Preferred Conventional Program First-Time Homebuyer Assistance Programs

Louisiana’s Preferred Conventional Program: The Affordable Bridge to Your First Home

Buying your first house can feel like standing at the edge of the Mississippi—wide, exciting, and just a bit intimidating. Fortunately, Louisiana’s Preferred Conventional Program offers a sturdy bridge: lower rates, down-payment help, and mortgage insurance savings that make homeownership more than a daydream. Below, you’ll find everything you need to know—from eligibility rules to little-known tips—so you can step confidently onto that bridge and cross into your new address.

Quick Navigation

• Why the Preferred Conventional Program Exists
• How the Loan Structure Works
• Who Qualifies?
• Rates, PMI & Monthly Costs
• What down payment is required?
• Is homebuyer education mandatory?
• Micro-Story: Jana’s Journey in Lafayette
• FAQ
• Next Steps

Why the Preferred Conventional Program Exists

Property values in many Louisiana parishes have risen nearly 30 percent since 2019, according to aggregated MLS data. While that’s good for existing owners, it prices out many renters whose wages haven’t kept pace. The Louisiana Housing Corporation (LHC) launched the Preferred Conventional Program to combat this affordability gap by combining conventional financing with attractive down-payment assistance (DPA) options. Think of it as a hybrid solution: the stability of a mainstream loan plus the financial support often associated with government programs.

By weaving DPA, reduced mortgage insurance, and flexible underwriting into one product, LHC helps qualified residents transition from renting to owning without draining their savings or relying on high-interest secondary loans. In effect, the program fuels community stability—homeowners are 10% more likely to engage in local civic activities than renters, per a 2022 LSU study.

How the Loan Structure Works

1. Core Conventional Loan

The backbone is a 30-year, fixed-rate Freddie Mac HomeOne or HomePossible mortgage underwritten by approved Louisiana lenders. Because the loan is conventional—not FHA—borrowers avoid the lifetime mortgage insurance premiums FHA requires.

2. Down-Payment & Closing Cost Assistance

Borrowers can layer on a second, soft-second loan of up to 4% of the first mortgage amount. Repayment is deferred; if you stay in the home for the required term (currently 10 years), that assistance may be forgiven entirely. Imagine receiving a $220,000 mortgage—up to $8,800 could cover your down payment, closing fees, or both.

3. Reduced PMI

Private mortgage insurance under the Preferred Conventional Program is priced below standard market rates because of risk-share agreements between LHC and insurers. Lower PMI can shave $40–$70 off a typical monthly payment, according to lender disclosures compiled in 2024.

Clockwork simplicity: one payment, one servicer, yet multiple layers of savings.

Who Qualifies?

Eligibility is broader than many assume. Key criteria include:

• First-time homebuyer status (no ownership in the last three years) or purchasing in a federally designated target area.
• Credit score as low as 640 (680 for manufactured homes).
• Income cap tied to parish median income—currently $99,000 in most non-target areas, slightly higher in targeted zones.
• Purchase price limit of $349,525 for an existing home; up to $380,000 for new construction (2024 figures).
• Occupancy must be primary residence within 60 days of closing.

Important nuance: You can pair the Preferred Conventional mortgage with grants from other sources—such as the city of New Orleans’ soft-second program—if layering rules are met. Seasoned loan officers can coordinate the paperwork so benefits stack legally.

Rates, PMI & Monthly Costs: Crunching the Numbers

Interest rates float daily, but program-specific spreads have averaged 0.25–0.40% below standard conventional rates over the last 12 months. Combine that with trimmed PMI and assistance, and the savings compound.

Over five years, that sums to about $8,900 in cash-flow savings—not counting potential principal paydown or tax benefits. Numbers like these turn would-be skeptics into believers.

What Down Payment Is Required for the Preferred Conventional Program?

Under standard Freddie Mac guidelines, first-time buyers can put down as little as 3%. The Louisiana Preferred Conventional Program enhances that by lending up to 4% toward your down payment or closing costs. In practical terms, many participants bring less than $2,000 of their own funds to the table—sometimes as low as $500, depending on earnest-money credits and seller concessions.

Keep in mind that lenders still verify you have skin in the game—bank statements must reflect enough cash to cover inspections, appraisal fees, and prepaid insurance. However, gift funds from relatives are allowed, making the actual cash hurdle one of the lowest among first-time buyer options in the Gulf South.

Is Homebuyer Education Mandatory in Louisiana?

Yes. A HUD-approved eight-hour course—or the LHC’s free online curriculum—must be completed before closing. Far from busywork, the class demystifies budgeting, escrow, and maintenance costs. Graduates of LHC’s program were 32% less likely to fall 60 days behind on payments within two years, according to internal 2023 performance audits.

You can take the course online over a weekend or in person at approved counseling agencies from Shreveport to Houma. The completion certificate stays valid for one year, so starting early won’t hurt.

Micro-Story: Jana’s Journey in Lafayette

Last spring, Jana B., a 27-year-old nurse at Ochsner Lafayette General, watched rents jump to nearly $1,400 for a two-bedroom. Discouraged, she stumbled across the phrase “Preferred Conventional Program” in a Facebook group and decided to investigate. Her credit score was a respectable 665, savings modest at $5,200—mostly earmarked for a wedding deposit.

With guidance from a local lender, Jana secured a $210,000 conventional mortgage at 5.875%, used 4% assistance to cover the down payment and most closing costs, and wrote a personal letter to the seller to win the bid. Her out-of-pocket expense on closing day? $1,306, leaving the wedding fund intact. Six months later, she cheerfully reports that her mortgage, taxes, and insurance total $1,264—less than she used to pay in rent. The moral: strategic programs translate aspiration into keys and doorbells.

Other Ways People Refer to the Program

While the official title is Preferred Conventional Program, you might hear lenders or real-estate pros mention keywords such as:

• Louisiana Preferred Conventional loan
• Preferred Conventional home loan
• LHC Preferred Program
• Louisiana first-time buyer program (conventional)
• Preferred Conventional mortgage option

Regardless of the label, the mechanics—and the benefits—remain the same.

Frequently Asked Questions

Ready to Step Over the Threshold?

The first conversation is free—and could save you thousands. Connect with our licensed Louisiana mortgage specialists today. We’ll pre-qualify you for the Preferred Conventional Program, map out down-payment scenarios, and hand you a checklist tailored to your parish. Your new mailbox numbers are closer than you think.

Schedule a 15-minute discovery call or start the pre-approval online. Tomorrow’s home could be today’s decision.