Louisiana FHA Loans – Requirements and Loan Limits for 2024 – Louisiana FHA Lenders
An FHA loan in Louisiana is a mortgage insured by the Federal Housing Administration, offering flexible qualification criteria and down payment options for eligible homebuyers in the state.
In Louisiana, FHA loans pave the way for flexible credit and income requirements. These loans provide an excellent alternative for first-time buyers or those with lower credit scores who might struggle to obtain traditional loans. Importantly though, Louisiana has its own unique rules concerning property standards and loan limits to be aware of. These guidelines ensure each home meets safety and livability criteria, and they also limit the highest possible loan amount that can be insured by FHA in different parts of the state
In Louisiana, FHA loan requirements typically include a minimum credit score of 500, a maximum debt-to-income ratio of 56.9%, and a down payment as low as 3.5%. These requirements can vary, so it’s important to consult with an experienced FHA loan officer for personalized guidance based on your financial situation.
We will take you through the Louisiana FHA loan requirements, detail what is needed to qualify, then help you to get pre-qualified. If you already know that an FHA loan is right for you, then click to connect with a Louisiana FHA lender whether you live in New Orleans, Baton Rouge, Shreveport, Lafayette, or anywhere else.
What are Louisiana FHA Loans?
FHA loans, provided by the Federal Housing Administration, are designed to make homeownership more attainable for a wider range of people. They prioritize flexibility, enabling homebuyers with lower income or less-than-perfect credit scores to qualify for a mortgage.
This program is especially beneficial for first-time homebuyers who might not have saved enough for a large down payment. In fact, the down payment could be as low as 3.5% of the purchase price, significantly below the standard 20% down payment often required for traditional loans.
To put this into perspective, if you were eyeing a $200,000 home, a 3.5% down payment would only be $7,000, much more manageable compared to $40,000 (20%).
Additionally, FHA loans welcome lower credit scores than most conventional loan programs would allow. This opens up opportunities for aspiring homeowners who may not have been eligible for traditional mortgages due to past financial challenges.
The homes in Louisiana are diverse and unique just like the people living in them, and FHA loans recognize and cater to that diversity. They’re designed to provide assistance to a larger group of prospective homebuyers, ensuring that buying a home isn’t just reserved for those with perfect credit scores and high incomes.
In this spirit of enabling broader access to homeownership, it’s crucial to understand the state-specific guidelines for FHA loans to make informed decisions when navigating the home buying process in Louisiana.
The Advantages and Disadvantages of Louisiana FHA Loans
When considering applying for an FHA loan in Louisiana, it’s crucial to weigh the benefits and drawbacks to make an informed decision. Let’s start with the advantages.
Advantages
- Lower Down Payment: FHA loans offer a lower down payment requirement, typically around 3.5% of the purchase price, making homeownership more accessible to individuals who might struggle with a larger down payment. It’s especially beneficial for first-time homebuyers or those looking to re-establish themselves after financial challenges.
- Lenient Credit Requirements: Flexible credit requirements are another perk of Louisiana FHA loans. Borrowers with lower credit scores or limited credit history may still qualify for an FHA loan, providing an opportunity for those working to improve their creditworthiness after financial setbacks.
- Competitive Interest Rates: FHA loans often feature competitive interest rates, leading to lower monthly mortgage payments over the life of the loan. This makes them an attractive option for individuals seeking a cost-effective homeownership solution.
Here are some additional benefits:
- Gift funds allowed
- Seller closing cost contributions are allowed
- FHA loans are assumable
- Co-signers allowed
- Higher debt to income ratios permitted
Additionally, FHA loans are assumable, meaning if you sell your home, the buyer can take over your existing FHA loan, potentially securing a lower interest rate than what is available in the market at that time—all of which can boost your home’s desirability in the real estate market.
Louisiana FHA Loan Benefits
These are the benefits of an FHA loan versus a conventional loan:
- Lower credit scores permitted
- Lower down payment requirement
- FHA interest rates are lower than conventional rates
- Gift funds allowed
- Seller closing cost contributions are allowed
- FHA loans are assumable
- Co-signers allowed
- Higher debt to income ratios permitted
Let us help you to get approved for an FHA loan by completing this FHA loan scenario form with some basic loan scenario information. No credit report will be pulled and we can connect you with the best option.
Disadvantages
Despite their appealing benefits, Louisiana FHA loans also come with some drawbacks that borrowers should consider before making a decision.
- Mortgage Insurance: One notable downside of an FHA loan is the requirement to pay mortgage insurance premiums (MIP). While this increases the overall cost of the loan, it enables individuals who might not otherwise qualify for a mortgage to obtain financing.
- Property Standards: Purchasing a home with an FHA loan requires adherence to specific property standards outlined by the Federal Housing Administration. These standards may limit the choices of homes as they highlight safety and habitability considerations that must be met by the property under consideration.
It’s important to note that these standards ensure that borrowers invest in properties requiring minimal immediate repairs or maintenance, ultimately safeguarding them from unexpected expenses as they move into their new homes.
Understanding both the advantages and disadvantages associated with Louisiana FHA loans can guide potential homebuyers towards informed decisions aligning with their financial goals and circumstances.
Louisiana FHA loans offer an array of benefits but also involve certain trade-offs. Therefore, prospective homebuyers should carefully evaluate their unique situations to determine whether an FHA loan is the right fit for them.
Qualifying for a Louisiana FHA Loan
Acquiring an FHA loan in Louisiana is feasible for many individuals who might not meet the criteria for conventional loans. One of the most critical factors to consider is your credit score. The FHA requires a minimum credit score of 580 to qualify for a loan with a lower down payment. However, individuals with credit scores between 500 and 579 may still qualify, albeit with a larger down payment of 10%. Understanding how your credit score influences your eligibility is crucial as it significantly impacts the loan approval process.
In addition to credit score, employment history is another pivotal factor. You will need to demonstrate a steady employment history, which essentially means having consistent employment or income for at least two years. Meeting debt-to-income ratio requirements is also vital. Lenders want to ensure that you can manage your finances responsibly. Your total monthly debts (like car loans, student loans, credit card payments, etc.) should not exceed a certain percentage of your gross monthly income.
Reducing your debt before applying for an FHA loan can improve your chances of qualifying. When you have a lower debt-to-income ratio, lenders view you as less risky and more likely to manage your mortgage payments effectively.
For instance, if you have a monthly gross income of $5,000 and a total monthly debt of $1,500, your debt-to-income ratio would be 30%, falling within the acceptable range for an FHA loan.
Additionally, saving up for a larger down payment can be beneficial, especially if your credit score is on the lower end of the spectrum. By making a larger down payment, you can compensate for a lower credit score and increase your chances of loan approval.
The bottom line: A lower credit score doesn’t automatically disqualify you from getting an FHA loan in Louisiana. Being aware of the other qualifying criteria allows you to take proactive steps to strengthen your position as a prospective borrower.
Louisiana FHA Loan Requirements for 2024
These are the basic FHA loan requirements for this year. All of these must be met to be approved for an FHA loan. If you are not positive on whether you meet these standards or have questions, an FHA lender can help.
- Down payment of 3.5% or 10% if your credit score is below 580
- 2-year employment history with some exceptions allowed
- Fully document your income for the past two years
- Minimum FICO score requirement of 500 – down payment will vary
- Mortgage Insurance Premium (MIP) is required for every FHA loan
- Maximum debt to income ratio of 43% with exceptions up to 56%
- The home must be your primary residence
- No bankruptcies or foreclosures in the past two years
Louisiana FHA Down Payment Requirements
The down payment requirements for an FHA loan is the same in every state. The minimum requirement for an FHA loan is 3.5% of the purchase price. However, if your credit score is below 580, then the down payment requirement will be 10%.
If you do not have the down payment needed, you can also use gift funds from a relative.
Louisiana FHA Down Payment Assistance
There are various down payment assistance programs in every state. Below is a list of just a few down payment assistance programs that may be available to you in Louisiana. Home buyers will need to contact, and arrange for these programs independently. Lenders will accept the funds from these programs for your down payment but they will not arrange for the down payment assistance.
Southern Mortgage Assistance Program
Louisiana Housing GNMA Program
Shreveport Home Buyer Assistance
New Orleans Home Buyer Assistance
We can also help by providing a lender assisted down payment. It is a down payment assistance program that is included in the loan package. The assistance may or may not be forgivable.
Let us help you to get approved for an FHA loan by completing this FHA loan scenario form with some basic loan scenario information. No credit report will be pulled and we can connect you with the best option.
Louisiana FHA Loan Limits
Every county in the United States has specific maximum loan limits that are set for single family homes, as well as 2-4 unit properties. The limits are set based upon the average home sales value in that county. The base FHA loan limit for single family residences in Louisiana for most counties is $498,257. Use this FHA loan limit lookup tool to see what the FHA loan limits are in your county.
| County Name | Single Family | 2 Units | 3 Units | 4 Units |
|---|---|---|---|---|
| ACADIA | $498,257 | $637,950 | $771,125 | $958,350 |
| ALLEN | $498,257 | $637,950 | $771,125 | $958,350 |
| ASCENSION | $498,257 | $637,950 | $771,125 | $958,350 |
| ASSUMPTION | $498,257 | $637,950 | $771,125 | $958,350 |
| AVOYELLES | $498,257 | $637,950 | $771,125 | $958,350 |
| BEAUREGARD | $498,257 | $637,950 | $771,125 | $958,350 |
| BIENVILLE | $498,257 | $637,950 | $771,125 | $958,350 |
| BOSSIER | $498,257 | $637,950 | $771,125 | $958,350 |
| CADDO | $498,257 | $637,950 | $771,125 | $958,350 |
| CALCASIEU | $498,257 | $637,950 | $771,125 | $958,350 |
| CALDWELL | $498,257 | $637,950 | $771,125 | $958,350 |
| CAMERON | $498,257 | $637,950 | $771,125 | $958,350 |
| CATAHOULA | $498,257 | $637,950 | $771,125 | $958,350 |
| CLAIBORNE | $498,257 | $637,950 | $771,125 | $958,350 |
| CONCORDIA | $498,257 | $637,950 | $771,125 | $958,350 |
| DE SOTO | $498,257 | $637,950 | $771,125 | $958,350 |
| EAST BATON ROUG | $498,257 | $637,950 | $771,125 | $958,350 |
| EAST CARROLL | $498,257 | $637,950 | $771,125 | $958,350 |
| EAST FELICIANA | $498,257 | $637,950 | $771,125 | $958,350 |
| EVANGELINE | $498,257 | $637,950 | $771,125 | $958,350 |
| FRANKLIN | $498,257 | $637,950 | $771,125 | $958,350 |
| GRANT | $498,257 | $637,950 | $771,125 | $958,350 |
| IBERIA | $498,257 | $637,950 | $771,125 | $958,350 |
| IBERVILLE | $498,257 | $637,950 | $771,125 | $958,350 |
| JACKSON | $498,257 | $637,950 | $771,125 | $958,350 |
| JEFFERSON | $498,257 | $637,950 | $771,125 | $958,350 |
| JEFFERSON DAVIS | $498,257 | $637,950 | $771,125 | $958,350 |
| LAFAYETTE | $498,257 | $637,950 | $771,125 | $958,350 |
| LAFOURCHE | $498,257 | $637,950 | $771,125 | $958,350 |
| LASALLE | $498,257 | $637,950 | $771,125 | $958,350 |
| LINCOLN | $498,257 | $637,950 | $771,125 | $958,350 |
| LIVINGSTON | $498,257 | $637,950 | $771,125 | $958,350 |
| MADISON | $498,257 | $637,950 | $771,125 | $958,350 |
| MOREHOUSE | $498,257 | $637,950 | $771,125 | $958,350 |
| NATCHITOCHES | $498,257 | $637,950 | $771,125 | $958,350 |
| ORLEANS | $498,257 | $637,950 | $771,125 | $958,350 |
| OUACHITA | $498,257 | $637,950 | $771,125 | $958,350 |
| PLAQUEMINES | $498,257 | $637,950 | $771,125 | $958,350 |
| POINTE COUPEE | $498,257 | $637,950 | $771,125 | $958,350 |
| RAPIDES | $498,257 | $637,950 | $771,125 | $958,350 |
| RED RIVER | $498,257 | $637,950 | $771,125 | $958,350 |
| RICHLAND | $498,257 | $637,950 | $771,125 | $958,350 |
| SABINE | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. BERNARD | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. CHARLES | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. HELENA | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. JAMES | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. JOHN THE BA | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. LANDRY | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. MARTIN | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. MARY | $498,257 | $637,950 | $771,125 | $958,350 |
| ST. TAMMANY | $498,257 | $637,950 | $771,125 | $958,350 |
| TANGIPAHOA | $498,257 | $637,950 | $771,125 | $958,350 |
| TENSAS | $498,257 | $637,950 | $771,125 | $958,350 |
| TERREBONNE | $498,257 | $637,950 | $771,125 | $958,350 |
| UNION | $498,257 | $637,950 | $771,125 | $958,350 |
| VERMILION | $498,257 | $637,950 | $771,125 | $958,350 |
| VERNON | $498,257 | $637,950 | $771,125 | $958,350 |
| WASHINGTON | $498,257 | $637,950 | $771,125 | $958,350 |
| WEBSTER | $498,257 | $637,950 | $771,125 | $958,350 |
| WEST BATON ROUG | $498,257 | $637,950 | $771,125 | $958,350 |
| WEST CARROLL | $498,257 | $637,950 | $771,125 | $958,350 |
| WEST FELICIANA | $498,257 | $637,950 | $771,125 | $958,350 |
| WINN | $498,257 | $637,950 | $771,125 | $958,350 |
FHA 203k Loans in Louisiana
FHA 203k loans are a great program which will allow you to borrow the money needed to purchase the home plus additional funds needed to rehabilitate or remodel the home. This program is also available in your state and we work with lenders that help with your FHA 203k loan.
If you would like to fully understand how this program works, we suggest reading our article on FHA 203k loans.
FHA Streamline Refinance in Louisiana
The FHA streamline refinance program is available to existing homeowners who would like to refinance for a lower rate while eliminating some of the refinance costs such as an appraisal. You may also get a discount on the mortgage insurance premium which is another advantage.
For more information, please read our article on the FHA streamline refinance.
Louisiana FHA Loan Pre-Approval Process
If you are looking for an FHA loan, there is an optimal process you should follow to get pre-approved.
- The first step is to make sure you have the minimum down payment needed to qualify
- check your credit and try to cleanup anything that is pulling down your scores
- Get a copy of your tax returns for the past two years
- Get copies of your pay stubs for the past month
- Get copies of your last two months’ bank statements
- Speak to an FHA lender about your loan scenario
Speak to a lender early in the process because they can identify opportunities to help with your FHA approval. This should be done months before you start looking for a home. Read more about how to get pre-approved for an FHA loan.
What to Look for in an FHA Lender
We take a few things into consideration when looking at which Louisiana FHA lenders we work with. Some of these also may be, or should be very important to you as you continue shopping for an FHA loan.
A good FHA lender will:
- Allow for credit scores as low as 500
- Provide FHA 203k loans
- Offer competitive rates and fees
- Have a great processing and underwriting team
- Work closely with you throughout the loan process
- Communicate well and will provide you with updates along the way
Louisiana FHA Loan Calculator
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Frequently Asked FHA Questions
Can I get an FHA loan with a bankruptcy?
In general, you will need to wait two years before applying for an FHA loan after a bankruptcy. However, there are some exceptions which may allow you to apply sooner. Read our article on the bankruptcy waiting period.
Are all FHA lenders the same?
Not all lenders who offer FHA loans are the same. They all do not offer all of the FHA programs and their rates and fees may also vary. Most importantly, the individuals who help to process and underwrite your loan will have a huge impact on your FHA loan experience.
Can I use gift funds for an FHA loan?
FHA loans do allow for gift funds to cover your down payment as well as your closing costs. The gift funds must come from a relative or a close friend as approved by the lender. You will need to provide the lender with a gift letter that is signed by the donor.
Do I need an appraisal for an FHA loan?
The FHA does require an appraisal and inspection before your loan can be approved. The FHA inspection has clear guidelines on what needs to be repaired before your loan can close. They want to make sure home buyers are moving into a home that is safe and operational.
Can I get an FHA loan for an investment property?
FHA loans are for primary residences only and if your goal is to purchase an investment property, you cannot use FHA insured financing for that purchase. However, if you are currently living in a home that is financed with an FHA loan, you can move to a new home and keep the current home as an investment.
How do credit score requirements differ for FHA loans in Louisiana compared to other states?
Credit score requirements for FHA loans are consistent nationwide, regardless of the state. The Federal Housing Administration (FHA) sets the minimum credit score at 580 for borrowers to qualify for a down payment as low as 3.5%. However, individual lenders may have their own overlays and may require a higher credit score. It’s important for homebuyers in Louisiana, like in any other state, to check with specific lenders to understand their credit score requirements.
Are there any specific property requirements for FHA loans in Louisiana?
Yes, there are specific property requirements for FHA loans in Louisiana. Some of the key requirements include the property being used as the borrower’s primary residence, meeting certain minimum property standards, and being appraised by an FHA-approved appraiser. Additionally, the maximum loan amount and loan-to-value ratio may vary depending on the county. According to recent data from the U.S. Department of Housing and Urban Development (HUD), the average FHA loan amount in Louisiana was $205,000 in 2020.
What are the pros and cons of opting for an FHA loan in Louisiana?
Opting for an FHA loan in Louisiana has several pros and cons. The main advantage is the lower down payment requirement, which can be as low as 3.5%, making homeownership more accessible. FHA loans also have more flexible credit requirements and may offer lower interest rates. However, there are some drawbacks to consider. FHA loans come with upfront and annual mortgage insurance premiums, increasing the overall cost of the loan. Furthermore, there are loan limits that vary by county, potentially restricting the purchase price of a home. It is important to weigh these factors based on individual circumstances before deciding on an FHA loan in Louisiana.
What is the maximum loan amount for FHA loans in Louisiana?
The maximum loan amount for FHA loans in Louisiana is determined by the Federal Housing Administration (FHA) and can vary based on the county. The limits higher for 2-4 unit properties. Areas where the average home cost is higher will also have higher FHA loan limits.
We have FHA lenders who can help with your FHA loan in these states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming