Conventional Loans in Louisiana
Not government-backed — conventional loans follow Fannie Mae and Freddie Mac guidelines. For buyers who qualify, this is the loan I recommend most often across Louisiana.
If you're weighing whether a conventional loan is the smartest financial choice for your next home, you're already asking the right question. Most of my Louisiana conventional buyers aren't wondering whether they can qualify — they're deciding whether it's the right way to protect their long-term money.
That's the conversation I have almost every week. On this page, I walk through how I think about down payment strategy, how to actually get rid of PMI, how conventional handles move-up buyers, second homes, and investment properties, and where Louisiana-specific costs quietly change the math.
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Why Conventional Is the Loan I Recommend Most Often
When someone qualifies for both FHA and conventional, I usually steer them toward conventional. Not always — but usually. Here's why.
Conventional gives you the most property flexibility (primary, second home, investment), the most competitive pricing at solid credit, and mortgage insurance that you can actually get rid of. FHA mortgage insurance generally stays for the life of the loan. Conventional PMI drops off — automatically at 78% LTV, or earlier if you request it or if your home appraises high enough to prove the equity is there.
For buyers with good credit and even modest down payment savings, conventional often means a lower overall cost, more freedom in what you can buy, and a clearer path to eliminating mortgage insurance down the road. That's why it's my default recommendation when the numbers support it.
For a side-by-side comparison, our blog on FHA vs. conventional walks through when each program wins.
How Much Should You Actually Put Down? (3%, 5%, 10%, 20%)
This is the question I spend the most time on with conventional buyers. It's not really about what you can put down — it's about what makes the most sense given your income, your reserves, and what you plan to do with the house.
Here's how I generally think about it:
- 3% down — Fannie Mae's HomeReady and Freddie Mac's Home Possible programs allow qualified buyers (often first-time or lower-income households) to get in with as little as 3% down. PMI applies, and there are income limits to check.
- 5% down — Standard conventional entry point for most buyers. PMI still applies, but pricing improves compared to 3% down.
- 10% down — A common sweet spot. PMI is meaningfully cheaper, rate pricing improves, and you keep more cash in the bank.
- 20% down — No PMI at all. Best pricing available. But you're also parting with a lot of cash — sometimes cash you'd rather keep working somewhere else.
The honest answer for most buyers is somewhere in the middle. I'll run all four scenarios side by side so you can see the exact payment difference — and more importantly, what each choice costs you (or saves you) over the life of the loan.
PMI You Can Actually Get Rid Of
One of the biggest advantages of conventional is that PMI isn't permanent. That's the piece a lot of buyers don't fully understand until we sit down and go through the numbers.
On a conventional loan, monthly PMI falls off automatically once your loan-to-value ratio hits 78% — measured against your original purchase price and your scheduled principal balance. You can also request PMI removal earlier at 80% LTV. And if your home appreciates faster than expected, you can order an appraisal, prove the equity, and have PMI removed based on the current value.
Compare that to FHA. FHA mortgage insurance (MIP) generally stays for the life of the loan on today's FHA loans, and the only way out is to refinance. That's not always bad — FHA is often the right call for buyers rebuilding credit or with tighter budgets — but it's a real long-term cost difference.
My rule of thumb: if you can qualify for conventional and your PMI cost is reasonable, I'll usually recommend it — because you have a realistic path to eliminating that expense within a few years.
When It Makes Sense to Skip 20% Down (Even If You Have It)
I have this conversation more often than you might expect. A buyer has enough saved to put 20% down and skip PMI entirely — but that doesn't always mean they should.
Situations where I've told buyers to keep more cash in the bank instead:
- They needed reserves for renovation, furniture, or move-in expenses on the new home.
- They wanted a healthy emergency fund after closing — six months of expenses instead of two.
- Their current investment returns were outpacing the after-tax cost of a smaller monthly PMI payment.
- They had a business, rental property, or upcoming investment where the cash would earn more elsewhere.
- They were relocating and wanted flexibility if the new job didn't work out.
The point isn't that PMI is free — it isn't. The point is that on conventional, PMI is removable, and sometimes the smarter move is to protect your cash cushion, get into the home, and pay off PMI on your terms once the equity is there.
Conventional for Move-Up Buyers, Second Homes, and Investment Properties
This is where conventional really pulls away from the government-backed programs. FHA, VA, and USDA are almost entirely built around owner-occupied primary residences. Conventional isn't.
A few of the places conventional does what other programs can't:
- Move-up buyers — buyers using equity from a current home to purchase their next home. Conventional handles the timing, the contingencies, and the non-contingent offers cleanly.
- Second homes — a lake house, a condo near family, a place at a vacation destination. Conventional finances these; FHA and USDA don't.
- Investment properties — a rental purchase or the "keep the old house as a rental" strategy. Down payment requirements are higher (usually 15%–25%), but conventional is often the only path.
- Higher-priced homes — homes above the FHA limit for the parish but still within conventional conforming limits.
If you're already thinking about your next home before you've bought your first, that's a conversation I love having early — because how you structure the first loan often determines what's possible on the second.
Louisiana Conforming Loan Limits and When You Cross into Jumbo
Conventional loans divide into two categories based on loan size: conforming loans (which follow Fannie Mae and Freddie Mac limits) and jumbo loans (anything larger). The line matters because pricing, down payment requirements, and reserve requirements can shift once you cross into jumbo territory.
Conforming loan limits are set each year by the Federal Housing Finance Agency (FHFA). For most Louisiana parishes, the baseline one-unit conforming limit is what applies — Louisiana doesn't currently have any "high-cost" designated areas that receive higher conforming limits. That means the same baseline generally applies from Shreveport to New Orleans to Lafayette.
We'll verify the current-year limit for your parish and property type before you make an offer, since these figures update annually. If your purchase price would push you past the conforming line, we'll compare jumbo options — the underwriting is stricter, but for the right buyer, it's a straightforward path.
Can You Combine Conventional with Down Payment Assistance?
Yes — and this is one of the most under-used strategies in Louisiana. A lot of buyers assume down payment assistance only pairs with FHA. It doesn't.
The Louisiana Housing Corporation (LHC) offers programs — including Mortgage Revenue Bond (MRB) programs and the Mortgage Credit Certificate (MCC) — that pair with conventional loans, including Fannie Mae's HomeReady and Freddie Mac's Home Possible. That means you can potentially:
- Use LHC down payment assistance to cover most of your down payment on a conventional loan.
- Combine an MCC to reduce your federal tax bill each year you own the home.
- Take advantage of the reduced-PMI structure that HomeReady and Home Possible offer on qualifying loans.
There are income limits, geographic considerations, and homebuyer education requirements to check, but for eligible buyers this can be a powerful stack. For a full walkthrough of Louisiana programs, see our guide to first-time homebuyer programs in Louisiana.
When we talk, I'll tell you honestly whether you qualify and whether it actually improves your bottom line — sometimes a straight conventional loan beats a stacked one once you account for fees and terms.
The Louisiana Details Most Conventional Guides Skip
National mortgage websites can tell you the conventional program rules. They can't tell you what those rules look like when a Louisiana insurance quote, a parish tax rate, or a flood zone lands in the middle of your file. Here's what actually moves the needle locally.
Flood insurance can quietly wreck your DTI
Louisiana has more flood-zone properties than most states. If the home you love sits in a designated flood zone, the annual flood insurance premium gets added to your monthly housing expense and eats into your debt-to-income ratio. I've seen buyers get pre-approved on paper only to have the loan re-underwrite once the flood quote comes in. I check for flood zone status early so we're not surprised.
Louisiana hurricane and wind coverage matters
Louisiana homeowners insurance can run meaningfully higher than the national average, especially in south Louisiana. Wind and hail deductibles are a specific line item. That insurance premium flows into your escrow and monthly payment. We'll get real quotes early — not a national average estimate — so your pre-approval reflects reality.
The Louisiana Homestead Exemption
Louisiana exempts the first $75,000 of assessed value from parish property taxes on your primary residence — but only if you file for the homestead exemption with your parish assessor after closing. I remind every conventional buyer to file. See our blog on the Louisiana Homestead Exemption for how much it can save you.
High-tax parishes and conforming DTI headroom
Louisiana property taxes vary widely by parish. Higher-tax parishes reduce your DTI headroom on a conventional loan the same way they do on any other program — but on conventional, DTI limits can be tighter than FHA, so the parish you're buying in can quietly affect your maximum purchase price. I run those numbers before we shop.
Conventional Might Be Right If…
- You want the most property flexibility — primary, second home, or investment.
- You want mortgage insurance you can actually get rid of.
- You have solid credit (typically 680+).
- You want to preserve cash for reserves, renovation, or investment opportunities.
- You're a move-up buyer using equity from a previous home.
- You want to keep VA entitlement available for a future purchase.
If most of that sounds like you, a conventional loan is worth a real look — and probably the first program I'd run for your situation.
Looking at Conventional in Shreveport, Bossier City, or Northwest Louisiana?
Most of my conventional buyers are professionals — dual-income households, engineers, healthcare workers, teachers with tenure, self-employed borrowers with strong documentation, and move-up buyers using equity from a previous home. If that's your situation, our conventional loans in Shreveport and Bossier City page walks through the local scenarios, buyer types, and neighborhoods where conventional financing tends to be the right call.
It also covers Barksdale AFB civilian and military buyers who sometimes have a good reason to choose conventional over VA — a smaller section of my practice, but an important one.
Ready to Explore Conventional?
I'll compare conventional to FHA, VA, and USDA for your situation — and help you lock in the loan that actually fits your goals.
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