City of Lake Charles

Community Development Division

Down Payment and Closing Cost Assistance Program




The City of Lake Charles Down Payment and Closing Cost Assistance Program will accomplish the following objective; provide home ownership opportunities for low and moderate income families.

Families from all walks of life qualify for a mortgage to finance the purchase of existing or newly constructed homes. However, these same families are often unable to save the money needed for the down payment, closing costs and prepaid taxes and insurance. The City provides a portion of the necessary financing in the form of a forgivable second mortgage loan at zero percent interest for five years. The mortgage will depreciate an equal amount for a period of five years. At the end of the five year period, the mortgage will be forgiven.

Policy clarifications or general questions should be addressed to the Community Development Office at (337) 491-1440.





To be eligible for participation in the Down Payment and Closing Cost Assistance Program, clients must meet all the following criteria:

1. The family gross annual household income cannot exceed eighty percent (80%) of the area median income (Appendix I).

2. Participants must be first time homebuyers defined by HUD as "an individual or family who has not owned home during the three year period preceding the HUD assisted purchase of a home, except that any individual who is a displaced homemaker may not be excluded from consideration as a first time homebuyer on the basis that the individual, while a homemaker or married, owned a home with his or her spouse or resided in a home owned by the spouse."


3. The participant(s) must occupy the home as their primary residence during the term of program assistance (five years). The second lien contains a due and payable/acceleration clause in the event of sale.


4. Participants must qualify for mortgage loan from a bona fide institutional lender. The interest rate on the mortgage loan cannot exceed three (3) points above the prevailing market rate. The major lenders in the area will determine the prevailing market rate.


5. Participants monthly note may not exceed thirty percent (35%) of monthly gross income.


6. Participants may not hold more than $5,000.00 in savings or any other form of account (i.e., CD, money market, mutual fund, stock, etc.), unless required by Mortgage Company. Participants must pledge any sum over the $5,000.00 for closing costs and prepaids.


7. Participants must receive a homebuyer education certificate from an approved program.




1. The residence to be purchased must be located within the city limits of Lake Charles.

2. The maximum sales price of the house to be purchased shall not exceed the 203(d) mortgage limits for the area and type of residence. Only single family residences are eligible.

3. At the time of initial occupancy, the property to be purchased must meet the City of Lake Charles current Property Standards Code.

4. The unit must contain adequate living/sleeping space as verified by the appraisal and site visit. Occupancy standards are stated in Appendix II.

5. All owners and purchasers will be provided with a federally approved lead hazard information pamphlet, "Protect Your Family From Lead in Your Home" which describes lead based paint hazards.



Eligible expenses are any reasonable closing costs normally associated with the purchase of a home incurred by a low or moderate income homebuyer, including: the loan origination fee, appraisal fee, credit report, flood certification, interest, mortgage premium, hazard insurance reserves, mortgage renewal reserves, property tax reserves, abstract or title search, title examination, notary fee, title insurance, recording fees, home inspection fee, and improvement survey.

All of these costs are eligible for financing, to some degree, through the Down Payment and Closing Cost Assistance Program. The maximum level of assistance per loan is $10,000.00, which includes the down payment.



1. The contract sales price cannot exceed the appraised value of the property.

2. The contract must show a fixed interest rate not to exceed three (3) points above the prevailing market rate.

3. All contracts must be subject to a Property Condition Addendum (PCA). The PCA must require an inspection of all major systems (electrical, plumbing, roof, foundation, and gas lines), and items, which may affect the health and safety of the occupants. The Housing Rehab Inspector for the Community Development Division will inspect the residence and determine the scope of the work required to bring the structure up to City Code Standards.

4. The loan appraisal fee is a reimbursable item, if the seller pays for the fee up front and the contract calls for reimbursement by buyer at closing.

5. Seller(s) and buyer(s) must properly endorse contracts. Any changes to the contract must be dated and initialed by both parties.

6. Broker's name and address are required along with selling agent's name and telephone number.

7. Access to structures must be provided, when possible, to facilitate proper inspections.



The seller must be informed of the program regulations regarding lead based paint and abatement, environmental reviews, the independent inspection and possible repairs; and the closing date should be at least 15 days after submittal of the proper documentation and inspections for processing.

In some cases, the buyer may be faced with closing costs, which cannot be covered through the Down Payment and Closing Cost Assistance Program.


A letter of preliminary approval will be issued after the following items have been submitted to the Community Development Office.

1. Completed application

2. Verification of employment and/or public assistance, original.

3. Verification of financial status, original.

4. Last four (4) Recent pay stubs, original.

5. Bank statements (including savings accounts) - six months, original.

6. 1040 income tax forms for the last three years, original.


7. Birth Certificates and Social Security Cards of children when dealing with families.


8. Copy of Buy/Sell Agreement.


9. Copy of Letter of commitment from lender for mortgage financing.


10. Copy of appraisal.


11. Good Faith Estimate.


12. Homebuyer Education Certificate.

Upon receipt of all of the above requested information, the Community Development Division will begin processing the request for assistance. These functions include:

1. Information is reviewed to ensure completeness and accuracy and an eligibility check is performed (income, location, availability of funds, etc.)

2. An environmental site assessment and inspection is conducted to determine if the structure is located adjacent to a manmade hazard, civil or military field, flood plain, etc. If the site assessment or inspection indicates any areas of concern, the purchaser will be notified about the findings and the property is not eligible for participation in the program unless they are satisfactorily addressed.

3. Determine if house has sufficient living/sleeping space to accommodate family.

4. Schedule appointment with purchaser and realtor.

5. Notify mortgage and title company of the commitment.

6. Prepare legal documents for loan closing pertaining to Down Payment and Closing Cost Assistance.






Income eligibility for Down Payment and Closing Cost Assistance is determined in accordance with HUD MSA Income figures for Lake Charles, dated March 2009.


Family Size

Maximum Income




















All income received on a regular basis must be divulged and verified whether or not it is to be considered as a basis for repayment of the primary loan.


Co-borrowers/co-mortgagors must meet all eligibility criteria (must not own residential property, gross income when combined with the principal borrower's must be within limits, must occupy the home, etc.).







The funds provided through the Down Payment and Closing Cost Assistance Program are Community Development Block Grant monies. According to the federal regulations, the Community Development staff is charged with the responsibility of ensuring that the funds are not used to contribute to the overcrowded housing conditions in our city. The following standards will be applied in considering eligibility for federally supported housing assistance programs.

Number of

Family Members

Number of

Required Bedrooms






0 Efficiency



1 Bedroom



2 Bedrooms



3 Bedrooms



4 Bedrooms



5 Bedrooms



6 Bedrooms

Policy Clarifications


When necessary, one (1) adult person may be permitted to use the living room for sleeping purposes.


Persons of the opposite sex, except spouses, shall not share a bedroom unless one of the persons is under six (6) years of age.


A minimum of (1) bedroom will be required for each of the following:


1. A couple with no children.

2. A single head of household with one (1) child less than six (6) years of age.

3. A single adult.

4. Two (2) children of the same sex, regardless of age.

5. Two (2) children of different sex who are less than six (6) year of age.

6. Three (3) children of the same sex regardless of age may occupy one (1) bedroom with a minimum of 140 sq. ft.

Contact Information

If you have any questions regarding this service, please contact .