What to Know About Buying a Home in Louisiana
First-time home buyers in Louisiana are pretty lucky. Home prices are lower in Pelican State than they are on average nationally. And, in most places, they are increasing more slowly.
Of course, that may not be the case. Because you still need to save a lot of money to cover your down payment and closing costs.
Or you ? Louisiana offers an exceptionally wide selection of down payment assistance programs. And if you qualify for any of them, you could become a homeowner sooner than you thought possible. Here’s how.
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Louisiana Home Buyer Overview
Home prices in Louisiana rose 6.7% year over year in January 2022, according to Redfin. And that’s a big increase for nearly all first-time homebuyers, though it’s well below the national average.
The good news is that Louisiana has a remarkably wide range of down payment assistance programs to help cover your upfront costs. And it could make buying a home much more affordable, if you’re eligible.
Louisiana Home Buyer Statistics
| Average LA Home Selling Price | $299,000 |
| Minimum down payment in Los Angeles (3%) | $8,970 |
| 20% deposit in LA | $59,800 |
| Average Credit Score in LA1 | 684 |
| Maximum grant for buying a house in LA2 | LHC: up to $60,000 in certain parishes as a silent and forgivable second mortgage |
Installment amounts are based on the state’s most recently available average selling price. The “minimum” down payment assumes a 3% down payment on a conventional mortgage with a minimum credit score of 620.
If you qualify for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the United States Department of Agriculture), you may not need a down payment at all..
Loans for the purchase of a first home in Louisiana
If you are 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’ll never have to pay for private mortgage insurance (PMI).
Of course, few first time buyers have saved enough to afford a 20% down payment. But the good news is that you don’t need a lot. Not by far.
Borrowers can often buy 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 minimum FICO score of 620. You can usually stop paying mortgage insurance after a few years once you reach 20% of the equity in your home.
- FHA loan – Supported by the Federal Housing Administration. 3.5% down payment and a minimum credit score of 580. But you are responsible for mortgage loan insurance until you refinance another type of mortgage, move house, or pay off your loan.
- VA loan – Only for veterans and military. No deposit is required. Minimum credit score varies by lender, but often 620. No outstanding mortgage insurance after closing. These are arguably the best mortgages available, so apply if you qualify
- USDA Loan – For low to middle income people buying in designated rural areas. No deposit required. Credit score requirements vary by lender, but often 640. Low mortgage insurance rates
- LHC loans – Can include super competitive rates, mortgage credit certificates and significant down payment assistance. More information below
Note that government loan programs (including FHA, VA, and USDA home loans) require you to purchase a primary residence. This means you cannot use these loans for a vacation home or investment property.
Depending on the mortgage you choose, you could potentially walk into your new home with minimal cash out of pocket.
These programs even allow you to use donated cash or down payment assistance (PAD) to cover the down payment and closing costs.
If you’re unsure which plan to choose for your first mortgage, your lender can help you find the right plan for you based on your finances and buying goals.
Homeownership Programs in Louisiana
the Louisiana Housing Corporation (LHC) offers a wide range of assistance to first-time buyers in the state. However, these are primarily intended for low to moderate income borrowers.
The benefits of an LHC mortgage include:
The Louisiana Housing Corporation also offers home buying training course. It offers a “2-day, live, instructor-led course, totaling 4 hours” at no cost. But you can choose a paid option if you prefer.
To find out more, there is a request more information button on the website. Or you can call one of the LHC approved lenders.
Grants for First Time Home Buyers in Louisiana
The Louisiana Housing Corporation offers several down payment programs. And you should discover all the options to see which one suits you best.
Each assistance program has income limits and house price limits for you to qualify. But note that those who shop in “target areas” (census tracts designated as needing regeneration) may have higher income caps than those who shop elsewhere.
The programs have different eligibility requirements and benefits, which can be found on the LHC website.
- For example, Delta 100 is only available in certain parishes. It offers a fixed mortgage rate of only 2% without mortgage insurance and down payment assistance of up to 3% of the purchase price. It’s a real bargain
- Meanwhile, Soft Second Resilience can provide up to $60,000 in down payment and closing cost assistance in a wider selection of parishes. The “second loan” means that it is a second mortgage, which has an interest rate of 0% and no monthly payment. If you don’t sell, refinance, or leave the home for 10 years, that loan will be completely forgiven.
Be sure to read the five deposit programs offered by LHC. Only then can you determine which ones you might be eligible for and which you might benefit the most from.
Buying a house in major cities in Louisiana
As you’d expect, New Orleans has the most expensive homes of Louisiana’s three largest cities. Median home prices in Shreveport are less than half of those in the Big Easy. And Shreveport home prices actually fell slightly in 2021, while New Orleans prices rose nearly 13%. Baton Rouge falls between the other two for home prices and home price inflation.
New Orleans First Time Home Buyers
In January 2022, the median list price for homes in New Orleans was $359,900. This is a 12.8% year-over-year increase according to Realtor.com.
If you want to buy a home at this median price, your down payment options could be between:
- $10,800 for 3% deposit
- $71,980 for 20% deposit
The City of New Orleans has a down payment assistance program called Second Mortgage Direct Homebuyer Assistance Program. But you will need a modest income to qualify.
According to city painting, at the start of 2022, these maximum incomes ranged from $39,450 for a single borrower to $74,350 for a household of eight or more. These numbers represent 80% of the New Orleans area median income and yours must be at or below that.
Eligible homebuyers are offered an offer similar to LHC’s Resilience Soft Second. They can receive up to $55,000 in a repayable second mortgage and up to $5,000 in closing cost assistance.
First-Time Home Buyers in Baton Rouge
In January 2022, the median list price for homes in Baton Rouge was $249,000. That’s an 8.3% year-over-year increase according to Realtor.com.
If you want to buy a home at this median price, your down payment options could be between:
- $7,470 for 3% deposit
- $49,800 for 20% deposit
We found no record of an active down payment assistance program on the City of Baton Rouge website. But you can try calling City Hall at (225) 389–3000 to see if we missed anything.
First-Time Home Buyers in Shreveport
In January 2022, the median list price for homes in Shreveport was $159,900. It was a to diminish 1.3% year over year according to Realtor.com.
If you want to buy a home at this median price, your down payment options could be between:
- $4,800 for 3% deposit
- $31,980 for 20% deposit
The town of Shreveport has a Home Buyer’s Assistance Program Participation Initiative (“HAPPY”). To be eligible for this assistance program, your income must be equal to or less than 80% of the median income of the city. Check these income eligibility figures on the city website. Note that income limits may have changed by the time you read this.
The program website states: “The maximum amount of [down payment] the aid is up to 20% of the sale price of the property or the appraised value; whichever is lower, based on the percentage of median income in the region. Other incentives are available to applicants who purchase in designated home ownership zones approved by the Department of Community Development.
You can call Shreveport Community Development at (318) 673–5900 for more details.
Where to find help buying a house in Louisiana
All of the organizations we’ve listed above should provide free advice to any first-time home buyer in Louisiana or their area.
In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides lists of statewide, regional, and local resources:
Statewide and Areawide Homeownership Programs in Louisiana
Homeownership Programs in Louisiana by City/Town
Programs by parish
Fuller Center for Housing Louisiana Affiliates
What are today’s mortgage rates in Louisiana?
You can see current mortgage rates in Louisiana here.
When you’re ready to start the home buying process, be sure to get personalized quotes from at least three mortgage lenders.
Don’t just look at advertised rates online; apply for pre-approval and compare the interest rates and fees available to you. It’s the only way to know that you’re getting the best possible deal on your new home loan.
1 Source: Experian.com 2021 study of 2020 data
2Based on a review of available state DPA grants at the time of writing this article
The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising 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 company or affiliates.
