Louisiana First-Time Home Buyer | 2022 Programs and Grants

What to know about buying a house in Louisiana

Louisiana first–time home buyers are pretty lucky. Home prices are lower in the Pelican State than they are on average nationwide. And, in most places, they’re rising more slowly.

Of course, it may not feel that way. Because you still need to save a large amount to cover your down payment and closing costs.

Or do you? Louisiana has an unusually broad selection of down payment assistance programs. And if you’re eligible for one of them, you could be a homeowner sooner than you dreamed possible. Here’s how.

In this article (Skip to…)

Louisiana home buyer overview

Home prices in Louisiana were up 6.7% year–over–year in January 2022, according to Redfin. And that’s a big increase for almost any first–time home buyer, even though it’s much lower than the nationwide average.

The good news is that Louisiana has a remarkably wide range of down payment assistance programs to help you cover your upfront costs. And that could make home buying much more affordable, if you’re eligible.

Louisiana home buyer stats

Average Home Sale Price in LA $299,000
Minimum Down Payment in LA (3%) $8,970
20% Down Payment in LA $59,800
Average Credit Score in LA1 684
Maximum LA Home Buyer Grant2 LHC: Up to $60,000 in certain parishes as a forgivable silent second mortgage

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

First–time home buyer loans in Louisiana

If you’re a first–time home buyer in Louisiana with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first–time buyers have saved enough for 20 percent down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low–down–payment mortgage programs:

  • Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years once you reach 20% home equity
  • FHA loan – Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
  • VA loan – Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
  • USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • LHC loans – May include super–competitive rates, mortgage credit certificates, and significant down payment assistance. More information below

Note that government loan programs (including the FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.

Louisiana first–time home buyer programs

The Louisiana Housing Corporation (LHC) offers a wide range of assistance to first–time buyers in the state. However, these are mostly geared toward borrowers with low or moderate income.

Benefits of an LHC mortgage include:

The Louisiana Housing Corporation also offers home buyer education courses. It provides a “2–day course facilitated by a live instructor, totaling 4 hours” at no charge. But you can choose a paid–for option if you prefer.

To discover more, there’s a request–more–information button on the website. Or you can call one of LHC’s approved lenders.

Louisiana first–time home buyer grants

The Louisiana Housing Corporation offers several down payment programs. And you should check out all the options to see which one suits you best.

Each assistance program has income limits and home price limits for you to be eligible. But note that those buying in “target areas” (census tracts designated as requiring regeneration) may have higher income caps than those purchasing elsewhere.

Programs have different eligibility requirements and benefits, which can be found on LHC’s website.

  • For example, Delta 100 is available only in certain parishes. It offers a fixed mortgage rate of only 2% with no mortgage insurance and down payment assistance of up to 3% of the purchase price. That’s a real bargain
  • Meanwhile, Resilience Soft Second can deliver up to $60,000 in down payment and closing cost assistance in a wider selection of parishes. The “soft second” means it’s a soft second mortgage, which has a 0% interest rate and no monthly payments. If you don’t sell, refinance, or move out of the home for 10 years, that loan will be forgiven in full

Be sure to read up on all five of the down payment programs LHC offers. Only then can you work out the ones for which you might be eligible and from which you might benefit most.

Buying a home in Louisiana’s major cities

As you’d expect, New Orleans has the most expensive homes out of Louisiana’s three biggest cities. Shreveport’s median home prices are less than half those in the Big Easy. And Shreveport’s home prices actually fell a little in 2021, while New Orleans prices rose nearly 13%. Baton Rouge came between the other two for both home prices and home price inflation.

New Orleans first–time home buyers

In January 2022, the median list price of homes in New Orleans was $359,900. That was an increase of 12.8% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

  • $10,800 for 3% down payment
  • $71,980 for 20% down payment

The City of New Orleans has a down payment assistance program called Direct Homebuyer Soft Second Mortgage Assistance Program. But you’ll need a modest income to qualify.

According to the city’s chart, in early 2022, those maximum incomes ranged from $39,450 for a single borrower up to $74,350 for a household comprising eight or more people. Those figures are 80% of the area median income for New Orleans and yours must be at or below that.

Eligible homebuyers are offered a deal that is similar to the LHC’s Resilience Soft Second. They may receive up to $55,000 as a forgivable second mortgage and up to $5,000 in closing cost assistance.

Baton Rouge first–time home buyers

In January 2022, the median list price of homes in Baton Rouge was $249,000. That was an increase of 8.3% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

  • $7,470 for 3% down payment
  • $49,800 for 20% down payment

We could find no trace of an active down payment assistance program on the City of Baton Rouge’s website. But you could try calling City Hall at (225) 389–3000 to see if we missed something.

Shreveport first–time home buyers

In January 2022, the median list price of homes in Shreveport was $159,900. That was a decrease of 1.3% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

  • $4,800 for 3% down payment
  • $31,980 for 20% down payment

The City of Shreveport has a Home–buyer’s Assistance Program Participation Initiative (“HAPPI”). To qualify for this assistance program, your income must be at or below 80% of the city’s median income. Check these income eligibility figures on the city’s website. Note that income limits may have changed by the time you read this.

The program website says, “The maximum amount of [down payment] assistance is up to 20% of the sales price of the property or appraised value; whichever is lesser, depending on percentage of area median income. Other incentives are available to applicants purchasing in designated home ownership zones approved by the Community Development Department.”

You can call Shreveport Community Development at (318) 673–5900 for more details.

Where to find home buying help in Louisiana

All the organizations we’ve listed above should provide advice freely to any first–time home buyer in Louisiana or within their local areas.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides lists for statewide, regional, and local resources:

Statewide and regional home buyer programs in Louisiana

Louisiana first-time home buyer programs by city/town

Programs by parish

Louisiana Affiliates of The Fuller Center for Housing

What are today’s mortgage rates in Louisiana?

You can see today’s live mortgage rates in Louisiana here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

1 Source: Experian.com 2021 study of 2020 data

2Based on a review of the state’s available DPA grants at the time this was written

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *