Louisiana homebuyer guide

FHA, VA, USDA or conventional: picking the loan under your HomeStart help

HomeStart's 4% help rides on a 30-year fixed FHA, VA, USDA or HFA conventional loan. Here's how each one costs out for Louisiana buyers, from Bossier to Vernon to the suburbs.

The short version: HomeStart assistance is a second mortgage. It has to sit on a 30-year fixed FHA, VA, USDA Rural Development, or Fannie Mae HFA Preferred / Freddie Mac HFA Advantage conventional first mortgage. VA is usually best for eligible veterans, USDA for rural addresses that qualify, conventional for buyers with stronger credit (especially at or under 80% AMI, where an extra grant applies), and FHA for everyone else.

The 4% HomeStart second mortgage gets the headlines, but the first mortgage under it decides most of your monthly cost. The Louisiana Housing Corporation lets you pair its help with four kinds of loans, all 30-year fixed. Picking the right one can be worth more than the assistance itself over time.

The four options at a glance

Loan	Least down	Upfront cost	Monthly insurance	Best fit
FHA	3.5%	1.75% upfront MIP (can be financed)	0.55% a year for the life of the loan at 3.5% down	Scores near 640, higher debts
VA	0%	Funding fee, 2.15% first use with under 5% down, unless exempt	None	Eligible veterans and service members
USDA Rural Development	0%	Guarantee fee, capped by rule at 3.5%	Annual fee, capped at 0.5%	Rural addresses that qualify, moderate incomes
Conventional (HFA Preferred / HFA Advantage)	Generally 3%; lender confirms	Lender confirms	Private mortgage insurance, removable later	Stronger credit; extra grant at or under 80% AMI

The figures come from each agency's own rules. Current USDA fee levels and the HFA conventional limits are something your lender confirms.

FHA: the default for a reason

FHA is forgiving on credit and debt, which is why so many HomeStart files use it. The tradeoff is cost. You pay a 1.75% upfront premium, usually rolled into the loan, and at 3.5% down the annual premium of 0.55% lasts as long as the loan does. The only way out is refinancing later.

Two Louisiana program notes: LHC allows FHA's Limited 203(k) rehab loan with lenders approved by its servicer, Lakeview, but not FHA's 203(h) disaster-victim loan. And if any part of the house is in an A or V flood zone, FHA requires flood insurance for the life of the loan. See the flood guide.

VA: hard to beat if you've served

For eligible veterans, service members and some surviving spouses, VA usually wins. There's no down payment and no monthly mortgage insurance. Per va.gov:

The funding fee on a first-use purchase is 2.15% with less than 5% down, 1.5% with 5% down and 1.25% with 10% down. It can be financed.
Veterans receiving or eligible for service-connected disability compensation don't pay it, along with a few other groups.
Seller concessions are capped at 4% of reasonable value.

A bonus for Louisiana veterans: the first-time buyer rule is waived for veterans in LHC's HomeStart Assist and in the CAFA and JPFA bond programs. That matters around Barksdale in Bossier Parish and Fort Johnson in Vernon Parish, where many buyers have owned before. HomeStart Advantage doesn't require first-time status for anyone.

USDA: more of Louisiana than you'd think

USDA Rural Development's guaranteed loan allows 100% financing on homes in eligible rural areas. The loan can equal the home's value plus the upfront guarantee fee. Eligibility is set by USDA's map, address by address, and large parts of Louisiana's smaller parishes and the edges of growing suburbs can qualify. Check the exact address with your lender.

USDA also has an income cap. Your household's adjusted income can't exceed USDA's "moderate income" limit for the area. That's a separate test from HomeStart's own caps, so you have to pass both.

Per federal rules, the upfront guarantee fee can't exceed 3.5% of the loan and the annual fee can't exceed 0.5%. Your lender gives you the fees that apply today.

Conventional: the quiet winner at lower incomes

HomeStart's conventional options are Fannie Mae HFA Preferred and Freddie Mac HFA Advantage. They tend to suit buyers with stronger credit. They also carry a Louisiana bonus: the Affordable Income Subsidy (AIS) grant.

At or below 50% of area median income: a grant of 1.00% of the loan.
From 50.01% to 80% of area median income: 0.50% of the loan.
It stacks with HomeStart Advantage or Assist, and LHC notes reduced mortgage insurance for these borrowers.

Conventional mortgage insurance can also come off. Under Freddie Mac's servicing rules, you can ask to cancel it when your balance reaches 80% of the original value, and it ends automatically at 78% if your payment record is good.

Price limits to keep in mind

Each layer has its own cap. With HomeStart Advantage, the purchase price can't exceed the applicable FHA loan limit. HUD's 2026 one-unit FHA floor is $541,287, and LHC's 2026 exhibit lists a $678,150 one-unit mortgage limit. HomeStart Assist caps the price at $554,850, or $678,150 in targeted areas. Conventional loans have their own 2026 limit of $832,750 for one unit. For most first homes in Louisiana, those caps won't be the problem. Income limits and the monthly payment usually bind first.

Manufactured homes

All four loan types can work on a qualifying manufactured home, but HomeStart raises the bar to a 660 credit score and a 45% maximum debt-to-income ratio. On HomeStart Plus, the home must be built in 1994 or later, titled as real estate and permanently attached. Single-wides are allowed only on conventional loans there.

Three Louisiana buyers, three answers

Illustrative examples:

A Bossier City Air Force veteran with a disability rating: VA, with no funding fee and no monthly insurance. The 4% help can cover closing costs.
A Hammond nurse buying outside town at 75% of area median income, with a 700 score: compare USDA, if the address qualifies, with conventional plus the 0.50% AIS grant.
A Shreveport deputy at 648 with a truck note: FHA is likely the path, since its debt rules are more flexible.

Questions to ask your lender

Price this house on FHA and conventional, side by side, over five years.
Does the address qualify for USDA?
Do I fall under 80% of area median income for the AIS grant?
What will my mortgage insurance cost, and can it ever come off?

The answer depends on your credit, income and the house. Check your eligibility, and a participating lender can run all four for you.

Questions people ask

What loans can I use with HomeStart down payment help?

A 30-year fixed FHA, VA, USDA Rural Development, or Fannie Mae HFA Preferred / Freddie Mac HFA Advantage conventional loan.

Is VA or FHA better with Louisiana down payment assistance?

For eligible veterans, VA usually costs less: no down payment and no monthly mortgage insurance. FHA charges a 1.75% upfront premium and, at 3.5% down, an annual 0.55% premium for the life of the loan.

What is the AIS grant?

The Affordable Income Subsidy is an LHC grant for HomeStart conventional borrowers: 1.00% of the loan at or below 50% of area median income, and 0.50% from 50.01% to 80%. It stacks with Advantage or Assist.

Can I use a USDA loan with HomeStart?

Yes, if the address is in a USDA-eligible rural area and your household passes USDA's moderate-income limit as well as HomeStart's own limits.

Free download: our Louisiana homebuyer checklist. The paperwork, the steps, the programs and the questions worth asking, all on one printable page. Get the checklist