The four HomeStart Plus rules that end files
Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.
The money is the largest in the network. The conditions are the strictest, and three of them are the sort nobody mentions until underwriting.
★ The ratio rule that runs backwards
From the LHC Lenders' Guide, under Front-End Ratio:
"PITI must be at least 28% but may not exceed 33%."
Every other ratio rule in lending is a ceiling. This one is a window. Principal, interest, taxes and insurance has to land between 28% and 33% of income — and a borrower whose housing payment comes in under 28% is outside the programme.
The logic is that this is subsidy money aimed at households who genuinely need it. If your housing payment is a small share of your income, the programme's view is that you did not need $55,000. It is defensible policy and a genuine surprise to borrowers, because "your payment is too low" is not a sentence anyone expects to hear.
In practice it is one more reason to have the conversation before you choose a house rather than after. A cheaper property can push you below the floor.
★ A cap on what you may keep
New as of 09/10/26, and marked as such in the guide:
"After closing, the borrower may retain liquid assets equal to no more than six months of the proposed monthly housing payment. Any excess must reduce the Closing Cost Assistance. Retirement accounts are excluded. (Added 09/10/26)"
Two things worth drawing out. The excess does not disqualify you — it reduces the closing cost assistance, which is the $5,000 grant rather than the second mortgage. And retirement accounts are excluded from the calculation, so a 401(k) or an IRA does not count against you.
This is the newest rule on this site, and if you are reading about HomeStart Plus anywhere that does not mention it, that page predates 09/10/26.
★ Special Flood Hazard Areas are out
The guide is one line: "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."
In the 47 parishes this programme serves, that is a significant exclusion, and it sits oddly alongside a programme created in response to hurricanes. The reasoning is federal: CDBG disaster recovery money is not meant to put households back into the path of the next flood.
Separately, where the programme does lend, borrowers "must also maintain applicable homeowners and flood insurance requirements for the life of the second mortgage" — ten years. What this rules out and what it costs.
★ The two-week environmental review
Every HomeStart Plus property goes through one, and it is done by LHC rather than by your lender:
"All properties financed through the HomeStart Plus Program must pass an environmental review. The environmental review will be completed by Louisiana Housing Corporation (LHC) staff and may take up to two (2) weeks. Lenders must allow sufficient time for the review when establishing the anticipated closing date. A loan may not close until LHC has completed the environmental review and issued environmental clearance for the property."
This is the single most common reason a HomeStart Plus file misses its closing date, and it is entirely avoidable: it needs to be in the timeline from day one, not discovered in week three.
Mike's advice, as a lending matter: build the review into the expected closing date when you are deciding what timeline to work to. Two weeks of agency review on top of ordinary underwriting is not a delay if everyone planned for it.
What the file itself has to clear
| Test | HomeStart Plus |
|---|---|
| Minimum credit score | 640; 660 manufactured homes |
| Credit scores required | All three (CDBG programme) |
| Front-end ratio | 28%–33% |
| Back-end DTI | 48%; 45% manufactured homes |
| Underwriting | DU Approve/Eligible or LPA Accept/Eligible |
| Manual underwriting | Not permitted |
| Nontraditional credit | Not permitted |
| Assumptions | Not permitted |
| Eligible properties | One-unit, townhomes, condominiums, qualifying manufactured homes |
Note that HomeStart Plus is stricter than Assist and Advantage on underwriting — those two permit manual underwriting on FHA files, and this one does not permit it at all.
Is it worth the conditions?
Usually, yes, and it is not close. Up to $55,000 forgiven over ten years, plus $5,000 toward closing, against the 4% the statewide programmes pay. On a $250,000 purchase that is the difference between roughly $10,000 and $50,000.
What the conditions change is the planning. The flood zone question should be answered before you make an offer. The environmental review belongs in the timeline. The ratio window should be checked against the specific property. None of that is difficult; all of it is expensive to discover late. Whether your parish qualifies.
Frequently asked questions
Does HomeStart Plus have a minimum debt-to-income ratio?
Yes, on the front end. The LHC Lenders' Guide states that PITI must be at least 28% but may not exceed 33%, so a borrower whose housing payment is below 28% of income is outside the programme. Maximum back-end debt-to-income is 48%, or 45% for manufactured homes.How much money can I keep after closing on HomeStart Plus?
No more than six months of the proposed monthly housing payment in liquid assets. Any excess must reduce the closing cost assistance rather than disqualify the borrower, and retirement accounts are excluded from the calculation. LHC added this rule on 09/10/26.Can I use HomeStart Plus in a flood zone?
No. Properties located within a Special Flood Hazard Area are not eligible, and LHC names Flood Zones A, AE and V. Where the programme does lend, borrowers must maintain applicable homeowners and flood insurance for the life of the second mortgage.How long does the HomeStart Plus environmental review take?
Up to two weeks. The review is completed by Louisiana Housing Corporation staff, and a loan may not close until LHC has completed it and issued environmental clearance for the property, so it must be built into the anticipated closing date.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.