Wells Fargo rolled out a down payment grant program that will offer $10,000 to eligible buyers or homeowners who currently live in or are purchasing homes in underserved communities in eight metropolitan areas.
The Homebuyer Access grant program is available to those who have a combined 120% or less of the area median income (AMI). The grant funds can only be used toward the down payment on a Wells Fargo fixed-rate conventional loan secured by a property that will be the purchaser’s primary residence.
“Homeownership is central to building wealth but has been out of reach for many minority families as a result of systemic inequalities in housing and finance,” Kevin Reen, head of Wells Fargo Home Lending, said in a statement. “One of the biggest barriers to achieving homeownership is coming up with the down payment.”
The property must be located in the following metropolitan areas: Minneapolis–St. Paul–Bloomington, MN-WI; Philadelphia–Camden–Wilmington, PA-NJ-MD-DE; Dallas–Ft. Worth–Arlington, TX; Washington–Arlington–Alexandria, DC-VA-MD-WV; Baltimore–Columbia–Towson, MD; Atlanta–Sandy Springs–Alpharetta, GA; Charlotte–Concord–Gastonia, NC-SC; New York–Newark–Jersey City, NY-NJ-PA.
Eligible buyers can combine the bank’s grant with other programs including — Wells Fargo’s Dream. Plan. Home. Mortgage, and/or Closing Cost Credit.
For eligible borrowers at or below 80% AMI, the mortgage program allows a 3% down payment on a fixed-rate mortgage and the closing cost credit program provides up to $5,000 to use toward closing costs.
Home prices are on the rise again, mortgage rates are over 7% and the lack of existing homes for sale continues to put pressure on first-time homebuyers.
Lenders — already struggling with the mortgage industry rightsizing — have rolled out down payment assistance programs in recent months.
Generally, the programs allow eligible customers to buy a home with a minimum down payment of 1% of the purchase price and lenders provide 2% of the required 3% minimum down payment for a conventional loan.
Wells Fargo’s Homebuyer Access grant program is an extension to the bank’s Special Purpose Credit Program (SPCP), announced in April 2022 – when the bank committed $210 million to help minority families at the time of the launch.
Wells Fargo has been accelerating efforts to expand its SPCP to serve underserved communities this year following a series of consumer scandals.
Following the bank’s announcement to exit the correspondent lending space in January, Wells Fargo invested an additional $100 million to advance racial equity in homeownership and deployed additional home mortgage consultants in local minority communities.
The bank recorded $847 million in revenues related to its home lending business in the second quarter, a decrease from $863 million in the prior quarter (-2%) and $972 million in the same quarter in 2022 (-13%).