Program Offers Assistance for Louisiana First-Time Homebuyers in Areas Affected by 2016 Floods

November 22, 2019

The devastating floods that affected much of Louisiana in 2016 have hurt the state’s housing stock in ways that continue to unfold today.

Floodwaters inundated an estimated 90,000 homes, including 28,000 rental units. Given the scale of the disaster, the Louisiana Housing Corporation and its state partners quickly realized that innovative and collaborative approaches would be needed to meet the affordable housing needs of people across the state.

In the spirit of that approach, LHC is proud to offer the latest incarnation of its successful Soft Second program for first-time homebuyers in flood-impacted areas. The program is designed to cover the affordability gap between the maximum amount that a homebuyer can afford and the purchase price of a home.

Qualified first-time homebuyers in 51 flood-impacted parishes can get up to $60,000 toward purchasing a home, along with closing-cost assistance. All or a portion of the loan is forgivable if certain conditions are met.

The $6 million program is a collaboration between LHC and the state’s Office of Community Development. “The goal is to increase homeownership in the parishes affected by the great floods of 2016,” says Brenda Evans, LHC’s director of housing development.

Bridging the Affordability Gap

The Soft Second Loan program provides assistance for first-time homebuyers with incomes at or below 80% of the area median income to purchase one-unit family homes. The assistance includes a soft second loan of 20% of the purchase price, up to $55,000 per household, plus up to $5,000 for closing costs.

The loans are interest-free and are forgiven when the homeowners remain in the house for at least 10 years. “They don’t have to make any payments on the soft second loan; they just have to live in the property for 10 years,” Evans says. “The closing-cost assistance is forgiven as long as they are in the house for two years.”

Homebuyers must meet minimum credit requirements and complete a homeownership education class, either through a HUD-approved counseling agency or through an online course. Participants must also provide a down payment of at least 1% of the purchase price of the home.

Evans says the program can make homeownership a reality for many renters who never thought purchasing a home was possible. “This program is designed to be an affordability-gap-filler,” she says. “This ia a fairly substantial amount of money, so it’s an excellent way to make a house affordable for a family that needs it.”

Encouraging Homeownership

The program comes as the LHC wraps up a previous Soft Second program for designated disaster areas related to hurricanes Gustav, Ike and Isaac. Evans says that the program provided significant aid in the affected areas, which covered most of Louisiana.

“That program was very successful and has been fully committed and obligated,” she says. “It was very effective. We even had a waiting list and we’re still getting a lot of interest for that program. Now we’re able to launch this new program for the floods, and we feel like this one will be very successful.

Prospective homebuyers can contact a participating lender to see if they qualify.

Parishes included in the Soft Second Loan program are Acadia, Allen, Ascension, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Calcasieu, Caldwell, Catahoula, Claiborne, DeSoto, East Baton Rouge, East Carroll, East Feliciana, Evangeline, Franklin, Grant, Iberia, Iberville, Jackson, Jefferson Davis, Lafayette, LaSalle, Lincoln, Livingston, Madison, Morehouse, Natchitoches, Ouachita, Pointe Coupee, Rapides, Red River, Richland, Sabine, St. Helena, St. James, St. Landry, St. Martin, St. Tammany, Tangipahoa, Union, Vermilion, Vernon, Washington, Webster, West Baton Rouge, West Carroll, West Feliciana and Winn.

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