Louisiana Mortgage Rates

Living in Louisiana

Louisiana is probably most known for its largest city, New Orleans, and its annual celebration, Mardis Gras. But with a rich history that predates its entry into the United States, a diversity of people and cultures and a booming food scene, the southern state offers residents and visitors year-round appeal.

According to data from the Greater Central Louisiana Realtors Association (GCLRA) — which covers the central part of the state — home prices in the area have bounced up and down during the first quarter of 2019. At the end of March, the median price for all property types was $155,000 — down slightly from a year ago.

However, when looking exclusively at single-family home sales in the major metro areas of the state, prices are higher than a year ago, which echoes national trends, according to the National Association of REALTORS (NAR). For example, in Baton Rouge, the state capital, the median sales price was $209,100, up 2.4% from last year. And in the Shreveport/Bossier City metro area, the median price was $164,000, an 8.2% increase from the same period in 2018.

Inventory levels in the parishes (the Louisiana equivalent of counties) served by the GCLRA rose steadily for the most part during the first quarter of 2019, indicating good news for buyers as we head into the spring and summer months.

The rules and costs of buying a home in Louisiana

Regulations that govern the homebuying process vary from state to state. As a buyer, you should familiarize yourself with the laws in your state. Here’s what you need to know about purchasing a home in Louisiana:

Home seller and buyer laws

In Louisiana, property sellers must complete a Property Disclosure Document and are required by law to disclose any known defects within the home that does any one of the following:

  • reduces the value of the home
  • provides a safety or health risk to occupants
  • shortens the life expectancy of the home if not addressed

Additionally, the sellers must disclose on the form if the buyers must adhere to “Obtain and Maintain Insurance Requirements,” a federal law that dictates flood insurance must be secured and maintained on a property if the owner received federal disaster assistance or if the home is in a designated Special Flood Hazard Area.

If sellers provide the Property Disclosure Document after the buyer makes an offer, the buyer has 72 hours after receipt of the form to cancel or withdraw the offer without loss of deposit or any other penalty. Some sellers are exempt from providing a Property Disclosure Document, for example, in the sale of a newly-built home that has never been occupied.

Louisiana is a judicial foreclosure state, which means if you encounter difficulty affording your mortgage payments, your lender will need to go through a legal process in court before they can foreclose on your property. In some cases, the process can take as little as 60 days.

Homebuyers who are going through a divorce should know that Louisiana is one of the few community property states in the country. This means that spouses evenly own assets and debts acquired during the marriage, unless a marriage contract is in place. Community property laws could affect your ability to qualify for financing, as some government loan programs consider the debt of both spouses in community property states, even if one partner will not be a homeowner.

If you married outside of Louisiana and later moved to the state, your union will be under Louisiana’s law upon moving. You’ll have one year within your move to establish a marriage contract without having to seek court approval.

In Louisiana, buyers do not have to hire an attorney to represent them, as is the requirement in some states. Buyers can choose to work with an escrow agent.

Taxes

Louisiana does not impose a real estate transfer tax; the state banned the tax in 2011. However, the city of New Orleans does impose a Document Transaction Tax, which is typically a flat fee of $325. The cost may be higher depending on the property type, and it is lower for mortgages under $9,000. If this tax applies to you, your lender will let you know the exact amount you’ll need to pay as you near your closing date.

Homeowners do pay annual property taxes, of course. To help reduce the burden, Louisiana provides a statewide homestead exemption of $75,000 of the home’s market value to those who own and occupy their homes. Some parishes extend the exemption to $150,000 for eligible veterans, while others offer additional exemptions.

Louisiana has one of the lowest property tax rates in the country, with a median tax of $243 based on a $135,400 home, according to Tax-Rates.org. Tax rates vary by parish. For example, residents of St. Tammany Parish pay an average of $1,335 in property taxes, which is the highest tax rate in Louisiana, while residents of St. Landry Parish pay only $202, which is the state’s lowest rate.

Conforming loan limits

The conforming loan limit in Louisiana is $484,350, which is the loan limit in place for most areas in the country. Conforming loan limits represent the maximum amount Fannie Mae and Freddie Mac will insure for conventional loans. Mortgages above conventional loan limits are called jumbo loans and usually have higher interest rates and stricter lending requirements.

Programs for homebuyers in Louisiana

The Louisiana Housing Corporation (LHC) provides multiple programs to help make homeownership more accessible and affordable for Louisianans, a few of which we highlight below. Assistance ranges from mortgages with below-market interest rates to assistance with down payments and closing costs.

In addition to statewide programs, parishes and towns may offer homebuyer assistance. Learn more about programs available throughout the state by visiting the U.S. Department of Housing and Urban Development (HUD).

Market Rate Ginnie Mae (GNMA) Program

This program offers buyers fixed government loans at competitive interest rates.

Features include:

  • 30-year low-interest FHA, VA or USDA loans
  • Down payment and closing cost assistance up to 4% of the loan amount
  • No loan origination or discount fees

Who qualifies

  • Buyers must meet income guidelines (cannot exceed 115% of area median income)
  • Borrowers must have a minimum credit score of 640
  • The home must be the buyer’s principal residence

Learn More

Delta 100 Program

Low- to moderate-income buyers who lack traditional credit can purchase a home with this program, which provides up to 100% financing.

Features include:

  • 30-year, 2% fixed interest rate mortgage
  • 100% financing up to program limits
  • Up to 3% closing costs and prepayment assistance
  • No mortgage insurance requirement

Who qualifies

  • First-time buyers only
  • Buyers in the Delta Parishes [Caldwell, Catahoula, Concordia, East Carroll, Franklin, Madison, Morehouse, Pointe Coupee, Richland, Tensas, West Carroll and Ouachita (excluding Monroe)]
  • Borrowers must put down at least 1% of the purchase price or $1,500 (whichever is less)
  • The loan amount cannot exceed $242,000
  • Household income cannot exceed $99,000
  • Buyers do not need to meet a minimum credit score
  • Borrowers must attend a homebuyer education course

Learn More

LHC Preferred Conventional Program

This program provides an alternative to FHA loans by allowing high loan-to-value (LTV) limits.

Features include:

  • 30-year, low fixed-rate mortgages
  • Reduced mortgage insurance
  • No loan origination or discount fees
  • Available on 1-2 unit homes
  • Up to 97% LTV on a 1-unit property and 95% LTV on a 2-unit property
  • Down payment and closing costs assistance up to 4% of the loan amount

Who qualifies

  • Open to non-first-time buyers (First-time buyers must attend a homebuyer education course)
  • The loan amount cannot exceed $484,350
  • Household income cannot exceed $99,000
  • Buyers must have a minimum credit score of 640

Learn More

Soft Second Program

This program helps buyers bridge the gap between an affordable mortgage payment and the home purchase price.

Features include:

  • 5-year, no-payment loan of 20% of the purchase price up to $30,000
  • The loan is phased out over 5 years and is 100% forgiven at the end of the term (If the property is sold or transferred within five years, the loan becomes due)
  • Up to $5,000 for closing costs

Who qualifies

Learn More

Rate shopping tips

One of the best ways you can save money on your mortgage is to compare rates. A small difference in the interest rate can either cost you or save you thousands over the life of the loan. Here are some tips to help you get your best rate on your mortgage.

Contact at least 3 lenders on the same day

Before applying or prequalifying, identify a few lenders you want to get your quotes from. To make sure your rates are competitive, consider getting quotes from different types of lenders (e.g., national banks, credit unions, regional or community banks, online lenders). And because rates change daily, get your quotes on the same day so you can make accurate comparisons.

Give each lender the same information

When getting multiple quotes, it’s crucial that they are based on the same information and that you provide complete details about your finances upfront. Initial quotes are usually subject to change if your circumstances differ, so it’s best to avoid a situation where your rate increases down the road.

Add up all the lender fees to confirm the costs

The interest rate, of course, is a crucial factor in the affordability of your mortgage, but it is not the only thing you need to consider. Be sure to compare the annual percentage rate (APR), which provides the total cost of financing. Also, consider any fees that may not be included in the APR, such as the credit report fee and the appraisal fee.

Know when to lock in the rate

To protect yourself from rising interest rates, find out from your lender what the procedure is for locking in your rate. Keep communication with your loan officer open, so you have an idea of the direction of interest rates.

The information in this article is accurate as of the date of publishing.