Help For First-Time Home Buyers In Louisiana: A Guide

When you picture Louisiana, it may conjure up images of colorful masks, beignets and jazz music. But did you know that Louisiana is also considered one of the 10 best states for quality of life? This may be one of the reasons prospective home buyers are drawn to the Bayou State.

Even so, buying a home in any state is no easy feat. Luckily, Louisiana offers several home buying programs to help lighten the load. If you’re a first-time home buyer in Louisiana, this article is for you!

Why Buy A Home In Louisiana?

Taking strong influence from its Native American, Spanish and French colonizers, Louisiana is known for its unique cuisine, architecture and events, including iconic Mardi Gras parades and festivities. Each of these elements plays a role in attracting visitors to the state – but what makes people want to stay?

Whether due to positive job growth, lower than average real estate costs or a cost of living that is 13.1% lower than the U.S. average, buying a home in Louisiana can be appealing.

What Are The First-Time Home Buyer Programs In Louisiana?

The state of Louisiana offers several programs aimed at helping prospective buyers achieve their dream of homeownership, provided by the Louisiana Housing Corporation (LHC). Keep in mind that eligibility requirements may vary between each of these programs and that location and income limits apply.

The precise definition of what constitutes a first-time home buyer may also differ between these programs. For example, the LHC’s Mortgage Revenue Bond (MRB) programs define a first-time home buyer as anyone who hasn’t owned a home in the last three years. While the Resilience Soft Second Program follows this definition, it also considers single parents who have only owned a home with a former spouse while married or displaced homemakers who have only owned a home with a spouse as first-time buyers.

To help you better understand these programs and their requirements, we’re breaking them down one by one.

Mortgage Revenue Bond (MRB) Programs

The LHC’s Mortgage Revenue Bond (MRB) Programs make up one piece of the corporation’s offerings, aligning with its main goal to help Louisiana residents obtain what they call “safe, affordable and energy-efficient housing.”

But what exactly are these programs and how can they help you become a homeowner? Let’s get into the details.

MRB Assisted Program

The MRB Assisted Program offers down payment and closing cost assistance for up to 4% of the loan amount through a forgivable second mortgage. To qualify, you’ll need to complete a home buying education course, meet local income and purchase price limits and have a minimum credit score of 640.

MRB Home Program

The MRB Home Program also offers down payment and closing cost assistance, though this program functions somewhat differently. Qualified borrowers can receive up to 5% – 9% of the loan amount in the form of a grant, which does not require repayment.

This program is specifically targeted at prospective home buyers who are at or below 80% of the area median income (AMI). To find the median income in your area, we recommend using the Fannie Mae Income Look-Up Tool. To qualify, you’ll need to meet the 80% AMI requirement as well as the same qualification standards mentioned above.

Market Rate Conventional Program

The Market Rate Conventional Program is a 30-year, fixed-rate mortgage available for first-time and repeat home buyers at or below 80% of the area median income. This mortgage comes with up to 4% of the loan amount to be used for down payment and closing costs as well as a reduced cost for mortgage insurance.

To qualify, a minimum credit score of 640 and the completion of a home buyer education course is required. Market Rate Conventional loans are only available for the purchase of primary, single-family homes.

Market Rate GNMA Program

The Market Rate GNMA Program offers 30-year, fixed-rate loans through the Federal Housing Administration (FHA loans), the Veterans Administration (VA loans) and the U.S. Department of Agriculture (USDA) with favorable interest rates. These mortgages include up to 4% assistance for down payment and closing costs.

To qualify, borrowers can have an income up to 115% of the area median. Like the conventional program, the Market Rate GNMA Program is available for first-time and repeat home buyers. A median credit score of 640 is required.

Premier Program

The Premier Conventional & Government Program offers 30-year, fixed-rate mortgages with down payment and closing cost assistance up to 5% of the loan amount.

The program includes options for conventional, FHA, VA and USDA loans, though qualification guidelines and program benefits may vary between each loan type. In general, you’ll need a minimum credit score of 640 and an annual income below $99,000 to qualify.

Though the conventional loan is only available for single-family primary residences, the Premier Government Program can be used on purchases of condos, townhomes and manufactured homes. Once again, it’s important to note that the Premier Program is available both to first-time and repeat home buyers.

Mortgage Credit Certificate Program

The Mortgage Credit Certificate (MCC) Program was created to help veterans, first-time and low- to moderate-income buyers purchase homes in designated areas. The program offers a federal tax credit for up to 40% of the annual mortgage interest payments over the lifetime of the loan, capped at $2,000 per year.

Purchase price and income limits vary by area. To capitalize on this credit, homeowners must file IRS Form 8936 with their federal tax returns. This program can be used alongside other down payment assistance programs offered by the LHC.

Resilience Soft Second

The Resilience Soft Second Program aims to bridge the affordability gap between what a home buyer can afford and the purchase price of their desired home. This is done through what the LHC calls a “soft” second mortgage – a fully forgivable loan if you use the home as your primary residence for at least 10 years. This loan covers 20% of the home’s purchase price (capped at $55,000) and also provides up to $5,000 in closing cost assistance.

A minimum credit score of 640, a maximum debt-to-income (DTI) ratio of 48% and an AMI at or below 80% is required to qualify. This program is only available to members of the Gustav/Ike and Isaac designated parishes. In this program, first-time home buyers are classified as anyone who hasn’t owned a home in the past 3 years, a single parent who has only owned a home with a former spouse while married or a displaced homemaker who has only owned a home with a spouse.

Are There USDA Loan Eligible Properties In Louisiana?

Across the country, USDA loans are often offered to help low-income borrowers purchase homes in designated rural areas – and Louisiana is no exception. USDA loans are backed by the government and therefore usually come with lower interest rates and no down payment requirement.

The Single Family Housing Direct Home Loan – also called the Section 502 Direct Loan Program – is available for borrowers with an adjusted income at or below the income limit for their area. To find eligible properties and income limits in your area, leverage the USDA Eligibility Site.

Are There Any Parish-Specific First-Time Home Buyer Assistance Programs Available?

The Bayou State offers certain parish-specific programs designed to attract investment to specific regions. For example, the Delta 100 Program provides up to 100% financing with a 2% interest rate and 3% in closing cost assistance for the purchase of single-family homes located in Delta Parishes.

To qualify, you’ll need to meet the 80% AMI requirement and find a home with a cost below $242,000. Borrowers can lack traditional credit as long as they have what the LHC calls “sufficient cash reserves.” The borrower will be required to complete a home buyer education course and invest whatever costs less: 1% of the home’s purchase price or $1,500.

Are There Any Other Sources Of First Time Home Buyer Assistance Available?

In addition to state-wide programs, there are several first-time home buyer programs offered nationwide, at the city level and by nongovernmental entities that you can consider.

For more information regarding your local offerings, we recommend turning to the U.S. Department of Housing and Urban Development (HUD), which maintains a database of local home buying resources by state.

How Can I Get Started On Finding My Louisiana Home?

With several first-time home buyer grants and programs to consider, your dream of homeownership may be closer than you think.

If you’re ready to begin your home search, check out our Louisiana home listings or get a housing trend report to learn more about your desired areas. And if you need help finding a real estate agent in your market, we can help with that, too!

The Bottom Line: The Bayou State Offers A Helping Hand To First-Time Home Buyers

When you’re dealing with all of the emotional and financial stress of preparing to buy your first home, it might be comforting to know you’re not in it alone. Depending on their income, prospective home buyers in Louisiana can receive significant financial help to become homeowners.

When you’re ready to take the first step toward finding your Bayou State home, start the approval process by applying online today.