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Direct Homebuyer Soft Second Mortgage Assistance Program

New Orleans, Louisiana

Last verified
See what you qualify forOfficial program site →
Income limit

80% AMI

Of area median income; varies by county and household size

Price cap

$324,000

Highest purchase price the program allows

Repayment

Forgivable

Forgiven after 10 years

What is Direct Homebuyer Soft Second Mortgage Assistance Program?

Direct Homebuyer Soft Second Mortgage Assistance Program is a forgivable loan for homebuyers in New Orleans, Louisiana.

  • CDBG-funded Soft Second Mortgage Assistance: up to $55,000 at 0% interest, 10-year forgivable; full repayment in years 1-5, then 25% forgiven year 5, +15% per year in years 6-9, 100% forgiven year 10. Alternative $5,000 closing cost assistance. 80% AMI, first-time homebuyer, $324K max sales price, Orleans Parish-wide. $350 Homebuyer Education Stipend due at closing. $1M funded January 2026.
  • City of New Orleans Office of Community Development's Direct Homebuyer Soft Second Mortgage Assistance Program provides up to $55,000 in soft second mortgage assistance to bridge the gap between the home purchase price and the maximum first mortgage loan amount, OR up to $5,000 in closing cost assistance (program covers up to 50% of total closing costs per CDBG guidelines). The soft second is structured as a 0% interest, 10-year forgivable loan: full repayment required if buyer sells/moves within years 1-5.
  • 25% forgiven at year 5.
  • +15% forgiven each year in years 6-9.
  • 100% forgiven at year 10. $1M CDBG funding allocation as of January 2026. Maximum sales price $324,000 anywhere in Orleans Parish. 80% AMI ceiling.
  • Funding comes from Federal, CDBG, and City.

Do you have to pay it back?

Direct Homebuyer Soft Second Mortgage Assistance Program is forgiven after 10 years, so a buyer who stays that long does not repay it.

  • Repayment is triggered by Full repayment of the unforgiven balance is required if the buyer sells, refinances, or moves before year 5. After year 5, 25% of the loan is forgiven, +15% forgiven per year in years 6, 7, 8, 9, and 100% forgiven at year 10. No prepayment penalty. Assumptions not allowed.
  • The assistance is recorded in 2nd Lien position.
  • Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

Direct Homebuyer Soft Second Mortgage Assistance Program is open to first-time homebuyers and buyers who will live in the home as their primary residence.

The program requires

  • First-time homebuyer — with exceptions: First-time homebuyer = no homeownership in past 3 years. Displaced homemaker exception applies.
  • The home is occupied as a primary residence
  • On credit: No specific City-imposed minimum FICO; first-mortgage lender overlays apply.
  • A completed homebuyer education course, through HUD-approved homebuyer education course required (HUD Approved Homebuyer Training Agencies list at nola.gov). $350 Homebuyer Education Stipend due at closing, separate from any class fees.
  • Residency: Property must be located in Orleans Parish (City of New Orleans). Homebuyer must occupy as primary residence for the full 10-year forgiveness term; selling/moving before year 10 triggers prorated repayment.
  • Citizenship or immigration status: Per HUD CDBG federal eligibility - U.S. citizen or qualifying non-citizen.
  • First-time homebuyer (or no homeownership in past 3 years; displaced homemaker exception). Household income at or below 80% AMI per HUD New Orleans MSA limits (2025 1p=$48,650; 8p=$91,700). Soft Second cannot exceed 50% of home's purchase price (program limit). Front-end DTI 30-33%; back-end DTI up to 48%. Buyer must contribute minimum 1% of sale price or $1,500 (whichever is less) and have liquid assets equal to at least one month of proposed household expenses after closing costs. Gift funds permitted up to 10% of purchase price (gift letter and bank statement required). HUD-approved homebuyer education required. $350 Homebuyer Education Stipend due at closing. Property must meet City of New Orleans Housing Code, International Residential Code, and HUD Housing Quality Standards (NSPIRE/HQS inspection by City). Site-specific NEPA environmental review by City. Buyers must use City-approved closing/title agent. Homeowner's and flood insurance required for full replacement value or sale price; City listed as Loss Payee. City of New Orleans employees are eligible. Maximum sales price $324,000.

The program excludes

  • Manufactured homes
  • Purchases above the $324,000 price cap
  • Households above 80% of area median income

These are the program's own published rules, not a decision about any individual — the administering agency and a lender determine who actually qualifies.

What are the income limits?

Direct Homebuyer Soft Second Mortgage Assistance Program limits household income to 80% of the area median income, which varies by county and household size.

  • Household income at or below 80% AMI per HUD New Orleans MSA / Orleans Parish (2025 1p=$48,650; 8p=$91,700). Per Income Guideline Chart at nola.gov.
  • The limit applies to total household income, not only the borrower’s.
  • The program lists a maximum household size of 8.
  • Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

Direct Homebuyer Soft Second Mortgage Assistance Program caps the purchase price at $324,000.

  • Eligible property types include Single-family homes, newly constructed homes, renovated homes, townhouses, condominiums within City of New Orleans / Orleans Parish.
  • New construction is eligible.
  • Manufactured homes are not eligible.

Is there eligibility for specific groups?

Direct Homebuyer Soft Second Mortgage Assistance Program names veterans, active-duty service members, reservists and National Guard members, and surviving spouses among the groups it serves.

  • Being named here means the program mentions the group, not that membership alone qualifies an applicant — the rest of the eligibility rules still apply.

Where does it apply?

Direct Homebuyer Soft Second Mortgage Assistance Program serves buyers purchasing in New Orleans, Louisiana.

How do you apply?

Applications for Direct Homebuyer Soft Second Mortgage Assistance Program go through the administering agency, which publishes the current terms and the application steps on its own site.

  1. Take a homebuyer education course

    Required by the program, through HUD-approved homebuyer education course required (HUD Approved Homebuyer Training Agencies list at nola.gov). $350 Homebuyer Education Stipend due at closing, separate from any class fees..

  2. Contact the administering agency to reserve funds

    Funds are reserved through City reviews loan packages after first-mortgage underwriting; commitment letter issued before payment processing. Funds disbursed to title company at closing once all conditions met. Subject to CDBG funding availability ($1M as of January 2026)., and are subject to availability.

  3. Work with a lender who handles the program

    Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.

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