Homeownership is strongly associated with financial stability and freedom, but many people are anxious about engaging in what is often the biggest and most important investment they’ll make in their lifetime. In fact, in many cases fear is the main thing that prevents renters from diving into the purchasing process — especially first-time homebuyers.

The key to overcoming nagging fears is gathering as much knowledge and information as possible about the homebuying process. Knowing the answers to these 10 common homebuyer questions can help you make the dream of homeownership a reality.

How much do I need to save for a down payment?

A conventional mortgage usually requires at least a 5% down payment. Unfortunately, sometimes saving the necessary amount for a down payment isn’t realistic — the cost of living can be very high. Fortunately, that doesn’t automatically dismiss you from being a potential homeowner. The Louisiana Housing Corporation can help you identify programs to achieve your goal, such as these down payment assistance programs. Counselors will help you determine which programs you qualify for and which will give the biggest boost to your budget.

Am I eligible for down payment and closing-cost assistance?

LHC offers access to low-interest loans — as well as up to 4% assistance for a down payment and closing costs — to qualifying Louisiana residents looking to purchase their first home. Homebuyers must have a credit score of at least 640 and must meet income requirements based on their location. Assistance is available statewide for home purchases of up to $435,000.

What type of assistance is available?

LHC offers several programs to assist homebuyers with a down payment on a new home. The Market Rate GNMA Program offers 30-year, fixed-rate FHA, VA or USDA Rural Development mortgages at favorable interest rates. The amount of assistance is 2-3%. LHC’s conventional loan programs offer a mortgage that allows for a higher loan value than FHA, but still offers down payment assistance of 3-4% with additional insurance savings. And there are other programs offering assistance for buyers whose income is no more than 80% of the area median income for their parish. Learn more and find the program that’s right for you.

What are the income limits for these assistance programs?

The limits vary depending on the type of loan and assistance program but are often much higher than potential homebuyers realize. For example, LHC’s conventional home loan programs are available for qualified buyers with annual incomes of up to $99,000.

Can Louisiana homebuyers get any additional help purchasing a home?

Yes. Through the Market Rate Conventional program, Freddie Mac offers additional assistance to the homebuyer based on the income limit. For example, if the homebuyer is at 50% of the AMI, then the homebuyer qualifies for an additional $2,500 in assistance. At 80% AMI the homebuyer gets an additional $1,500.

You may qualify for a tax credit worth up to $2,000 with LHC’s Mortgage Credit Certificate. This financial savings is available every year for the life of the loan.

What steps should I take when selecting a Realtor?

It’s very important that you choose a Realtor that you can trust. Look for someone focused on your best interests — and that should include an ability and a willingness to walk you through the process. The best way to identify a good Realtor is to get recommendations from friends and family who have had positive experiences with a real estate professional. While personal referrals are a great starting point, don’t hesitate to ask the Realtor questions before committing. Make sure their expertise matches your needs.

Should I shop around for a loan?

Absolutely. Always compare mortgage interest rates and loan estimates among lenders. Just like with a Realtor, try to get lender recommendations from friends and family who have had good experiences with the loan process. LHC also has great resources for choosing a lender. And if you find a great Realtor, they may have a preferred lender — but again, make sure they’re willing to explain each step of the process to you.

What’s the first step in getting a home loan?

A good starting point is to identify your credit score, which sets the parameters for a home purchase. Your credit score is the gateway to homeownership, so it’s really important to know where you stand and what steps you can take to make your credit the best it can be. Responsible credit card use will have a massive effect on your ability to purchase a home, but it’s not a skill that everyone is born with. Learning to control your credit score is a crucial step in the process.

What steps can I take to prepare for homeownership?

Before you start picking out paint colors and measuring for drapes, you need to prepare yourself. There are a few questions that are helpful to ask. First, do you have a household budget? Have you begun saving for a down payment and other expenses? What does your credit look like? Are you a responsible renter? A qualified homebuyer counselor can help you assess your situation and plan the necessary steps to make sure you’re ready.

How can I learn more about the homebuying process?

The first step to homeownership is to learn the process — and a great place to start is homebuyer counseling. LHC, along with 17 other partners throughout Louisiana, offers workshops designed to expose first-time homebuyers to the resources they need to succeed. Homebuyer counseling provides a solid basis for a smooth home-purchasing process. LHC also offers informative reassurance that homebuying is possible through our classroom offerings.

Check out our downloadable guide here.

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