Louisiana first-time homebuyer assistance through the Louisiana Housing Corporation can put a 4% soft second grant toward your down payment, but not everyone knows they already qualify as a first-time buyer. The definition is broader than most people expect, and understanding it is the first step toward using this program to buy a home in Louisiana.
As a Mortgage Loan Advisor who works with first-time buyers across the New Orleans metro every week, I get this question constantly: “I owned a home years ago, so does that rule me out?” Usually, the answer is no. Let’s walk through exactly who qualifies for Louisiana first-time homebuyer assistance and how the program works.
What Is Louisiana First-Time Homebuyer Assistance?
Louisiana first-time homebuyer assistance is delivered through the Louisiana Housing Corporation’s MRB Assisted Program. It provides a soft second loan equal to 4% of your final first mortgage loan amount, at 0% interest, to help cover your down payment and closing costs.
That soft second is not a loan you make monthly payments on. Repayment is deferred until the property is sold or refinanced, and the entire balance is forgiven after a 5-year compliance period as long as you occupy the home as your primary residence. If you sell or refinance before the 5-year mark, the full soft second balance becomes due immediately.
The assistance pairs with an FHA, VA, USDA Rural Development, Fannie Mae, or Freddie Mac first mortgage. FHA 203(h) loans are not eligible. Your loan must receive an Approve/Eligible finding through automated underwriting; manual underwrites are not permitted under this program.
Who Counts as a First-Time Homebuyer in Louisiana?
This is where Louisiana first-time homebuyer assistance surprises people. You are considered a first-time homebuyer if you meet any one of these conditions:
- You have not held ownership interest in a principal residence at any point during the 3-year period ending on the date you purchase your new home. This includes your spouse’s ownership history if you are married.
- You are a single parent who has only ever owned a home with a former spouse while you were married to that person.
- You are a displaced homemaker who has only ever owned a home together with a spouse.
- You are purchasing a home in a HUD-defined Targeted area. Buying in one of these areas waives the first-time homebuyer requirement entirely, so previous homeownership does not disqualify you.
In practice, that 3-year lookback window is the one that catches most people off guard. If it has been more than three years since you owned a home, and you meet the program’s other requirements, you likely qualify for Louisiana first-time homebuyer assistance even if you owned property in the past.
Income Limits for Louisiana First-Time Homebuyer Assistance
Eligibility for Louisiana first-time homebuyer assistance is also tied to your household income, measured against Area Median Income (AMI) for your area, based on current MSA data:
- 140% AMI in HUD-defined Targeted areas.
- 115% AMI in Non-Targeted areas.
- 80% AMI for all conventional first mortgages, regardless of area.
Your household income is projected annually against these limits, and “grossed up” non-taxable income is not used in that calculation. Because AMI figures vary by parish and household size, ask your lender to pull the current numbers for your specific area.
Credit, DTI, and Other Borrower Requirements
Beyond the first-time buyer definition and income limits, the LHC MRB Assisted Program has a few overlays worth knowing before you apply for Louisiana first-time homebuyer assistance:
- A minimum credit score of 640, with at least two credit scores required for evaluation.
- Non-traditional credit histories are not accepted under this program.
- A maximum debt-to-income ratio of 50%.
- Two years of verifiable employment history, plus a paystub dated within 30 days of application.
- Completion of a Homeownership Education class that meets National Industry Standards, through a HUD-approved counseling agency or an approved online course, with a completion certificate on file.
These overlays are often stricter than the base guidelines for an FHA, VA, or USDA loan on its own, and they are the ones that govern once you add LHC’s assistance.
Property Rules to Know
The home also has to qualify. Eligible properties are one-unit primary residences and townhouses anywhere in Louisiana’s parishes, with a purchase price that cannot exceed current FHA loan limits. Duplexes, condos, manufactured homes, mobile homes, vacation homes, and unimproved land are not eligible, and the property must be move-in ready and meet local code plus your first mortgage product’s physical standards.
How to Apply for Louisiana First-Time Homebuyer Assistance
Funds for Louisiana first-time homebuyer assistance are reserved on a first-come, first-served basis. Your application date is the day an LHC-approved lender receives your complete application, so timing matters more than people expect.
Here is the general order of operations:
- Get prequalified with an LHC-approved lender so you know your realistic price range and which loan type fits your situation.
- Complete your Homeownership Education class and keep the certificate on hand.
- Find a home and get a legally binding purchase agreement in place. This must be submitted along with your application for funds.
- Your lender submits your complete file to reserve your spot in the program.
- Close on your first mortgage and soft second together, then move in and start your 5-year residency period toward forgiveness.
One note on co-borrowers: a non-occupant co-borrower is only allowed when your first mortgage is FHA, and you still need some qualifying income of your own since LHC will not approve a co-borrower paired with a main borrower who has none.
For a broader look at getting ready to buy your first home, see our New Orleans first-time homebuyer guide. You can also review the program directly on the Louisiana Housing Corporation’s MRB Assisted Program page.
Frequently Asked Questions
Do I really qualify if I owned a home more than three years ago?
In most cases, yes. Louisiana first-time homebuyer assistance defines a first-time buyer as someone with no ownership interest in a principal residence during the 3-year period ending on your purchase date, so homeownership further in the past typically does not disqualify you.
Does the 4% assistance ever need to be repaid?
It can be. The soft second is forgiven in full after a 5-year compliance period as long as you live in the home as your primary residence. If you sell or refinance before that 5-year mark, the entire balance is due immediately.
Can I use this assistance with a conventional loan?
Yes, alongside FHA, VA, or USDA Rural Development, as well as Fannie Mae or Freddie Mac conventional loans. Conventional borrowers are held to the 80% AMI income limit rather than the 115% or 140% limits used for government loans.
What credit score do I need?
LHC requires a minimum credit score of 640, using at least two credit scores. Non-traditional credit history is not accepted under this program.
Is homebuyer education really required?
Yes. Every borrower using Louisiana first-time homebuyer assistance must complete a Homeownership Education class that meets National Industry Standards through a HUD-approved agency or approved online course, and provide the completion certificate.
Louisiana first-time homebuyer assistance can make the difference between renting another year and closing on your first home this year, but the details matter: your first-time buyer status, your income limits, your credit profile, and how quickly you get your application in. If you want to find out exactly where you stand, reach out and we will walk through your numbers together.
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.
