How to Buy a House in Louisiana: A Homebuyer’s Guide

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Edited byAshley Jacobs
Edited byAshley Jacobs

Updated: October 14, 2023

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According to a study conducted by Zillow, the median home price in Louisiana is $217,587. Louisiana's property value is significantly lower than the national average, which is $357,589.

In addition to being lower than the national average, this median value has increased by 10.5% year-over-year (a significant difference compared to 13.5% nationally).

Before you commit to a property purchase, it is critical that you understand how to buy a home. This will save you from being overwhelmed and making mistakes during the process. In order to help you purchase a property in Louisiana without falling into serious debt, MoneyGeek has broken down the process for you.

Key Takeaways

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The average cost of homes in Louisiana is $217,587, an increase of 10.5% compared to the previous year.

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When you apply for a mortgage, the lender will look at your income, credit history and debt-to-income ratio. Some lenders may also require at least a 20% down payment. However, there are also low-down-payment and zero-down-payment options.

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There are some important steps to follow to buy a home in Louisiana. These include finding the right house that meets your needs, getting pre-approved for a mortgage, negotiating the best possible purchase price and terms of sale, then making an offer and closing on your mortgage.

Choose an Ideal Location

Consider the location of your new home when deciding where you want to live. The cost of a house depends largely on location, so it is crucial to research your desired neighborhood or area before you start shopping for homes.

Location affects the cost of homes based on factors such as neighborhood culture, access to amenities and recreational activities as well as the cost of living.

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WORK WITH A REAL ESTATE AGENT

If you are shopping for a new home in Louisiana, it is essential to have an experienced real estate agent on your side. A good agent will know the area, the types of homes available and any neighborhood challenges that might be of concern.

They can help you find a home that suits your needs and budget. Plus, they can make buying a house much easier by handling paperwork and negotiations.

MoneyGeek outlines the qualities to look out for in a real estate agent. They include:

  • Knowledge
  • Efficiency
  • Availability
  • Communicative
  • References

The best agent for you depends on what you're looking for and what kind of service you need.

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CALCULATE THE COST OF LIVING

The cost of living in Louisiana varies based on your desired location. For example, the cost of living in Baton Rouge is 8% below the national average and 3% less than in New Orleans. The cost of living in Lafayette is 6% lower than the national average but 4% more than in Shreveport.

Note that various factors affect your cost of living, such as:

  • Healthcare
  • Gas
  • Transportation
  • Education
  • Utilities
  • Food
  • Income, real estate and property taxes

MoneyGeek's cost of living calculator is a good starting point for figuring out the cost of living in Louisiana. MoneyGeek calculates how much income you will need by estimating monthly expenses in your area and then calculating the costs based on those parameters (e.g., housing expenses).

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CONSIDER AFFORDABLE NEIGHBORHOODS

Living near the coast can be expensive, but there are plenty of affordable neighborhoods throughout the state. Cheaper neighborhoods often have less access to public transportation. However, they are typically more family-friendly than high-priced communities and offer a lower cost of living.

Living near more expensive areas may mean better schools, more parks and recreation centers, shorter commutes and access to quality healthcare. When considering these factors, as well as affordability, safety and proximity to schools and jobs, it becomes clear that cheaper doesn't always mean better for everyone. Some of the most affordable cities in Louisiana include Bastrop, Bogalusa and Minden.

Calculate Mortgage Rates

There are many different types of mortgages, and they vary depending on your income, loan term, interest rates and loan amount.

Mortgage rates are also determined based on the borrower’s credit score, the type of mortgage and the down payment. A homebuyer can even choose from fixed-rate mortgages or adjustable-rate mortgages.

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SEE YOUR MORTGAGE OPTIONS

Different mortgage options carry different rates. For example, homebuyers with a high credit score might qualify for the best interest rates on their mortgage, while those who have lower scores might be charged higher rates.

When you shop around for your mortgage, it’s important to find out what kind of rate you qualify for.

Data from Zillow and rural development USDA shows that ​​ average interest rates in Louisiana for different types of 30-year mortgages include:

MoneyGeek recommends that you verify your eligibility before signing up for a loan. For instance, VA loans are typically for veterans who served in the military and offer competitive rates with no down payment.

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USE A MORTGAGE CALCULATOR

It’s important for homebuyers to spend time researching mortgage rates. These will dictate how much you end up paying on your loan.

A mortgage calculator can help you determine these costs by estimating the size of your loan and calculating monthly payments based on the interest rate, length of loan and number of payments.

Prospective homebuyers can use MoneyGeek's mortgage calculator as a starting point to get an estimate of their mortgage payments. You can also use our FHA vs. conventional loan calculator to see which one better fits your needs.

Your final decision should be weighed against many different factors, including your credit score, down payment amount, desired location and more.

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KNOW YOUR QUALIFICATIONS

Lenders determine the terms of your loan largely based on your financial profile. For example, people with higher credit scores are usually eligible for lower interest rates.

To apply for a home loan, the most important qualifications are:

  • Credit score: Lenders consider your creditworthiness and payment history on existing debts when determining if you qualify for a mortgage as well as your interest rate.
  • Income: Lenders will want proof of stable income, including pay stubs or tax returns.
  • Debt-to-income (DTI) limits: Your DTI is the percentage of your gross monthly income that goes towards other debt obligations.
  • Down payment: This is the amount you pay upfront for your mortgage. It generally ranges from 3% to 20% of the purchase price, depending on your lender.

Prepare Down Payment Requirements

Borrowers are often required to make an upfront payment before they can buy a home. This is called the down payment. The amount required depends on the mortgage type and can affect the total cost of the loan.

Amounts can be as high as 20%, but there are some loans that don’t require any down payment.

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DETERMINE DOWN PAYMENT REQUIREMENTS

A down payment is the amount of money you will need to put up when buying a house. This amount varies based on the type of mortgage option you are considering and your eligibility for the loan.

The higher your down payment, the lower your monthly payments. A conventional loan usually requires at least 20% down, while other loans may require 0% down. Down payments typically affect the terms.

There are many benefits to making a larger down payment, including paying less over time, obtaining better interest rates and being eligible for special programs or discounts offered by lenders. In addition, this can help create better savings opportunities and build equity more quickly.

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CALCULATE MORTGAGE INSURANCE

Mortgage insurance, also known as private mortgage insurance (PMI), is a type of insurance that protects the lender if you do not make your mortgage payments. PMI is typically required for loans with less than a 20% down payment.

This insurance can be removed once you have at least 20% equity in your home. Borrowers who choose an FHA loan can avoid PMI by paying an upfront mortgage insurance premium (MIP) and maintaining excellent credit. If you get approved for a VA loan and are eligible for zero-down financing, there is no PMI.

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DOWN PAYMENT ASSISTANCE PROGRAMS

There are programs available that can help you with your down payment. The Louisiana Housing Corporation has several programs to help prospective homeowners achieve home ownership. First-time homebuyers in Louisiana with insufficient down payment funds may be eligible for assistance from the state.

  • Market Rate GNMA Program: This program provides 30-year, fixed-rate FHA, VA or USDA Rural Development mortgages at low rates.
  • Market Rate Conventional Program: This program provides a conventional mortgage with a higher loan value than FHA.
  • MRB Home and Assisted Programs: These programs assist potential homeowners with down payment and closing fees.
  • Resilience Soft Second Program: The Soft Second Assistance program provides up to $55,000 for a down payment and $5,000 for closing costs.
  • LHC Soft Second Program: This program offers up to $5,000 Closing Cost Assistance and up to $30,000 Soft Second Assistance for a down payment.

Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage will allow you to shop with confidence and know your budget.

Being pre-approved means that the lender has already looked over your finances, budget and credit history in order to determine that you are qualified for the loan amount you request. It is different from prequalification, which is just an estimate of what they think you might qualify for.

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GATHER NECESSARY DOCUMENTS

In order to get approved for a mortgage loan, you will need the following documentation:

  • Proof of income (W-2s or pay stubs)
  • Proof of assets (bank statements)
  • Bankruptcy and credit reports
  • Employment verification
  • Social Security card and number
  • Photo ID
  • Military discharge papers (for veterans)
  • Current debts, monthly expenses and net worth

Ask your lender if alternative documents are needed. They may require more information based on the type of loan you are trying to apply for or your current credit score.

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TIME YOUR PRE-APPROVAL

Getting pre-approved for a loan is an important step in the homebuying process. It gives you enough time to gather the required documents for your loan and it helps speed up the process. It may take two weeks to get pre-approved for a mortgage.

Typically, it can take 30 minutes to fill out the paperwork and have your credit checked. Once you get approved, it may last for up to 30 days to 90 days, depending on the lender.

It’s important to time your pre-approval with when you are ready to move forward with buying a home so that you don’t have to apply again. This can be a hassle and hurt your credit score.

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RECEIVE PRE-APPROVAL LETTER

In order to buy a house, you'll need pre-approval. A pre-approval letter, while not an offer on the property, assures your lender that you are serious about buying a home and have sufficient income and credit history for them to approve the loan.

You can get as many of these letters as you want, but it is important to know that some lenders conduct hard credit checks that affect your score. As a result, it’s best to limit the number of letters you get

Pre-approval lasts 30 to 90 days, depending on the lender. This validity period gives you time to find the perfect house. Make sure not to apply for your letter until you are ready to seriously look for a property.

Conduct a Home Inspection

Home inspections are one of the most important steps in the homebuying process. They can provide you with peace of mind and save you money down the road if something goes wrong.

A home inspection is basically an impartial evaluation of the condition of your future house. Inspectors typically check for structural issues, hidden mold, pest infestations and other things that could impact your health or property value.

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CONTACT A LICENSED INSPECTOR

When looking to buy a home in Louisiana, it is wise to hire a licensed inspector to inspect all of the parts of your new home. This ensures that it is structurally sound and meets safety codes.

Inspectors should check the following:

  • Exterior of the property, including the roof
  • Interior of the property, including looking at areas like attic spaces or crawl spaces
  • Foundation and load-bearing walls
  • Electrical wiring
  • Plumbing system
  • Leaks or other potential sources of water damage
  • Sewage system inspection
  • Radon, lead paint and asbestos contamination
  • Heating and cooling systems
  • Gas and electric meters to determine
  • Fire extinguishers and smoke detectors
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FOLLOW LOUISIANA-SPECIFIC INSPECTIONS

In Louisiana, the state board of home inspectors regulates and licenses residential contractors. The board recommends a home inspection checklist for consumers to ensure their house is safe. The Louisiana legislature approved legislation in 2001 requiring all persons conducting home inspections to be licensed by the state.

Some areas of Louisiana require certain mandatory inspections on homes. A licensed inspector will inspect your house thoroughly and make sure all safety codes are met. They will also tell you about any problems with the construction or major defects that may be present. Plus, they may provide general recommendations on how to keep your home maintained.

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GO THROUGH APPRAISAL

Home appraisals are an important step in the homebuying process in Louisiana. An appraisal is a process of determining the market value of a property. It is used to help determine the offer you should make when buying a house or how much your house might be worth.

The appraiser will review local sales data as well as recent sales and offers in your area to give an opinion on what they believe your property might be worth. An appraiser will inspect the property, taking notes on its condition and features before coming up with a final estimate.

Close Your Mortgage Loan

After reviewing the terms of your mortgage, you can proceed to the final step of closing your mortgage loan.

There are also costs associated with closing, which vary from one lender to another but generally include the loan origination fee, document preparation fee, title examination fee and lender’s title insurance premium.

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SIGN ALL DOCUMENTS

When buying a house, be sure to review the documents before signing anything. Some of the documents you may be asked to sign include:

  • Final loan application: You’ll need to sign the loan application form to confirm that the details you’ve provided are correct.
  • Mortgage note: This is the legal basis of your mortgage. It lays out the mortgage amount, interest, payment schedule and more.
  • Property deed: The technical details about the property are listed in the deed.
  • Closing disclosure: The terms of your loan are discussed in the closing disclosure. Lenders must provide you with this document at least three business days before closing your mortgage.
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PAY CLOSING COSTS

Closing costs are the fees associated with the purchase of a home. They are usually paid by the buyer. However, depending on the agreement, sellers sometimes pay closing costs as well. The following are some types of closing costs:

  • Mortgage origination fee: This fee covers the mortgage company’s administrative and underwriting expenses.
  • Escrow charges or impounds: This is the money that is collected and held by a third party for distribution at some point in time (e.g., property taxes and homeowner’s insurance).
  • Title insurance policy premiums: This protects you against any title defects that could cause future problems for you as the new owner of your home.
  • Recording fees: These fees cover the recording of paperwork related to your purchase, such as deed transfers and mortgages.
  • Appraisal fee: This is the amount you pay for an appraisal of the home you want to buy. It will give you an estimate of how much your house is worth.
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COMPLETE YOUR HOME PURCHASE

The homebuying process in Louisiana is straightforward. Identify your desired location, find the right mortgage broker, make an offer on your new home, draw up and sign all of the documents with your lender and agent, review your title insurance policy and take possession of your house.

It is your responsibility to pay taxes and insurance premiums as well as any other payments that come with owning a home. Your lender will not be responsible for these payments. It is also your responsibility to maintain the property.

You should stay on top of your mortgage payments by making sure you have enough money in your account every month. You can also set up autopay through your bank so that you don’t miss a payment.

Louisiana Homebuying Details

Buying a home is an exciting prospect, but it can also be overwhelming. It's important that you understand the process and what you need to do before making an offer on a property. Louisiana homebuyers should look into the neighborhood of their new residence, evaluate various mortgage options and shop around for a lender that best meets their needs.

While these are general measures to take when purchasing a property, there can be Louisiana-specific practices. Reach out to your lender or a real estate agent so you can be ready for Louisiana's homebuying process.

Residents of Louisiana may also apply for homeowner assistance programs to help them with homeownership expenses.

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The Louisiana Housing Corporation’s Delta 100 program provides qualified buyers with up to 100% financing as well as up to 3% closing cost and prepayment assistance. Eligible borrowers must attend a homebuyer education course, fulfill minimum investment criteria and have adequate cash reserves to qualify.

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The Louisiana Housing Corporation provides Mortgage Revenue Bond Assisted and Home Programs. This program assists low-income homeowners at 80% AMI or less with down payments and closing fees. The program features below-market interest rates. Depending on loan size, down payment and closing cost assistance is 5% to 9%.

Frequently Asked Questions About Buying a Home in Louisiana

The process of buying a home in Louisiana can be overwhelming, especially for first-time homebuyers. MoneyGeek answers some frequently asked questions about buying a house in Louisiana.

What are the most important questions to ask when buying a house in Louisiana?
Is buying a house in Louisiana a good idea?
Is it wise to buy a house in Louisiana in 2023?
How much income do I need to buy a house in Louisiana?
How much is property tax in Louisiana?
Which Louisiana city is the cheapest to buy a home?
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