Famous for music, food, fishing and good times, Louisiana also offers a relatively affordable selection of homes. However, Louisiana’s property party has been hampered by disasters both natural and manmade. Hurricane Katrina in 2005 displaced hundreds of thousands people, the BP oil spill roiled the region, and the intense flooding of August 2016 damaged more than 40,000 homes. In another down note, Louisiana’s economy has been spotty. The unemployment rate was 6.3 percent in July 2016, well above the national average. On the bright side, it’s a state that keeps bouncing back. This page covers what you need to know about navigating the housing market and qualifying for a mortgage in Louisiana.

1

Check Mortgage Rates in Louisiana

Current Last Week

You and your credit history are the most crucial variable in qualifying for a mortgage. That said, rates can vary a bit from state to state, owing to regional trends in property markets. Foreclosures are one important factor, and Louisiana’s rate of mortgage defaults is just below the national rate, according to RealtyTrac. As a so-called non-judicial foreclosure state, Louisiana does not force lenders to endure an arduous legal process to take back homes. See MoneyGeek’s mortgage rates guide for more details about the market forces that determine how much you pay to borrow money.

2

First-Timer? Get Homebuying Help in Louisiana

Louisiana combines below-average wages with above-average unemployment, so it might seem like a tough place to get ahead. Fortunately for first-time buyers, there are numerous programs available to help Louisianans achieve homeownership. The Louisiana Housing Corp.’s loan program offers low- and moderate-income borrowers with a 640 minimum credit score 30-year loans without origination fees, plus assistance of up to 4 percent of the amount of the loan for down payment or closing costs to buy a single-family home. Borrowers must make no more than 115 percent of their area’s median income. The state’s preferred conventional loan program offers similar terms for first-time buyers but allows borrowers to earn as much as $99,000 annually.

In addition to state programs, local agencies also offer favorable terms to help buyers qualify for mortgages. The Finance Authority of New Orleans offers mortgages to borrowers who make up to $99,000 per year grants of up to 4 percent of the loan amount. Borrowers must have a credit score of at least 640 and a total debt load of 45 percent or less of monthly income. The Baton Rouge Homebuyer Assistance Program provides generous assistance to first-time low- and moderate-income buyers. The city awards as much as $50,000 in aid to buyers of new houses built in certain neighborhoods. Homes outside of targeted areas are eligible for up to $23,000. The no-interest loans need not be repaid until the buyer sells the house. For more information about buying your first house, visit MoneyGeek’s first-time homebuyers guide.

Financial Assistance in Louisiana for First-Time Buyers

Need assistance with closing costs or your down payment? See MoneyGeek’s comprehensive list of financial help.

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3

Understanding Home Affordability in Louisiana

Like most parts of the country, Louisiana has seen a lack of new construction and a tight supply of starter homes. But the good news is that, with a statewide median price of just over $200,000 in first-quarter 2016, Louisiana offers plenty of homes in reach of the typical family. The state’s median income is 180 percent of the income needed to buy a median-priced home, says Richard Haase, president of Latter & Blum Inc. Realtors, a regional company based in New Orleans. “Even though prices are rising, we are still a very affordable market to buy a home,” Haase says.

Homeowners insurance is one wild card for Louisiana owners. While it doesn’t affect home prices, insurance premiums will boost your ownership costs. Because its history of costly hurricanes and risk of future storms, Louisiana has some of the most expensive insurance premiums in the nation.


How Louisiana Mortgage Rates and Home Prices Affect Monthly Payments

Metro Area Estimated Monthly Mortgage Payment* Q1 2016 (Change from Previous Year) 2015 Median Home Price 2014 2013
Baton Rouge $824 $175,400 (-1.00%) $181,500 $171,300 $170,000
New Orleans-Metairie-Kenner $797 $169,500 (+10.00%) $169,700 $165,000 $164,700
Shreveport-Bossier City $743 $158,200 (+4.40%) $160,600 $158,600 $162,400

Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today’s rates.

4

Determine How Much You Can Borrow in Louisiana

In all of Louisiana, the loan limit for conforming mortgages is $417,000. To borrow more than $417,000 for a historic mansion in New Orleans, a buyer needs a jumbo mortgage, which often carries a higher interest rate and stricter underwriting standards than a standard loan. FHA loan limits are capped everywhere in the state at $271,050 for single-family homes.

For more details about Louisiana’s loan limits, look here:

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5

Buying a Home in Louisiana: Experts Weigh In

David Talbert

David Talbert is managing partner at US Capital Group in Baton Rouge and president of the Louisiana Mortgage Lenders Association.

Richard Haase

Richard Haase is president of Latter & Blum Inc. Realtors, a New Orleans-based brokerage with more than 1,400 agents. A veteran broker, he is active in numerous business groups and charities.

What advice would you give to a first-time buyer?

Talbert

Work with a local lender for cheaper rate and fees. They can also help you get a better estimation upfront of closing costs and better advice on where to look to meet your needs.

Haase

Know the market — not only where it stands today, but where it’s trending. It’s probably not going to get less expensive from a housing-finance cost perspective. These are the halcyon days of borrowing.

What’s the biggest challenge for buyers right now?

Talbert

Probably inventory for houses priced at $150,000 and less in the Baton Rouge area. But statewide, we have many affordable houses, and we have many state and local assistance programs.

Haase

Finding available inventory. It’s an act-fast real estate market. You need to be ready to act when a property comes on the market.

How has your market changed through the volatility of the past decade?

Talbert

We’ve grown year after year. We hadn’t peaked previous to ’08 and appear as though we still haven’t.

Haase

Our past decade includes Hurricanes Katrina and Rita, the largest oil spill in the history of the world and most recently, the flooding in South Louisiana. Our marketplace has been very atypical because of these anomalies and natural disasters. We’ve seen about a 5 percent appreciation rate in the past 10 years. It’s not a smooth line. It’s a sawtooth pattern — up 7 percent, down 2 percent, up 8 percent, down 4 percent. But 5 percent is a number we’re happy with, because it’s not an overheated market.

What’s unique about Louisiana’s market?

Talbert

Great food, great people. South Louisiana has just experienced a flood. Weather experts are calling it a 500-year flood, as many homes that had issues were not in flood zone areas. I can tell you from experience we’ll be back up and running in a matter of weeks because that’s how Louisiana citizens operate.

Haase

The rich heritage, culture and architecture. I don’t want to say it’s a melting pot, because the cultural differences exist side by side, without being homogeneous.

6

Don’t Forget Louisiana’s Closing Costs

Whether you’re buying a home or refinancing an existing mortgage, it’s easy to forget about closing costs, but those fees can add a couple thousand dollars to your bill. In Louisiana, closing costs run a bit more than the national norm, according to a 2016 survey by Bankrate.com. Borrowing $200,000 will cost you $2,164 in behind-the-scenes-fees, just above the national average of $2,128. The average broker or originator fee of $1,009 was the single largest item, and the typical survey fee of $455 is another major cost. What’s more, attorney fees add an average of $501 at the closing table. You might be able to haggle over these fees, and not all lenders charge the same amounts, so be sure to compare offers. To learn more about the expenses that go along with a home loan, visit MoneyGeek’s closing costs page.

Average Closing Costs in Louisiana

Average Origination
Fees
$1,060
Average Third-Party
Fees
$817
Average Total Closing
Costs
$1,877

Source: Bankrate’s 2015 survey of closing costs.

Refinancing a Mortgage in Louisiana

Louisiana properties are affordable partly because the state hasn’t seen much price appreciation in recent years. While U.S. home prices jumped 27 percent in the five years ending in March 2016, property values rose just 19 percent in Louisiana during that period, according to the Federal Housing Finance Agency. If you want to cash in on historically low mortgage rates by refinancing, these sluggish values could pose an obstacle. Generally, lenders limit borrowing to 80 percent of the property’s value.

Rock-bottom mortgage rates mean it’s an opportune time to refinance a home loan and score some savings. If your home has gained value, this might be the moment to lock in a lower rate or dump your private mortgage insurance. Say you have a $160,000 loan at 5 percent interest, with a monthly payment of $859. Borrowing the same amount at a 3.5 percent rate will cut your payment to $718. In another incentive to refi, unlike many states, Louisiana collects no recording tax on home loans. MoneyGeek’s guide to refinancing your mortgage includes more information about refis.

Other Louisiana Mortgage Resources

Louisiana Housing Corp. loan program

The state offers 30-year fixed-rate mortgages with favorable terms to low- and moderate-income borrowers.

Louisiana Housing Corp. preferred conventional program

This state program provides discounted fees and down payment assistance for borrowers who make as much as $99,000 a year. Homebuyer education is required for new buyers.

Finance Authority of New Orleans loans

These mortgages, available to borrowers who earn up to $99,000, include grants of up to 4 percent of the loan amount.

Weatherization assistance program

The Louisiana Housing Corp. offers grants to help low-income homeowners make their abodes more energy-efficient.

Homebuyer classes

The Louisiana Housing Corp.’s homebuyer counseling walks you through the process of budgeting and home shopping.

Baton Rouge Homebuyer Assistance Program

The city of Baton Rouge offers as much as $50,000 in aid to homebuyers. The no-interest loans need not be repaid until the buyer sells the house.

Shreveport Home Ownership Assistance

The city helps first-time buyers with down payments and other costs for those who want to live in Shreveport.

City of Kenner down payment assistance

This New Orleans suburb provides first-time buyers with grants worth as much as $35,000 to live in this area.

Jefferson Parish down payment assistance

This area near New Orleans offers grant to help with down payment costs, modify homes for the disabled and rehab substandard homes, among other things.