently low mortgage interest rates. Check out our detailed Bank of America Mortgage review to decide if BofA is the best mortgage lender for you.

Full Bank of America Mortgage review

This mortgage lender is a good fit for: Creditworthy first-time home buyers low on cash. Bank of America Mortgage is also a great option for current customers with significant balances at the bank or at Merrill Lynch, as they can qualify for rate and fee discounts.

Top perks

Low down payment offerings

Bank of America Mortgage offers multiple loan options for borrowers with qualifying incomes who are low on cash, including:

• The Affordable Loan Solution? program requires a 3% down payment on loans of up to $726,200, and there is no mortgage insurance requirement. In certain high-cost markets, loan amounts of up to $1,089,300 are available with a 5% down payment.
• The Freddie Mac Home Possible? mortgage has the same low down payment requirement. However, this mortgage program requires mortgage insurance and more cash reserves.
• Qualified applicants can choose a VA loan (a loan guaranteed by the Department of Veterans Affairs). VA loans have no minimum down payment requirement.
• FHA loans have more flexible requirements than some other mortgage programs. The down payment requirement is 3.5%. Mortgage insurance is required.

The first two loan types have income limits and other conditions. There is no income limitation on VA loans, but other eligibility requirements apply. Anyone can apply for an FHA loan but it's usually more appropriate for borrowers who don't qualify for a conventional loan (for example, because they plan to make a down payment of less than 5%).

Digital mortgage application

Many buyers want to handle financial matters from the comfort of home. Bank of America Mortgage delivers with a fully online application process.

With the Bank of America Digital Mortgage Experience? mobile app, you can:

• Prequalify
• Apply
• Electronically sign documents
• Track your loan
• Refinance your existing mortgage

There is a home search feature within the app as well.

High industry rankings

Bank of America Mortgage ranks consistently high in independent studies:

• A- rating with the Better Business Bureau
• 4.82 out of 5 stars on Zillow

Customer discounts

Some Bank of America customers qualify for a discount on the mortgage origination fee. To be eligible, you must sign up for the Preferred Rewards program. This program requires a three-month combined average daily balance of $20,000 or more in qualifying Bank of America banking accounts and/or Merrill investment accounts. The Preferred Rewards program is free to join, and the origination fee discounts are as follows:

• $200 discount for Gold tier members (combined balance of at least $20,000)
• $400 discount for Platinum tier members (combined balance of at least $50,000)
• $600 discount for Platinum Honors tier members (combined balance of at least $100,000)

Preferred Rewards members can also get a mortgage interest rate discount of up to 0.625% on a home equity line of credit (HELOC).

Cash grants

Bank of America Mortgage offers closing credits up to $7,500 and down payment grants of up to $10,000 to qualified applicants. The programs can be combined for a total possible benefit of $17,500, and this money does not have to be repaid. Eligibility requirements include income caps, geographical restrictions, occupancy restrictions (primary residence only), and loan limits.

The Bank of America Down Payment Center is a comprehensive online resource. It helps borrowers identify other down payment and closing cost assistance programs that may be specific to the borrower's county or city. Bank of America Mortgage places no restriction on the combination of assistance programs it will allow. It's worth noting that most home buyer assistance programs are either for first-time home buyers, low- to moderate-income borrowers, or borrowers in designated areas. Many require home buyer education.

Affordable HELOC

Borrowers considering a cash-out refinance loan can also look at the Bank of America Mortgage home equity line of credit. This loan product comes with no application fee, no closing costs, no annual fee, and no fee to access cash. Bank of America makes HELOCs even more affordable with interest rate discounts. Those are available to customers who set up automatic payments and customers who make an initial withdrawal of at least $10,000. There is also no fee to convert a variable-rate HELOC to a fixed-rate loan.

Doctor loans

A doctor loan, or physician loan program, is for doctors, dentists, and other qualified medical professionals who have a high income but insufficient cash available to make a 20% down payment. Qualified borrowers can get a mortgage for up to $850,000 with a 3% down payment, up to $1 million with a 5% down payment, up to $1.5 million with 10% down, and up to $2 million with 15% down. Medical residents and fellows with an employment contract can get a mortgage 90 days before they start their new job.

Transparency

Bank of America publishes its mortgage rates on its website. That's convenient for borrowers who are doing initial research online.

What could be improved

No USDA loan

Bank of America Mortgage doesn't offer USDA loans. USDA loans are mortgages insured by the U.S. Department of Agriculture for low and moderate income borrowers, usually in rural areas. A key benefit is that there is no down payment requirement. If you want a zero-down mortgage from Bank of America, you'll have to pursue down payment assistance and home buyer grants through other channels, which can be more work on your part.

Customer discounts are not for all customers

You have to have at least $20,000 in combined balances to enjoy a discount off the Bank of America Mortgage origination fee and other financial perks. Unfortunately, customers whose balances are lower get no origination fee discount or interest rate reduction, even if they're a longtime account holder.

Non-qualified mortgage loans

If you don't qualify for a traditional mortgage, you might have a hard time finding a home loan to suit your needs. Bank of America might not be able to help you, for instance, if you're self-employed and need to qualify on bank statements or profit-and-loss statements. You also need to look elsewhere if you want to buy an investment property relying on the rental income you expect it to generate.

Alternatives to consider

Better gets high marks for a seamless online experience, and it's good for those who want low fees and interest. The lender also doesn't charge origination fees and consistently offers some of the lowest rates we've come across. It'll back that up, too -- Better will beat any competitor's estimate by $100 or give you $100 if it can't.

Citi Mortgage gives a financial incentive to all of its current customers, not just those with a high net worth. If you have just $1 on deposit at Citi, you can qualify for $500 off your mortgage closing costs. If you have significant assets (more than $50,000), you get a permanent reduction off your mortgage loan interest rate.

How to qualify

For most loans at Bank of America Mortgage, you need a FICO? Score of at least 620. Jumbo loans and VA loans may require a higher score. For an FHA loan, you might qualify with a lower credit score, but the mortgage insurance requirement makes this a more costly loan.

Most Bank of America Mortgage loans require a debt-to-income ratio under 50%. Your DTI is the percentage of your before-tax income that goes to debt each month, including your proposed new monthly payment for the home you want to buy. Bank of America may allow higher DTIs on some loans for qualified borrowers.

Generally speaking, if your application is weak in one area, you need to make a stronger showing in other areas. So with a higher DTI, you may need a larger down payment or have a higher credit score (or vice versa).

How are Bank of America's refinance rates?

Bank of America's refinance interest rates are competitive. On the day we checked, refinance rates were about the same as the national average. Also, they were a little higher than the purchase loan rates.

How are Bank of America's rates compared to the national average?

Bank of America's mortgage rates are competitive. When they run a little higher than the national average, the fees are usually a little lower than what other lenders charge. When you find a low rate, it's important to ask how much in fees you'll pay for it. Lenders allow borrowers to get a permanently lower interest rate by paying for some of the interest upfront. This is called buying mortgage discount points, and it's a very important factor to compare when you shop around. To qualify for Bank of America's lowest mortgage rate, you need a credit score over 740. If your score is lower, your interest rate will be higher. That's true for all mortgage lenders, and that's why it's a good idea to do your best to increase your credit score before you apply.

Bank of America Mortgage is right for you if:

You're a low- to moderate-income borrower with a credit score of at least 620. Many first-time home buyers fall into this category. These borrowers could potentially buy a home for more than $300,000 with no money out of pocket. Not every applicant or every property qualifies. But for those that do, Bank of America's affordable mortgage options put homeownership in reach.

You're a Bank of America customer with significant assets. Between the mortgage closing cost discount and the HELOC interest rate discount, Bank of America Mortgage products stand out for low costs in a competitive market.