New Mexico First-Time Home Buyer Programs and Grants of 2022
Key Takeaways:
- New Mexico offers first time homebuyers mortgage loans at competitive rates as well as down payment assistance via a robust variety of programs
- For certain home buying assistance programs in New Mexico, such as military-specific VA loans and openly-available FHA loans, credit scores can be as low as 550 without impacting eligibility.
- Buyers can cover their down payments and closing costs with “forgivable” second mortgage loans that require no monthly payments.
There’s a certain excitement that goes along with buying a home for the first time – daydreams of decorating, realizing you’ll no longer be paying rent for a place you don’t own, and the pride of knowing that it’s your very own. But getting to that step does take some financial planning and strategizing!
Fortunately, there are numerous home buyer programs and grants available for people just like you. If you’re on the market for a house in New Mexico and happen to be a first-time home buyer, we’ll walk you through the options in this guide.
Education For First-Time Homebuyers: What You Need To Know
Whether you’re a first-time home buyer considering a new residence in New Mexico or anywhere else in the United States, there are three basic guidelines you will want to follow to prepare for what’s ahead:
1. Do your research
Websites like HUD.GOV are trustworthy resources for up-to-date information about statewide and regional homeownership assistance programs and grants offered in New Mexico. Another great site, Homewise.org offers would-be homeowners everything needed to become a homeowner, including access to affordable, fixed-rate mortgages, one-on-one financial coaching, and even a team of non-commissioned realtors.
2. Educate yourself
Once you’ve decided to move ahead in your house-hunt, consider free online homebuyer education workshops. HUD.GOV also offers various educational resources through HUD Approved Housing Counseling Agencies. These free workshops offer valuable educational information to the first-time homebuyer, including pre-purchase homebuyer classes, reverse mortgage counseling, and other helpful insider knowledge.
3. Learn the language
For many people, learning about homeownership finances is almost like learning a new language. There are many terms and phrases used that can be mystifying for a first-time homebuyer. Resources such as the FDIC’s Money Smart is a great place to start: created for folks of all ages, this financial education program is designed to help sharpen your financial skills while fostering good banking relationships.
Financial Programs For First-Time Home Buyers In New Mexico
From new families just starting out to older folks seeking a retirement home, there are a host of homeownership assistance programs and mortgage loans available in New Mexico. For starters, check out the New Mexico Mortgage Finance Authority (NMMFA), described on their site as “a self-supporting quasi-governmental entity that provides financing to make quality affordable housing and other related services available to low- and moderate-income New Mexicans.”
The MFA’s mortgage programs provide a variety of financial options for first-time homebuyers, including assistance for down payment costs, associated closing costs, and mortgage loans with competitive rates. Let’s explore.
FIRSTHome
The FIRSTHome program offers competitive interest rate mortgages to first-time homebuyers with low and moderate incomes. It can be used as a stand-alone first mortgage or combined with other MFA programs for down payment assistance (more on that shortly). This program works in conjunction with VA, USDA, FHA, and preferred conventional loans obtained through the HFA.
Program restrictions
- Exclusively available to first-time homebuyers
- A minimum credit score of 620 is required
- Borrowers must contribute $500 of their own personal funds
- You must complete pre-purchase counseling through MFA’s eHome America program or an approved counseling agency
- Your household income must fall under the limits for your county. You can look up your county’s limits here.
FIRSTDown
A fixed-rate second mortgage loan program, FIRSTDown helps you cover the upfront down payment on your home as well as the costs incurred at closing. FIRSTDown is a smart down payment assistance program option for first-time homebuyers. Note that the requirements for your credit score, income, and pre-purchase counseling are the same as the FIRSTHome program.
Key features
- Up to $8,000 to assist with down payment/closing costs
- An extended repayment term & affordable interest rate provides first-time homebuyers with a budget-friendly monthly payment
- Must be combined with MFA’s FIRSTHome first mortgage loan program
NEXTHome
This program combines two key benefits: A) an MFA mortgage loan at competitive rates, and B) down payment assistance in the form a second mortgage loan. This second loan requires no monthly payments and is forgiven (i.e. you don’t need to repay it) as long as you meet certain conditions. It can cover up to 3% of your first loan size. For example, if you take out a $150K mortgage, you can get up to $4,500 down payment assistance.
NEXTHome is available to both first-time and repeat homebuyers, making it a particularly versatile and useful program. The qualifying limits for income and limits on purchase price are also statewide, for easy self-determination prior to applying:
Requirements
- Borrowers must contribute $500 from their own funds
- Borrower income must be less than $91K, and the home price must be less than $340K
- This program works in conjunction with VA, USDA, FHA, and preferred conventional loans obtained through the HFA
- Participation in the NMMFA requires a minimum credit score of 620
Home Ready Program
The Home Ready Program is a conventional home loan offered through Fannie Mae. It’s intended to make the home buying process accessible for those navigating it for the first time. A few of the perks of this program include:
- Flexible qualifying guidelines
- 30 year low fixed rate program
- Down payment requirements as low as 3%
- Eligible for assistance with down payment costs
- Lower mortgage insurance as a result of program enrollment
- A minimum credit score of 620 will be required
HomeNow Payment Assistance Program
If you’re having trouble finding the cash you need upfront to buy a home, the MFA HomeNow program can help. HomeNow gives you up to $8,000 for your down payment and closing costs. This money comes in the form of a second mortgage loan that will be forgiven after 10 years – i.e. you don’t have to repay it. You simply need to keep living in the home (and not sell, rent, or lease the property) to get this benefit.
Features & restrictions
- Eligibility includes the entire state of New Mexico
- Must be paired with the FIRSTHome 30-year mortgage
- A minimum credit score of 620 and a $500 investment will be required
- Your income must be 80% or lower of your county’s median income. Check your county’s income limits here.
Chenoa Down Payment Assistance Program
Another form of help available to cover your down payment and closing costs is the Chenoa Down Payment Assistance Program. This program offers a second mortgage (equal to 3.5% of your home’s purchase price) with a 10 year term. Although this loan is not forgivable, it can still make homeownership much more affordable by stretching those hefty upfront costs out into a low monthly payment.
Key features
- Eligibility includes the entire state of New Mexico
- Can be combined with the Home Ready Program
- Lower mortgage insurance as a result of program enrollment
- A minimum credit score of 640 will be required
Did You Know…
Rent vs. Own? According to FirstHomeBuyers.net, the median value of a home in New Mexico is approximately $172,000, and the current appreciation rate is about 5% annually. So with the average rent going for about $1,100 a month, it costs about the same if you qualify for the HomeReady 3% Down Payment Program, which works out to @$1,194 a month. Try the rent versus own calculator on their site to discover if buying a home is actually better than renting in the long run!
First-Time Homebuyers In New Mexico: Additional Resources
Not sure you qualify for any of the state-based financial assistance available in New Mexico? Here are some additional resources that may be right for you:
USDA Home Loan: For first-time home buyers who wish to purchase a home in a rural area or small town in New Mexico, the USDA Home Loan might be a perfect fit:
- Zero down payment required on home purchase
- The seller can pay the closing costs of the sale
- A minimum credit score of 600 will be required
FHA Loan: Another loan option worth considering, the FHA loan is a loan program offered by the government to stimulate home ownership. It helps buyers purchase a home, even if they have problems with credit or a low credit score. Some of the highlights of this government program include:
- Low required down payment – as little as 3.5% of the home’s purchase price
- Eligible for assistance with down payment costs
- A minimum credit score of 580 is required for participation
VA Loan: For individuals who have served or are currently serving in the military, the VA Loan is a government-backed program that extends loans to both active military members and non-dishonorably-discharged veterans. Below, some key benefits:
- Zero required down payment on the home
- Low percentage, fixed rate mortgage with a 30 year term
- A minimum credit score of 550 to apply for eligibility
- Also available to qualifying surviving spouses who have lost their military spouses due to a service-connected disability or injury
Homeownership In New Mexico: Discovering the Best Loans For First-Time Homebuyers
As you can see, there are plenty of powerful mortgage programs and loans available to hard-working individuals like you in the state of New Mexico. By carefully researching your options, understanding your finances, and zeroing in on the right solution, you can make your dream home a reality. Just talk to a participating lender or and MFA counselor to take the next big step.
Sources Cited:
1) “Homeownership Assistance: New Mexico.” U.S. Department Of Housing And Urban Development (HUD.GOV), (no published date), https://www.hud.gov/states/new_mexico/homeownership/buyingprgms. Accessed September 9, 2020.
2) “New Mexico First Time Home Buyer Programs.” FirstHomeBuyers.net, (no published date), https://www.firsthomebuyers.net/states/new-mexico-first-time-home-buyer.html. Accessed September 9, 2020.
3) “Your Path to Homeownership.” Homewise® (homewise.org), (no published date), https://homewise.org/buy-a-home/. Accessed September 9, 2020.4) “Realizing the Dream of Homeownership.”
4) New Mexico Mortgage Finance Authority (MFA / housingnm.org), (no published date), https://www.housingnm.org/homebuyers/home-buyers. Accessed September 9, 2020.
