Are you a first-time home buyer in Louisiana?
If you are buying a house in Louisiana for the first time, you have many different options available to you. Buying a house can feel a bit overwhelming so let me help you ease some of your anxiety. I want to share with you my top Louisiana first-time home buyer programs.
What is a First-Time Home Buyer Program in Louisiana?
A first-time home buyer program is a mortgage program or grant that is designed to relieve some of the financial burden that comes with buying a house for the first time.
First-Time Home Buyer Programs Have Common Features
- Low Down Payment Requirements
- Competitive Interest Rates
- Flexible Credit Guidelines
First-Time Home Buyer Programs will have different requirements but they usually require you to meet certain criteria.
These often include:
- Minimum Credit Score Requirements
- Maximum Income Limits
- Complete Home Buyer Education Courses
- Purchase a Single Family Home
- Must Be a First-Time Home Buyer
Does Louisiana Have a First-Time Home Buyer Program?
Louisiana has many first-time home buyer programs available. These programs range from popular loans such as USDA and FHA, but also include programs that provide down payment and closing cost assistance.
It’s important to remember that not all first-time home buyer programs are the same, so you’ll need to consider each of your options to determine which one is right for you.
Louisiana Down Payment Assistance and Grant Programs
If you are considering down payment assistance or a grant program, you’ll need to determine if:
- You meet the eligibility requirements
- The long term cost of the program
With these types of programs you typically have two different ways of getting assistance:
- Forgivable Second Mortgage
The first way to receive assistance is via a forgivable second mortgage. This is how most of the state run programs work. They provide you with down payment and closing costs assistance between 3%-6% of the purchase price.
You have to keep the house for a specific period of time, usually between 5 and 10 years. If you keep the house for the full term then the second lien is forgiven. If you sell the house during this period you must pay back the assistance.
- Grant Provided by The Lender
The second option to receive assistance comes in the form of a grant provided by your mortgage lender. These are often the most expensive because the lender will recoup their costs in the form of a higher interest rate.
With these programs you’ll likely get an interest rate that is 1-2% higher than the interest rate you would otherwise qualify for.
So if you are considering using one of these program, you’ll need to weight the costs and time commitments to ensure they meet your current lifestyle.
Top First-Time Home Buyer Programs in Louisiana
So now that you know what a first-time home buyer program is, and what to look for, let me help you narrow down your search by sharing some of the best first-time home buyer programs in Louisiana.
USDA Rural Development Loan
The USDA RD loan is technically not a first-time home buyer program because you don’t have to be a first-time home buyer in order to use it. However no list of the best programs would be complete without it… especially in Louisiana.
The USDA Rural Development Loan is available in nearly every market in Louisiana. While the program is a “rural” loan program the definition of rural is very broad.
Most of the suburbs and rural areas in Louisiana are going to qualify. If you can live outside of the major city limits of cities such as, New Orleans, Metairie, Kenner, Baton Rouge, Lake Charles, Lafayette, Shreveport and Monroe, you’ll find opportunities with this program.
In fact USDA tells us that over 97% of America is eligible to use this loan program.
Why Do We Love USDA?
There is no down payment requirement. You do not need a down payment in order to purchase a home using the USDA Loan. It also allows the seller to cover your closing costs, and has reduced mortgage insurance. So if you are a first-time home buyer in Louisiana you need to check out this program.
In fact you can read more about it here: USDA Rural Development Loan Louisiana
CAFA Gold 100
The CAFA Gold 100 program is another first-time home buyer program that allows you to purchase a home with no money down. Unlike the USDA Loan, this program uses down payment assistance in conjunction with an FHA Loan.
The Capital Area Finance Authority provides homebuyer assistance up to 4% of the loan amount to help cover the cost of your down payment.
Since this down payment assistance program is using an FHA Loan you can also get the seller to cover up to 6% of your closing costs as well.
The CAFA Gold 100 works by providing you with a forgivable second lien that lasts for either 7 or 10 years.
This program also has a few other requirements:
- Minimum Credit Score of 620
- Debt to Income Ratio up to 55%
- Maximum Loan Amount of $420,680
- Must Earn Less Than 115% Area Median Income
If you’d like to learn more about this home buyer assistance program click here.
Home Ready & Home Possible – Low Down Payment for Good Credit Borrowers
One of my next favorite first-time home buyer programs is the Home Ready and Home Possible Loan Programs.
These loan programs are conventional loans so will be best for first-time home buyers in Louisiana who have higher credit scores and lower incomes.
The benefits of this loan program is:
- 3% Down Payment Requirement
- Reduced Private Mortgage Insurance
- Lower Interest Rates
If you are a conventional borrower and you make less than 80% of your area’s median income limit this could be a much cheaper option for you.
Louisiana First Time Home Buyer Program for Veterans
VA Loans are a great program for veterans and active-duty military members. The VA Loan is the best loan program available in America. It’s very flexible when it comes to credit requirements and where you can purchase a home.
Benefits of a VA Loan:
- No Minimum Credit Score Requirement
- No PMI
- No Down Payment Required
- High Loan Limits
Buying a house using your VA Loan benefits can be a great way to become a first-time home buyer in Louisiana. If you are interested in learning more about your VA Loan benefits check out our VA Loan Guide.
Bad Credit First Time Home Buyer Programs in Louisiana
Can I buy a house in Louisiana with bad credit?
If you have credit struggles you’ve probably asked yourself this question. To properly answer this we first have to define what bad credit is.
For this article, we’ll assume you have a credit score lower than a 620. When trying to purchase a house with a score under 620, things will be different. If you have other issues such as:
- Late Payments
I would suggest reading – How to Buy a House with Bad Credit
If you want to buy a house and you have bad or poor credit, you are most likely going to need a down payment… unless you are going to use a VA Loan.
The Two Major Differences for First-Time Home Buyers with Bad Credit
- You need a down payment: If you are going to buy a house with bad credit, you’ll most likely need to use an FHA Loan which requires 3.5 % Down. So start with saving up a down payment so that you are eligible to buy a house.
- Mortgage Reserves: You will also likely need to provide mortgage reserves in order to get your loan application approved. Mortgage reserves are 1 month of your full mortgage payment saved AFTER you pay your down payment and closing costs.
Which First-Time Home Buyer Louisiana Program is Right for You?
So, which program do you think is right for you? If you’d like help understanding which loan programs might be the best fit, I would love to help you.
We have a special Mortgage 101 call where we can walk you through each program and help you determine which one is best for you and your situation.