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IBC Bank\u2019s Community Homeownership Program offers zero-down payment loans to prospective homeowners in low-income areas. Credit: Amber Esparza \/ San Antonio Report<\/p>\nWhen Juan Esparza first heard about the loan program, he thought it was a scam.<\/p>\n
It was his second attempt to apply for a home loan. He was speaking to a representative from IBC Bank on the phone when they brought up the Community Homeownership Program.<\/p>\n
\u201c[It] sounded too good to be true,\u201d Esparza, 31, said. \u201cI said, \u2018Can I meet you?\u2019 I didn\u2019t want to fall into a scam.\u201d<\/p>\n
It was only after he met the loan officer face to face in an IBC Bank building that he started to realize the program might be real.<\/p>\n
\u201cI was scared of it,\u201d Esparza said. \u201cI didn\u2019t know what the catch was.\u201d<\/p>\n
The IBC Bank pilot program offers prospective homeowners in low-income areas zero-dollar down payment loans and alternatives to a typical credit check. The bank\u2019s Community Homeownership Program started in 2023 as a way to help community members that typically face barriers to buying a home.<\/p>\n
Will Shipp, a senior vice president of the Laredo-based bank, said the pilot program was developed after working with nonprofits and regulators to best meet the needs of underserved communities. They help residents who make less than 120% of the area median income look for homes that cost between $200,000 and $300,000 in specific census tracts.<\/p>\n
IBC Bank\u2019s Community Homeownership Program offers zero-down payment loans to prospective homeowners in low-income areas. Credit: Amber Esparza \/ San Antonio Report<\/p>\n
\u201c[It targets] those marginalized or underserved communities where the bank has a presence,\u201d Shipp said. \u201cThere\u2019s really just a small part of San Antonio where this isn\u2019t available.\u201d<\/p>\n
IBC Bank keeps the loans on its books rather than selling them on to government-controlled companies such as Fannie Mae and Freddie Mac, which typically package home loans for investment.<\/p>\n
\u201cWe\u2019re willing to accept a greater risk in order to complete the home buying process for the underserved communities we work with,\u201d Shipp said.<\/p>\n
IBC Bank also reduces risk by partnering with the nonprofit<\/a> Business and Community Lenders of Texas. BCL of Texas provides financial education to prospective homeowners and can help guide them through the application process.<\/p>\n \u201cWhenever this program came out, it was a little bit of an eye opener,\u201d said Pamela Garcia, chief of staff at BCL of Texas. \u201cYou\u2019re showing alternative ways of, \u2018Hey, I know how to handle my money.’\u201d<\/p>\n The Special Purpose Credit Program\u2019s users might not have robust credit histories, but they do have to show they can handle money responsibly, she said. That means they have to have good debt-to-income ratios and show they don\u2019t have a history of late payments for rent, vehicles and utilities.<\/p>\n BCL of Texas advises applicants who have issues with their credit or bank histories on how to fix them. Sometimes, it\u2019s as simple as explaining a one-time hospital visit.<\/p>\n Loans with no down payment can be more expensive, Shipp said, but IBC Bank also provides assistance with closing costs and cuts out mortgage insurance. <\/p>\n Esparza said his $2,100 monthly mortgage payment is manageable.<\/p>\n The required eight-hour, federally-approved homeowner education course was also helpful. Esparza learned about his tax and insurance obligations and keeps track of survey information and his easement rights.<\/p>\n A part of broader efforts<\/p>\n IBC Bank is not the only entity that sees credit scores and up-front payments as barriers to homeownership.<\/p>\n Jung Hyun Choi<\/a> is a research associate with the Urban Institute\u2019s<\/a> Housing Finance Policy Center. Choi has studied people\u2019s ability and risk to pay their mortgage. Credit scores tend to be good predictors of mortgage payment, but so is rent, she said.<\/p>\n Often, she added, rental payments are not incorporated into credit scores.<\/p>\n \u201cThere is a greater movement to improve rental reporting,\u201d Choi said. \u201cIf we include rental payment data into the credit-scoring model, those with no credit scores or low-credit scores benefit the most.\u201d<\/p>\n That can help marginalized communities that regularly pay rent, but might not have as much traditional banking history.<\/p>\n Lorraine Robles, chief real estate and development officer for Opportunity Home San Antonio<\/a>, said she\u2019s seen San Antonio residents struggle to get traditional home loans.<\/p>\n Opportunity Home is the City of San Antonio\u2019s housing authority.\u00a0It runs its own affordable homeownership program<\/a>, building homes and selling them to low-income residents at affordable prices. Like IBC Bank\u2019s pilot program, Opportunity Home offers assistance with the upfront costs.<\/p>\n
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Family photos and children\u2019s artwork hang near the front entrance of Juan Esparza\u2019s recently purchased home in East Terrell Hills. Credit: Amber Esparza \/ San Antonio Report<\/p>\n