What to know about Louisiana mortgage rates

Pubs are alight with neon lights on New Oreleans famed Bourbon StreetImage: Pubs are alight with neon lights on New Oreleans famed Bourbon Street
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Louisiana hosts more than 400 festivals and events each year, making it an exciting place to live and work. The state also offers a low cost of living and small-business culture.

If you’re searching for a home in Louisiana, remember to shop around and compare mortgage rates. What may seem like a small difference could add up to thousands over the course of a 15-year or 30-year mortgage.

Mortgage debt in Louisiana

Credit Karma members with mortgages in Louisiana had average mortgage debt of $155,870 in 2020 and average monthly mortgage payments of $1,100.

That puts Louisiana below average for both mortgage debt and average monthly mortgage payments compared to Credit Karma members across the U.S in 2020.

Types of home loans

If you choose to finance your dream home, you might be overwhelmed with the number of mortgage loan options out there. Here are some of the more common mortgage types Louisiana homeowners may consider.

Conventional loans in Louisiana

Conventional loans are mortgages that aren’t part of government programs. These loans tend to be good for people with solid credit and a down payment of at least 3% to 5%.

Louisiana FHA loans

FHA loans are a good option for first-time homebuyers to explore — particularly if your credit is less than perfect. That’s because you may be able to qualify with credit scores as low as 580 with a 3.5% down payment or 500 with a down payment of 10%. This FICO® score requirement is the FHA minimum standard. In general, additional lender credit score requirements may apply.

The FHA loan limit in 2021 is generally $356,352 for a one-unit property, but it can reach as high as $822,375 depending on where you live.

Every area in Louisiana conforms to the FHA loan limit of $356,362 in 2021 .

You can find the exact limit by county on the U.S. Department of Housing and Urban Development website.

VA loans in Louisiana

If you’re an eligible veteran or service member comparing mortgage rates in Louisiana, a VA loan can be attractive since down payments and mortgage insurance aren’t typically required by the VA and you may be able to qualify if you don’t have great credit.

Similar to FHA loans, VA loans are insured by the federal government but issued by private lenders.

Conforming loan limits in Louisiana

Conforming loans are a type of home loan that meets certain loan limits set by the Federal Housing Finance Agency. This means they can be bought by Fannie Mae and Freddie Mac, federal-government-sponsored enterprises that guarantee mortgages.

Loans that exceed conforming loan limits are known as jumbo loans. Lenders often consider these loans riskier than conforming loans.

All of Louisiana’s counties have a conforming loan limit of $548,250 in 2021 for single-unit properties.

First-time homebuyer programs in Louisiana

If you’re hoping to buy your first home, there may be some assistance programs available to you in Louisiana.

  • LHC Mortgage Revenue Bond Home Program — Offered by the Louisiana Housing Corporation (LHC), the Mortgage Revenue Bond Home program offers down payment and closing cost assistance in the form of a second mortgage up to 9% of the total cost of the mortgage depending on the loan amount. To qualify, you must be a first-time homebuyer with a credit score of at least 640 and meet certain income and purchase price limits.
  • LHC Market Rate Conventional Program — Available to first-time and repeat single-family homebuyers within 80% Area Median Income (AMI) limits, the Market Rate Conventional Program provides competitive 30-year fixed-rate mortgages, reduced mortgage insurance, and up to 4% in down payment and closing cost assistance. To take advantage of it, you must have a minimum credit score of 640, and if you’re a first-time homebuyer you must complete homebuyer education.
  • LHC Premier Program — This program offers competitive 30-year mortgages plus up to 5% to help cover the cost of the down payment, closing costs and prepaid items. Other benefits include reduced mortgage insurance for those within certain income limits and no origination or discount fees. To be eligible, you can be a first-time or repeat homebuyer, but you must have a credit score of at least 640 and a household income of no more than $99,000.

Mortgage refinance rates in Louisiana

If you’re thinking about refinancing your mortgage in Louisiana, keep a few things in mind.

  • Break-even cost Once you know the closing costs for your refinance, you can use any savings on your monthly mortgage payment to calculate how long it will take you to recoup that investment and “break even.”
  • Cash-out refinance Have you accumulated equity in your home that you’d like to convert to cash? A cash-out refinance lets you refinance your home for more than what you owe and get cash in return. But remember that you’ll owe the full amount plus interest, and the equity in your home will be less if you sell in the future. 
  • Loan term You also may want to either shorten or extend your loan term. For instance, if you have a 30-year mortgage, you may want to convert it to a 15-year loan. Keep in mind that reducing your term likely means you’re paying more each month — but less in interest over time. Lengthening your loan term may mean you pay less each month, but more interest over the course of the mortgage.

About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt Un… Read more.