First-time homebuyer programs in Louisiana
To apply for assistance from one of the LHC’s programs, you’ll identify your annual income and purchase price maximums, then work with an approved mortgage lender to get pre-approved for a mortgage loan.
Once you’ve found a home that meets the eligibility requirements, you’ll return to your lender to apply for your loan. Your loan officer will then make a request to the LHC to reserve the assistance funds and walk you through the rest of the process to closing.
LHC Market Rate Conventional program
The LHC offers conventional mortgage loans at competitive 30-year fixed rates to eligible Louisiana residents through its Market Rate Conventional program. The program is open to both first-time and repeat homebuyers with incomes no higher than 80% of the area median income (AMI) by parish and household size.
The program offers assistance worth up to 4% of the home’s purchase price. The funds can be used for your down payment, closing costs and/or prepaid items, and they come with a reduced mortgage insurance rate and no origination fees, additional bond documents or compliance package.
To qualify, a property must be a single-family home in Louisiana with a maximum purchase price of $453,100. The first-time homebuyers must participate in a homebuyer education program.
LHC Market Rate GNMA program
Through the Market Rate GNMA program, LHC offers 30-year, fixed-rate FHA, VA or USDA mortgages for single-family homes at favorable interest rates.
The program also offers up to 4% assistance for down payment, closing costs and/or prepaid items, with no origination fees or additional bond documents, and no compliance package.
Eligible homebuyers can bring in a household income of up to 115% of the area median income.
LHC Mortgage Revenue Bond (MRB) Assisted program
The Mortgage Revenue Bond Assisted Program offers prospective homeowners funds to help with their down payments and closing costs. Qualified applicants can get a loan of up to 4% of their purchase price with interest rates that are generally at market level. Borrowers using a conventional loan are offered a reduced mortgage insurance rate.
This program is reserved for first-time homebuyers, unless the property is in a targeted area of Louisiana, which your lender can help you identify. Buyers must meet local income requirements, and the purchase price can’t exceed the established limits for the program; details are available on the website for the MRB program.
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LHC Mortgage Revenue Bond (MRB) Home program
The Mortgage Revenue Bond Home Program helps with down payment and closing costs if a homebuyer earns 80% or less of the area median income. Like the MRB Assisted program, the money is reserved for first-time homebuyers in Louisiana. However, through the Home program, you may access a loan that ranges from 5% to 9% of your home’s purchase price.
And as with the MRB Assisted program, you’ll have to follow the income and purchase price guidelines for your parish.
LHC Delta 100 program
This program is designed to help selected first-time homebuyers in the Mississippi Delta parishes of Louisiana who don’t meet the traditional credit score requirements to secure a mortgage, but who have shown they have the ability, willingness and commitment to become a homeowner.
The LHC will provide qualified homebuyers with up to 100% financing (potentially meaning no down payment) and up to 3% of the home’s sale price for closing cost assistance. Mortgage insurance isn’t required with these loans.
Eligible first-time homebuyers in the parishes will be offered 30-year, 2% fixed interest rate loans. While there’s no minimum credit score, a homebuyer must be purchasing a single-family home in the Delta region, and will have to contribute either 1% of the purchase price or $1,500 of the buyer’s own funds. (Gifts are not allowed.) Applicants also will have to complete a homebuyer education course.
With the Delta 100 program, the maximum loan a homebuyer can take out is $242,000, and the maximum for household income is $99,000.
More: Mortgage calculator based on income
LHC Mortgage Credit Certificate (MCC) program
This statewide program is designed to help first-time homebuyers, veterans and low- to moderate-income borrowers buy homes in designated areas. The MCC program offers homebuyers up to 40% of the annual mortgage interest they pay (to a maximum $2,000) as a direct credit on their federal taxes for the life of the loan. You’ll have access to this tax credit as long as the home remains your primary residence.
With the MCC, there are purchase price limits and income limits that range by region. You can use a mortgage credit certificate with all of the LHC’s other first-time homebuyer programs, with the exception of the Mortgage Revenue Bond program.
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Who qualifies for first-time homebuyer programs in Louisiana?
The Louisiana Housing Corporation’s programs are designed to help all Louisiana residents find affordable, safe and energy-efficient housing. With income and purchase price limits that range by parish, these programs are targeted to low- to moderate-income residents, both first-time homebuyers and repeat buyers.
With the exception of the Delta 100 program, the minimum credit score requirement for each of the LHC’s programs is 640.
More: Get a free credit score and credit monitoring from Credit Sesame.
Nationwide first-time homebuyer programs
It’s not so easy to secure a “conventional” mortgage from a lender in the private market. You often need a credit score of at least 620 to impress, plus at least 5% of the purchase price in cash for a down payment.
More: Use these savings accounts to build up your down payment.
That’s why many first-time homebuyers will find it easier to go through the federal government for one of these nonconventional mortgages.
Federal Housing Administration (FHA) loans were created after the Great Depression to encourage homeownership. In the mid-1930s, only about 40% of Americans owned their homes.
FHA loans have a typical credit score requirement of just 580 and a minimum down payment of 3.5%, so the mortgages are much more accessible. But if you put down less than 10% upfront, you also will face the added expense of a mortgage insurance premium (MIP).
The FHA's Loan Requirements Explained.
A walkthrough of how to meet the FHA's requirements.See Guide
At the tail end of World War II, Congress passed an act to increase benefits for veterans. From that, VA loans were created, making it possible for today’s U.S. Department of Veterans Affairs (VA) to guarantee or insure home, farm and business loans made to veterans by lending institutions.
Active service members, veterans and some surviving military spouses can all qualify for a VA loan. You won’t be asked for a down payment or have to buy mortgage insurance, but you do have to pay a funding fee when you take out a VA loan.
More: How much house can I afford calculator
Another loan that doesn’t require a down payment or private mortgage insurance is the USDA loan. These loans are targeted to lower-income rural and suburban Americans and are guaranteed by the United States Department of Agriculture.
There are a few fees associated with this type of loan. You’ll pay both an upfront 1% guarantee fee and an annual 0.35% fee. But in most cases, the mortgage insurance associated with other types of loans adds up to more than the USDA’s fees.
To see if you qualify for a USDA loan, lenders will look closely at your annual income. Borrowers must meet strict income limits, since this type of loan is reserved for lower-income households.
The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living. You can find the limits for your region on the USDA’s website.
With all these options available to you for buying your first home in Louisiana, you might be wondering where you even begin.
Before you even qualify for a mortgage, you’ll want to make sure your credit score meets the requirements for both state and national programs. Credit Sesame offers free access to your credit score.
If your score falls short of the standards right now, there are steps you can take to improve it. A company called Self can help you with credit repair, to get the score you need.
Then, you can think about getting pre-approved for a mortgage. And if you need more information, we’ve got a handy guide to mortgages for beginners.
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