Louisiana First Time Home Buyer Guide

Welcome to our Louisiana first time home buyer guide 😊! I am excited to share with you what you need to know to buy a home in Louisiana. 

Buying a house in Louisiana offers advantages for first-time home buyers, including lower home prices and a wide selection of down payment assistance programs. With these resources, eligible buyers can achieve homeownership sooner and with reduced upfront costs.

So let’s jump right in! 

What is a First Time Home Buyer in Louisiana? 

Louisiana defines a first-time home buyer as someone who hasn’t owned a home in 3 years, granting them access to assistance programs. Eligible first-time buyers in Louisiana can access programs for financial assistance, down payments, and favorable rates.

First Time Homebuyer Statistics in Louisiana

In Louisiana, the average home price is $249,900. For those planning to buy a home, understanding the down payment options is crucial. A 3% down payment on this average price would be $7,497, while a 20% down payment would amount to $49,980. Choosing to pay 20% upfront can help lower your monthly mortgage payments and avoid Private Mortgage Insurance (PMI). Additionally, having a good credit score is essential for better mortgage rates. The average credit score in Louisiana is 686, which can impact your eligibility for various loan options. Whether you are a first-time home buyer or looking to upgrade, these statistics are vital for informed decision-making.

Average Home Price in Louisiana	$249,900
3% Down Payment	$7497
20% Down Payment	$49,980
Average Credit Score in Louisiana	686

What are the requirements for First-Time homebuyers in Louisiana? 

You’ll need to have a minimum credit score of at least 580 and have a down payment of 3.5% of the purchase price. You should have a debt-to-income ratio under 50%  and purchase a home that is under the loan limits for your area. 

First Time Homebuyer Loans in Louisiana 

Contrary to popular opinion, you don’t need 20% down to buy a house in Lousiana. You can purchase a home with as little a $0 down with the right program.

Loan Program	Down Payment	Credit Score Requirement	PMI Requirements
FHA Loan	3.5%	580 or higher	0.55 % of the Loan Amount
VA Loan	0%	500 or higher	None
USDA Loan	0%	580 or higher	0.35% of the Loan Amount
Conventional Loan	3%-20%	620 or higher	Varies

Conventional Loan: Offered by Freddie Mac or Fannie Mae, this program requires just a 3% down payment and a minimum FICO score of 620. What’s even better? You can often bid farewell to mortgage insurance after building up 20% home equity.

FHA Loan: Backed by the Federal Housing Administration, an FHA loan necessitates a 3.5% down payment and a minimum credit score of 580. While you will pay mortgage insurance premiums (MIP), there’s an opportunity to shed them through refinancing or by paying off your loan.

VA Loan: Exclusive to veterans and service members, the VA loan is a zero down payment option with varying credit score requirements, often around 620. What sets it apart? No ongoing mortgage insurance once you’ve closed the deal. These loans are among the finest available, so seize the opportunity if you qualify.

USDA Loan: Tailored for individuals with low-to-moderate incomes purchasing homes in designated rural areas, the USDA loan boasts a zero down payment requirement. Credit score prerequisites may vary by lender but often hover around 640. Plus, enjoy low mortgage insurance rates.

Louisiana Housing Corporation Loans: These loans can feature incredibly competitive rates, mortgage credit certificates, and substantial down payment assistance. We have more detailed information below to help you explore this option further.

It’s important to note that government loan programs, such as FHA, VA, and USDA home loans, are designed for primary residences, ruling out their use for vacation homes or investment properties.

Furthermore, most of these programs allow you to utilize gifted funds or down payment assistance (DPA) to cover your down payment and closing costs. Depending on your chosen mortgage, you could be moving into your new home with minimal cash out of pocket.

If you’re uncertain about which program suits your first mortgage needs, don’t worry. Our experienced lenders are here to guide you towards the perfect match, taking into consideration your financial situation and homeownership aspirations.

Begin your journey to homeownership today by clicking here

Louisiana First Time Home Buyer Programs

Capital Area Finance Authority (CAFA)

• CAFA offers valuable programs tailored to first-time homebuyers, designed to ease the burden of down payments and closing costs. These initiatives aim to provide assistance to Louisiana’s first-time homebuyers looking to purchase homes within the state.

• Grant amounts range from 4% to 7%, depending on the chosen program and lender.
• Use funds for down payments, closing costs, or prepaid items.

CAFA Requirements:

• Minimum FICO score of 640
• Debt-to-income ratio up to 50%
• Must meet income limit (80% of Parish Median Income Limit)
• Loan amount must be less than current loan limits

Some CAFA programs may forgive the grant after seven years of residing in the home, while others may require a higher interest rate on the primary loan to receive down payment assistance.

Louisiana Housing Corporation

• The Louisiana Housing Corporation administers federal and state funds to help working families achieve affordable housing, ensuring that every Louisiana resident has access to safe, energy-efficient homes.

Mortgage Revenue Bond (MRB) Assisted Program

• Designed for those at 80% AMI or lower, the MRB program aids homebuyers who lack the necessary funds for down payments and closing costs, offering below-market interest rates.

MRB Benefits:

• Aids Louisiana first-time homebuyers with down payment and closing cost coverage.
• Some programs include a second mortgage or increased interest rate on the primary mortgage (Down Payment Assistance).
• Provides 5% to 9% of the loan amount for down payment assistance.
• Offers reduced mortgage insurance on conventional loans.

MRB Requirements:

• Must be a first-time homebuyer.
• Property must be in Louisiana.
• Must meet income requirements.
• Minimum credit score of 640.

The MRB down payment assistance program involves a “soft” second lien attached to your home, equivalent to 4% of your mortgage loan amount.

Market Rate GNMA Program

• The Market Rate GNMA Program provides 30-year fixed-rate mortgages through FHA, VA, or USDA Rural Development Loans.

Market Rate GNMA Program Benefits:

• Open to both first-time and repeat homebuyers.
• Offers up to 4% assistance.
• No origination or discount fees.
• No additional bond documents or compliance package.

Market Rate GNMA Program Requirements:

• Single-family home.
• Property must be located in Louisiana.
• Household income under 115% of AMI.
• Minimum credit score of 640.

This program does not involve a soft second lien, but instead, repayment of the grant comes in the form of a higher interest rate on the primary mortgage.

Delta 100 Program

• Designed specifically for first-time homebuyers in Louisiana’s delta parishes, the Delta 100 Program offers 100% financing and up to 3% in closing cost assistance.

Delta 100 Program Benefits:

• No mortgage insurance required.
• Up to 3% for closing costs and prepaid items.
• Max loan amount of $242,000.
• Household income up to 80% of AMI.
• Fixed 30-year loan with a 2% interest rate.

Delta 100 Program Requirements:

• Must purchase a home in the Delta Parishes.
• Borrower contributes 1% of the purchase price or $1500 (whichever is less).
• No minimum credit score.
• Homebuyer education required.

The Delta 100 program offers a cost-effective alternative for low-income households in the Delta parishes.

Mortgage Credit Certificate Program

• The LHC Mortgage Credit Certificate is a statewide program aimed at assisting first-time homebuyers in designated areas of Louisiana. It enables eligible borrowers to receive a federal tax credit of up to 40% of their annual mortgage interest payments for the duration of their loan.

MCC Program Benefits:

• Available to low and moderate-income families.
• Claim up to 40% of annual mortgage interest payments as a tax credit on federal income tax returns (capped at $2,000 per year).
• Credit continues as long as you occupy the home.
• Can be combined with LHC’s down payment assistance programs.
• Available statewide.

The MCC program enhances borrowers’ monthly disposable income by providing income tax credits, creating a pathway to affordable homeownership.

Is A Louisiana First-Time Home Buyer Grant Right For You?

If you are a first-time home buyer in Louisiana, you may have heard about the availability of various grant programs designed to assist individuals in achieving homeownership. 

These grants can provide financial assistance, often in the form of down payment and closing cost assistance, to help make purchasing a home more affordable. 

While these grants can be beneficial, it’s important to assess whether they are the right fit for your specific circumstances. 

👉 5 Steps to Become a Louisiana First Time Home Buyer

Here are some factors to consider:

• Eligibility Requirements: First and foremost, determine if you meet the eligibility criteria for the grant programs. Each program may have specific requirements related to income limits, credit scores, property types, and other factors. Research the eligibility guidelines to see if you qualify for the grant.
• Financial Situation: Evaluate your financial situation and determine if you need additional financial assistance to cover the down payment and closing costs. If you have sufficient savings and resources to cover these expenses without the need for a grant, you may not require the additional assistance.
• Grant Amounts: Consider the amount of grant funds available. Some grants may provide a significant portion of the down payment or closing costs, while others may offer a smaller amount. Assess whether the grant funds would make a substantial impact on your overall home buying expenses.
• Repayment Terms: Understand the repayment terms associated with the grant program, if applicable. Some grants may require repayment over time or may be forgiven after a certain period of time. Evaluate if the repayment terms align with your long-term financial goals.
• Program Limitations: Be aware of any limitations or restrictions associated with the grant program. Some grants may have specific property location requirements, usage restrictions, or limitations on the types of mortgage loans you can use in conjunction with the grant.
• Application Process: Familiarize yourself with the application process for the grant program. Determine if you are comfortable with the documentation, paperwork, and timeline involved in applying for and receiving the grant funds.

Ultimately, the decision to pursue a Louisiana First-Time Home Buyer Grant depends on your individual circumstances and financial goals.

Applying for Louisiana First-Time Home Buyer Programs with Bayou Mortgage

Ready to buy your first home in Louisiana? With Bayou Mortgage by your side, here’s a simple guide to get you started.

Step 1: Check Eligibility

First, make sure you meet the requirements for the program you’re interested in. This usually involves your credit score, income limits, and the property’s location. Bayou Mortgage can help you understand these criteria.

Step 2: Research Programs

Take the time to explore the different first-time home buyer programs available in Louisiana. Organizations like the Capital Area Finance Authority (CAFA) and the Louisiana Housing Corporation offer various programs. Each program has unique benefits and requirements. Bayou Mortgage can help you understand these nuances to choose the best one for you.

Step 3: Connect with Bayou Mortgage

Reach out to Bayou Mortgage, a lender experienced with first-time home buyers and familiar with specific programs. Our team will guide you through the application process, ensuring you meet all the criteria.

Step 4: Gather Documents

Get all your financial documents ready with the help of Bayou Mortgage. You’ll need things like income statements, tax returns, bank statements, and proof of employment. Being organized will make the application process smoother.

Step 5: Submit Your Application

Work with Bayou Mortgage to complete and submit your application for the first-time home buyer program. We’ll help you fill out the paperwork accurately.

Step 6: Get Pre-Approved

Seek mortgage pre-approval from Bayou Mortgage. This step assesses your financial situation and creditworthiness, helping you understand how much you can afford. It also makes you look more serious to sellers.

Step 7: Start House Hunting

With your pre-approval in hand, start searching for your dream home. Bayou Mortgage will help ensure the property meets the program’s location and condition criteria.

How To Buy A House In Louisiana

Buying a Home in Louisiana’s Major Cities

When it comes to buying a home in Louisiana’s major cities, each location has its own unique real estate market. Let’s take a closer look at the top five cities in the state:

1. New Orleans

👉 First Time Homebuyer New Orleans

As the most well-known city in Louisiana, New Orleans boasts a vibrant culture and rich history. The median list price of homes in New Orleans was $349,000 in March 2023, with a 5.7% year-over-year decrease, according to Realtor.com. 

For first-time homebuyers in New Orleans, down payment options for a home at the median price might range from $10,475 (3% down payment) to $69,800 (20% down payment). 

2. Baton Rouge

Baton Rougage First Time Homebuyer

As the capital city of Louisiana, Baton Rouge offers a thriving community and diverse opportunities. The median list price of homes in Baton Rouge was $260,000 in March 2023,

showing a 6.1% year-over-year increase, according to Realtor.com. For first-time homebuyers looking to purchase a home at the median price in Baton Rouge, down payment options may range from:

• $7,800 for a 3% down payment
• $52,000 for a 20% down payment

3. Shreveport

Located in the northwest region of Louisiana, Shreveport combines Southern charm with a relaxed atmosphere. The median list price of homes in Shreveport is $182,000. 

For a home at the median price, down payment options might range from $5,460 (3% down payment) to $36,400 (20% down payment). 

👉 Shreveport First Time-Homebuyer Guide

4. Lafayette

👉 Lafayette First-Time Homebuyer Guide

Known for its vibrant Cajun and Creole culture, Lafayette offers a unique blend of tradition and modern living. The median list price of homes in Lafayette was $222k as of April 2023. 

For a home at the median price, down payment options might range from $6,660 (3% down payment) to $44,400 (20% down payment). 

5. Lake Charles

👉 Lake Charles First Time Homebuyer Guide

Situated along the Calcasieu River, Lake Charles captivates residents with its natural beauty and thriving community. The median list price of homes in Lake Charles was $181,955 as of April 2023. 

For a home at the median price, down payment options might range from $5,459 (3% down payment) to $36,391 (20% down payment). 

When considering buying a home in any of these cities, it’s essential to research the local market, understand your budget and financing options, and work with experienced professionals who can guide you through the process.

Looking for today’s mortgage rates in Louisiana?

Look no further. At Bayou Mortgage, we specialize in helping you find the perfect mortgage solution. As your dedicated mortgage broker, we have the unique ability to shop multiple lenders on your behalf, ensuring you get the most competitive rates and terms available.

Here’s how we can assist you:

1. Access to Multiple Lenders: We have a vast network of lenders at our fingertips. This means we can explore a wide range of options to find the one that suits your needs and budget.

2. Personalized Guidance: We understand that your financial situation is unique. We work closely with you to understand your goals and tailor our recommendations accordingly.

3. Competitive Rates: Our expertise in the mortgage market allows us to secure competitive interest rates and favorable terms. We’re committed to helping you save money.

4. Simplified Process: Say goodbye to the hassle of contacting numerous lenders individually. We streamline the process, bringing the lenders to you, making it efficient and straightforward.

5. Time and Money Savings: By leveraging our services, you not only save valuable time but also potentially thousands of dollars over the life of your loan.

Ready to find the perfect mortgage that fits your dream home? Let Bayou Mortgage be your trusted partner. Contact us today, and let’s get started on your homeownership journey. (Oct 18th, 2023)

How Much Are Closing Costs In Louisiana?

First Time Home Buyer Louisiana FAQ’s

What Are The Steps To Buying a House in Louisiana

• Understand your budget and determine how much you can afford.
• Get pre-approved for a mortgage to know your purchasing power.
• Find a reliable real estate agent who specializes in the Louisiana market.
• Search for homes, attend showings, and make an offer.
• Complete the home inspection and appraisal process.
• Finalize your mortgage application and secure financing.
• Close on the home, sign the necessary paperwork, and receive the keys.

What Are The Requirements to Buy a House In Louisiana?

• Proof of income and employment stability.
• Good credit score and history.
• Sufficient funds for a down payment and closing costs.
• Meet the lender’s debt-to-income ratio requirements.

What is a Good Credit Score to Buy a House Louisiana?

While credit score requirements may vary among lenders, a good credit score generally falls in the range of 670 or higher. However, it’s advisable to aim for a score of 640 or above to increase your chances of securing favorable mortgage terms.

What Do You Need to Be a First-Time Home Buyer In Louisiana?

Typically, being a first-time homebuyer means you haven’t owned a home in the past three years. However, specific eligibility criteria may vary depending on the loan program and assistance programs you’re considering.

How Much Is A Down Payment On A House In Louisiana?

The down payment amount can vary depending on factors such as the loan program and your financial situation. Conventional loans often require a down payment of 3% to 20%, while government-backed loans like FHA and USDA may offer options as low as 0% to 3.5%.

What Is The Average Mortgage in Louisiana?

The average mortgage in Louisiana can vary based on factors such as home prices, interest rates, and individual borrower qualifications. As of February 2023, the average mortgage in Louisiana was $1073

Are Property Taxes High in Louisiana?

Louisiana’s property tax rates are generally lower compared to many other states in the U.S. However, property tax rates can vary by parish and municipality within the state. It’s important to research and understand the specific property tax rates in the area you are considering. Louisiana also offers a homestead exemption for the first $75,000 in Value.

Does Louisiana Offer a First Time Home Buyer Program?

Yes, Louisiana offers various programs and assistance options for first-time homebuyers. These programs can provide down payment assistance, favorable loan terms, and other benefits. Research and consult with local housing agencies or lenders to explore the programs available in your area.

What is The First Time Home Buyer Tax Credit In Louisiana?

Louisiana does not have a specific first-time homebuyer tax credit program at the state level. However, you may be eligible for federal tax credits or deductions related to homeownership, such as mortgage interest deductions or credits for energy-efficient home improvements.

How Do You Qualify For a First-Time Home Buyer In Louisiana?

You typically qualify as a first-time homebuyer if you haven’t owned a primary residence in the past three years. Eligibility often depends on income limits and property location, which can vary by program. Specific programs may have additional requirements, such as credit score thresholds and debt-to-income ratios.

What Is The Minimum Credit Score To Buy a House in Louisiana?

The minimum credit score required to buy a house in Louisiana can vary depending on the lender and the type of mortgage you’re seeking.However, a FICO credit score of 620 or higher is often considered a good starting point for conventional loans. For government-backed loans like FHA or VA loans, you may be eligible with a credit score as low as 580 (FHA) or 620 (VA), but a higher score may help you secure better terms and rates.

What Is The First-Time Homebuyer Tax Credit In Louisiana?

Louisiana offers a first-time homebuyer tax credit through the Louisiana Mortgage Credit Certificate (MCC) program. This program enables first-time homebuyers to claim a federal tax credit equal to 40% of their annual mortgage interest, up to a maximum of $2,000 each year. However, eligibility for this tax credit is subject to certain restrictions based on household size, income, and property location.

What Benefits Do First Time Home Buyers in Louisiana Get?

First-time homebuyers in Louisiana can access a range of benefits through state and federal programs, including:

• Down payment assistance programs that help with upfront costs.
• Competitive interest rates and favorable terms on loans.
• Access to various grants and subsidies to make homeownership more affordable.
• Homebuyer education courses to provide knowledge and guidance through the process.
• Potential eligibility for federal tax deductions on mortgage interest.
• Specialized loan programs designed to accommodate lower credit scores or income levels.