LHC Homebuyer Assistance Often Is Available for Market Rate Conventional Bank Loans

There’s a common misconception that down payment assistance is only available through government-backed loans. In fact, qualified homebuyers across Louisiana can get substantial assistance when buying a new home — even when they opt for a mortgage loan through a private lender such as a bank.

While Louisiana Housing Corporation offers access to a wide range of federally backed programs, the state agency is also able to combine down payment and closing-cost assistance with market rate conventional loans through a bank.

“I always try to get a customer approved first on a conventional loan,” says Lisa Cooper, a mortgage loan originator with Gulf Coast Bank & Trust in Baton Rouge. “It’s often better for the customer to go conventional, but every customer is different. When I interview a customer I look for the best possible solution to meet that individual’s mortgage needs.”

Here’s a look at some of the market-rate conventional mortgage loan options available through the LHC.

LHC’s Preferred Conventional Program helps homebuyers meet upfront costs by providing assistance funds up to 4% of the total purchase price, which can be used to cover all or some of the down payment, closing costs and/or prepaid items.

Unlike most down payment assistance programs, the Preferred Market Rate Conventional Program is not exclusive to first-time homebuyers. Applicants must, however, be under the program's maximum income of $99,000 and have a credit score of at least 640. Additionally, first-time homebuyers must complete a homebuyer education course.

The program offers a competitive 30-year fixed rate for the purchase of single-family housing (a one- or two-unit principal residence) in Louisiana. The maximum loan amount is $484,350.

Cooper says many new homebuyers aren’t aware of the assistance that’s available. “A lot of first-time homebuyers out there don’t realize that they can buy a home,” she says. “They think they have to save for a down payment. But you don’t with all of these wonderful products out there. They can often move forward and realize their dream of homeownership.”

LHC’s Choice Market Rate Conventional Program is similar to the Preferred Market Rate Conventional Program, but it offers slightly lower maximum loans and an additional 2% in upfront assistance if the buyer’s income is no more than 80% of the area median income for their parish.

That translates into a total of 6% of an original loan’s value to help with down payment and closing costs. The program also eliminates the borrower contribution requirement, meaning buyers don’t have to put any of their own money down.

The Choice Market Rate Conventional Program’s LTV is 97%, which means buyers need to provide 3% as a down payment.

Cooper says one of the primary benefits of both of these market rate conventional loan options is that they only require insurance coverage on 18% of the mortgage loan, which can mean substantial savings for homeowners. “That reduces their monthly mortgage insurance and makes their payment lower,” she says.

Prospective homebuyers should contact a participating lender to begin the prequalification process. From there, they can start their property search and apply for assistance through the LHC with the assistance of the lender.

While going conventional may not be the right fit for every homebuyer, it does often offer substantial benefits, particularly for new homebuyers. “I especially enjoy working with first-time homebuyers,” Cooper says. “When they find out they can buy a home and they’re pre-approved, they’re so excited.”