Louisiana down payment assistance is available right now to eligible first-time homebuyers through the Louisiana Housing Corporation (LHC), and it can put real money toward your down payment and closing costs. Through LHC’s MRB Assisted Program, qualified buyers can receive a forgivable second mortgage equal to 4% of their final loan amount, at 0% interest, that is fully forgiven after five years of owner-occupancy. For many first-time buyers across Louisiana, that is the difference between renting another year and closing on a home.
At Max Mortgage, LLC, we work with this Louisiana down payment assistance program every week for first-time buyers throughout the New Orleans metro and beyond. Here is exactly how it works, who qualifies, and what to expect if you want to use it on your next purchase.
What Is Louisiana Down Payment Assistance Through LHC?
The Louisiana Housing Corporation offers down payment assistance through its Mortgage Revenue Bond (MRB) Assisted Program. This Louisiana down payment assistance pairs an eligible first mortgage (FHA, VA, USDA Rural Development, Fannie Mae, or Freddie Mac) with a soft second loan that covers down payment and closing costs.
That soft second loan is equal to 4% of your final loan amount, carries a 0% interest rate, and is deferred for as long as you live in the home as your primary residence. If you stay in the home and keep it as your primary residence for the full 5-year compliance period, the entire balance is forgiven. Sell or refinance before the 5 years are up, and the remaining balance becomes due at that time.
Who Qualifies for Louisiana Down Payment Assistance?
Eligibility for Louisiana down payment assistance centers on being a first-time homebuyer with household income at or below certain limits. Under LHC’s guidelines, you generally count as a first-time homebuyer if any of the following apply:
- You have not owned an interest in a principal residence during the 3-year period ending on your purchase date (this includes a spouse’s ownership).
- You are a single parent who has only owned a home with a former spouse while married.
- You are a displaced homemaker who has only owned a home with a spouse.
- You are purchasing in a HUD-designated Targeted Area, which waives the first-time buyer requirement entirely.
Income limits depend on where you are buying and which first mortgage you use. Household income generally needs to fall at or below 115% of the Area Median Income (AMI) outside Targeted Areas, or up to 140% AMI inside a Targeted Area. Conventional loan borrowers are held to an 80% AMI limit. Income is calculated on an annual, household basis, and non-taxable income is not “grossed up” for qualifying purposes.
On the credit side, Louisiana down payment assistance through LHC requires a minimum credit score of 640, with at least two credit scores on file, and it does not allow non-traditional credit or manual underwriting. Maximum debt-to-income ratio is capped at 50%. Lenders also verify two years of employment history along with a recent pay stub.
What Homes and Loans Qualify?
This Louisiana down payment assistance program works with several first mortgage types: FHA, VA, USDA Rural Development, Fannie Mae, and Freddie Mac loans (FHA 203(h) is excluded). Your first mortgage runs a standard 30-year term, paired with a 5-year second mortgage, and the purchase price cannot exceed current FHA loan limits for the parish where you are buying.
The property itself must be a one-unit primary residence or townhouse in any Louisiana parish, and it needs to be essentially move-in ready at the time your purchase agreement is signed. Duplexes, condos, manufactured homes, mobile or recreational homes, vacation and second homes, unimproved land, and a handful of other property types are not eligible. Co-signers and non-occupant co-borrowers are permitted on FHA loans only, and the main borrower must have income of their own; LHC will not approve a non-occupant co-borrower paired with a main borrower who has no income.
How to Apply for Louisiana Down Payment Assistance
Getting started with Louisiana down payment assistance is more straightforward than most first-time buyers expect.
- Talk with an LHC-approved lender, like Max Mortgage, to see whether your income, credit, and target purchase price fit the program.
- Complete a Homeownership Education class that meets National Industry Standards, through a HUD-approved counseling agency or an approved online course, and keep your completion certificate.
- Get a legally binding purchase agreement on a move-in-ready home.
- Submit your complete application to reserve funds. LHC serves applicants on a first-come, first-served basis, so timing matters once you are under contract.
Because this Louisiana down payment assistance is funded on a first-come, first-served basis, it is worth having your financing conversation before you start seriously touring homes, not after you find one.
Frequently Asked Questions
Is Louisiana down payment assistance really free money?
It is forgivable, not free at closing. You receive a 0% interest soft second equal to 4% of your loan amount, and the balance is forgiven only after you occupy the home as your primary residence for 5 years. If you sell or refinance sooner, the remaining balance is due.
Do I have to be a first-time buyer to use this program?
In most areas, yes, based on LHC’s first-time buyer definition. That requirement is waived if you are purchasing in a HUD-designated Targeted Area.
What credit score do I need?
LHC requires a minimum of 640, with at least two credit scores and no manual underwriting or non-traditional credit.
Can I combine this with an FHA, VA, or USDA loan?
Yes. Louisiana down payment assistance pairs with an FHA, VA, USDA Rural Development, Fannie Mae, or Freddie Mac first mortgage (FHA 203(h) is the one exception).
How do I find out if I qualify?
The fastest way is to talk with a Louisiana mortgage lender who works directly with LHC’s program, review your income against the current AMI limits for your parish, and check your credit and documentation before you start house hunting.
Louisiana down payment assistance through LHC has helped many first-time buyers get into a home years sooner than they expected. Program terms, income limits, and availability of funds are subject to change without notice, and every application is still evaluated individually, so nothing here is a promise of approval or a specific outcome. If you want to know where you personally stand, reach out and we can walk through your numbers together.
For the full official guidelines, you can also review LHC’s MRB program page directly. If you are still working through the basics of buying your first home in the New Orleans area, our New Orleans first-time homebuyer guide is a good next stop.
Charles, Mortgage Loan Advisor with Max Mortgage, LLC. 20+ years in mortgage and real estate. NAMB Certified FHA Mortgage Professional.
Max Mortgage, LLC | NMLS #1446745
Charles Parharm | NMLS #1413036
Licensed to conduct residential mortgage business in applicable states. Loan programs, terms, and conditions are subject to change without notice. All loans are subject to approval. Equal Housing Opportunity.
