The flood rule inside Louisiana's hurricane recovery programme
Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.
Louisiana's largest assistance programme exists because of hurricanes and will not lend in the places hurricanes flood. That is not a contradiction, but it needs explaining.
The rule
The LHC Lenders' Guide states it in one line under HomeStart Plus: "Properties located within a Special Flood Hazard Area are not eligible."
LHC's consumer page names the zones: "certain properties located in designated Special Flood Hazard Areas, including Flood Zones A, AE, or V, are not eligible under the program."
| Zone | Broadly | HomeStart Plus |
|---|---|---|
| A | High-risk, no detailed base flood elevation | Not eligible |
| AE | High-risk, base flood elevation determined | Not eligible |
| V | High-risk coastal, wave action | Not eligible |
Why a hurricane programme excludes flood zones
Because of where the money comes from. HomeStart Plus is funded with Community Development Block Grant disaster recovery dollars, and federal disaster-recovery funding is not meant to place households back into the path of the next event. Putting subsidised buyers into a Special Flood Hazard Area would work against the purpose of the appropriation.
It is coherent. It is also, for a buyer, a hard constraint that arrives early and cannot be argued with — and in the 47 parishes this programme serves, it excludes a meaningful share of what is for sale.
What this means in practice
Settle the flood zone before you make an offer, not during underwriting. Three reasons:
- It is a yes/no eligibility question, not a condition to be cleared.
- It determines whether up to $55,000 is on the table at all — the difference between HomeStart Plus and the 4% the statewide programmes pay.
- If the answer is no, you still have HomeStart Advantage or HomeStart Assist, which follow ordinary Agency and GSE flood guidelines rather than excluding the zones outright.
Mike's view, as a lending matter: in coastal and riverine Louisiana this is the single most consequential question about a property for this programme, and it is cheap to answer early. Ask it the same week you start looking.
Where Plus does lend: insurance for ten years
LHC's consumer page: homeowners "must also maintain applicable homeowners and flood insurance requirements for the life of the second mortgage."
The second mortgage runs ten years — that is the forgiveness term, with the balance burning down at 1/120 a month. So this is a ten-year obligation, not a closing condition, and letting the cover lapse is a programme compliance problem rather than merely an insurance one.
We are lenders rather than insurance advisers, so the useful framing is a budgeting one: carry the premium in your monthly figure from the start, and remember it sits inside the 28–33% front-end window the programme requires. Insurance is part of the PITI that window measures. The ratio rules.
The environmental review alongside it
Separate from the flood question, every HomeStart Plus property must pass an LHC environmental review, completed by LHC staff, which "may take up to two (2) weeks." No loan may close before clearance is issued.
Together, the flood-zone test and the environmental review make HomeStart Plus the most property-dependent programme on this site. Both are answerable up front; neither is forgiving if left late.
The other three programmes
HomeStart Assist, Advantage and Ready carry no equivalent exclusion. The guide's entry for them reads simply: "Flood Insurance — Follow Agency and GSE guidelines."
So a Special Flood Hazard Area property in Louisiana can be financed with LHC assistance — just not with HomeStart Plus. The practical consequence is that a flood-zone buyer trades the $55,000 programme for a 4% one, which is a real loss but a long way from having no options. The four programmes.
Frequently asked questions
Can I use HomeStart Plus on a property in a flood zone?
No. The LHC Lenders' Guide states that properties located within a Special Flood Hazard Area are not eligible for HomeStart Plus, and LHC's consumer page names Flood Zones A, AE and V specifically.Why does Louisiana's hurricane program exclude flood zones?
Because HomeStart Plus is funded with Community Development Block Grant disaster recovery money, which is not intended to place subsidised households back into high-risk flood areas. The other LHC programmes follow ordinary Agency and GSE flood guidelines instead.How long do I need flood insurance on HomeStart Plus?
For the life of the second mortgage, which runs ten years. LHC requires borrowers to maintain applicable homeowners and flood insurance requirements throughout, and the premium counts within the 28% to 33% front-end ratio window the programme requires.Can I get Louisiana down payment assistance in a flood zone at all?
Yes, through HomeStart Assist or HomeStart Advantage, which follow Agency and GSE flood guidelines rather than excluding Special Flood Hazard Areas. Those programmes pay 4% of the first mortgage rather than HomeStart Plus's up to 20% capped at $55,000.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal or tax advice. Louisiana Housing Corporation programme terms, income limits and purchase price limits are set by LHC and change; figures here carry the date we verified them against LHC's published documents. LHC assistance is a zero-interest forgivable second mortgage, forgiven only if occupancy and programme requirements are maintained. Federal recapture tax may apply on HomeStart Assist bond loans; consult a tax advisor. Loans are subject to borrower and property qualification.