Your Guide to Buying a Home in Louisiana

The Step-By-Step Process For Buying A Home In Louisiana 

• Real estate transactions are closed by attorneys in the state of Louisiana. Title companies are also involved in the transaction process.
• The buyer and the seller will complete the transaction at the same table. In Louisiana, the final closing is called the “act of sale” in the homebuying contract. 
• A notary must authenticate the closing documents.
• There are usually no mortgage or transfer taxes in Louisiana.
• Inspections, including mold and termite inspections, are recommended. 

Phase 1: Negotiations

Although you have come to terms on a price, the purchase is not complete. Now is the time to negotiate the details of your purchase. This will include repairs and updates to the property, and this phase can be completed at the same time as Phase 2. 

1. A purchase contract with various details will be signed and accepted.
2. A deposit, or “earnest money,” is paid to an escrow agent. 
3. A contract is delivered to the attorney to begin the title search. All work related to transferring the title is started at this point. 
4. The seller will send disclosures to the buyer. As the buyer, you should review these disclosures thoroughly and make sure there are no issues that would impact your purchase. 
5. At this time, you can elect to have the home inspected. Inspections should include a general inspection, as well as inspections for mold and termites. 
6. Louisiana has a due-diligence period. During this period, you have the chance to review a property’s surroundings for flood issues, school systems, and more. If any issues are discovered, the buyer and seller have 72 hours (three days) to reach an agreement. They can either proceed according to the contract, agree to the buyer’s requests, or (most common) create a negotiated settlement. 
7. The buyer may request a home warranty, which covers the cost of appliance repair or replacement for a given period. 

Phase 2: Finalizing the Mortgage Loan in Louisiana 

Before shopping for a home, you likely went through loan pre-qualification or pre-approval. However, you’ll now need to complete final approval of the loan, which is a more detailed and time-consuming process. 

1. The first steps is to submit a formal application. This can be done on your own or you can recruit the help of an experienced professional.
2. The lender will issue a “Good Faith Estimate,” which is a calculation for your final closing costs. This sum may vary, but lenders do their best to make it as accurate as possible.
3. At this point, even though you have already been pre-qualified or pre-approved, the lender will need updated and refreshed information on your financial situation. You will likely need to deliver various documents, including: 

• Paystubs and contract information from your employer.
• Tax returns for at least the past two years. (More may be requested.)
• Bank statements for all accounts you currently own.
• Information on outstanding liens and other debts.
• Financial disclosures that impact your income, either positively or negatively. These may include divorce decrees, alimony, child support, bankruptcies, and legal judgements. 
• Information on any large deposits that are outside of your normal income. Lenders are interested in large payments, especially if they will be used for a downpayment on the loan. You may need to provide a gift letter, which should state the nature of the payment, the reason, and a statement that the money is a gift and will not need to be repaid. 
• Finally, the lender may request repeated or updated information on any of the above documents. This is to ensure that everything is up-to-date, accurate, and reliable, so don’t be surprised or offended if lenders ask for more information. 

4. The lender will now issue an approval decision. You should receive a “loan commitment letter” that simply states their intention to support you purchase as long as certain conditions are met. These conditions include an appraisal and a requirement that there be no changes to your financial or debt situation. (No new loans, for example.)

5. The financing contingency can be removed from the contract. This is done by sending a copy of the approval letter to the seller or seller’s agent. In Louisiana, sellers have the option of financing the loan themselves at the terms outlined in the contract.

6. An appraisal will now be ordered by the lender or mortgage professional. This is done through a central directory of appraisers. If the appraisal comes back low, the buyer has a set number of days to negotiate a settlement.

7. Homeowner’s insurance is now ordered by the buyer. Proof of this insurance is given to the seller or seller’s agent. 

The loan process can be long and detailed. It’s best to start as early as possible and gather all documents immediately. Also, you should avoid any changes to your income and debt situation while you are working through the loan process. 

Phase 3: Closing the Louisiana Purchase

Now comes the time to get together with the seller, the attorney, and all representatives to finalize the sale. Once this phase is complete, you’ll be able to take possession of your Louisiana home!

1. The first step in this phase is to complete a title search, which will verify that there are no ownership issues and the seller can legally sell the property. 
2. A final cash figure for closing is determined. This can include closing cost, legal fees, origination fees, and more.
3. A final walkthrough of the property is performed. This simply checks that the home has no new damage or major issues before finalizing the purchase. 
4. The buyer and seller will now meet to sign all documents. 
5. The buyer will pay all the remaining funds for the downpayment and other fees. 
6. The purchase will be recorded with the appropriate city or county. 
7. The buyer can now take possession of their new Louisiana home!

Congratulations! After completing all three phases, you can move into your Louisiana property!

Conforming Loan Limits in Louisiana

“Conforming loans” are government-supported mortgages that have specific limits. While there are larger loans available, most homebuyers use some type of conforming loan, as they generally have better terms and rates. 

Limits for conforming loans are set by the Federal Housing Finance Agency, which determines the limits on a county-by-county basis. While most of the country is under the base limit, certain high-priced areas have larger loan limits. 

In Louisiana, however, the entire state is under the conforming loan limits. Currently, a single-family home has a conforming loan limit of $548,250. A two-unit property has a limit of $702,000, while a three-unit has a limit of $848,500. It’s also possible to purchase a four-unit property with a conforming loan. In the state of Louisiana, the limit is $1,054,500.

Remember that these are the limits for conforming loans only. There are also jumbo loans in Louisiana that can help you purchase the property you need. 

(Note: Loan limits are constantly changing. See your local lending office for current limits.) 

Downpayment Assistance Programs in Louisiana

Many aspiring homebuyers struggle to save for a downpayment. Buyers in Louisiana, however, are fortunate because they have access to some of the biggest downpayment assistance (DPA) programs in the country.

Statewide Programs in Louisiana

The Louisiana Housing Corporation (LHC) provides a large amount of support for Louisiana buyers. In fact, they provide arguably the most impressive support in the nation. Most of their support comes through two specific programs.

Resilience Soft Second Loan
This is one of the most generous programs in the country. Support comes as a soft loan that can be up to 20% of the home’s overall value, up to $55,000. Buyers working through this program can also get assistance for closing costs up to $5,000, which means Louisiana residents have the chance to secure as much as $60,000 in downpayment assistance!

Not only does this program deliver impressive totals, it can be fully forgiven after ten years.

MRB
Another important program from the LHC is the Mortgage Revenue Bond Assisted Program, or “MRB.” This option can provide downpayment assistance between 5% and 9% of the purchase price, although available assistance varies by loan amount.

Major Local Programs from Louisiana Cities and Counties

Shreveport’s HAPPI Program
The city of Shreveport supports homeownership through the “Home Buyers Assistance Program Participation Initiative,” or “HAPPI.” This program can help buyers by providing as much as 20% of the sales price or the appraised value. Even more benefits are available to buyers who purchase in a specific area.

Southern Mortgage Assistance Program
This program is available in select counties throughout Louisiana. It can help buyers secure a home by providing a grant worth as much as 4% of the purchase price. Because it’s a grant, repayment is not required.

New Orleans’ Expand to Homeownership
New Orleans encourages purchases through a program known as “Expand to Homeownership.” This program also provides as much as 4% for downpayments and other costs.

Common Requirements for Louisiana Downpayment Assistance

These programs often have many requirements, usually starting with income. They are (generally speaking) meant for low-income buyers, so borrowers usually need to be at or below the area’s median income to qualify.

First-time buyer restrictions are also common for these programs. Most are restricted to people who have never owned a home or have not owned in the past three or four years. But there are caveats; the Louisiana Housing Corporation, for example, allows single parents to use their programs even if they are not first-time homeowners.

There may also be credit requirements; usually a score of 640 or higher is needed for these programs. Buyers receiving charitable funds and assistance may need to complete homebuyer education. 

The availability of these programs is always changing. Speak with a qualified professional for information on current Louisiana downpayment assistance.