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  • Writer's pictureNathan Zarcaro

What to Know as a First-Time Home Buyer in New Mexico

Updated: Jun 8, 2023


We oftentimes get asked why we write so much home buying content as a student loan centered blog. And the answer is simpler than you think: because life continues to happen and paying off your student loan debt is far from the last financial goal you'll have in your life.


New Mexico is routinely ranked as one of the most beautiful states in the entire country. Best known for its diverse landscape, Native American culture, and unbelievable cuisine, The Land of Enchantment is truly that.


And lots of Americans, and specifically millennials, are recognizing it. Home prices have soared in the last few years as real estate has been in short supply. Coupled with a rising interest rate environment, buying a house in New Mexico has gotten more difficult to afford. Luckily, the state has a number of first-time home buyer programs, grants, and down payment assistance programs to help.


Here's what you need to know as a first-time home buyer in New Mexico.




Buying a new home in New Mexico


Much like the rest of the country, home prices in New Mexico have surged over the past few years. In fact, in the previous twelve month period ending in May 2022, home prices increased in value by nearly 20%, to an average of $291,328, according to Zillow.


average home price in New Mexico

With this increase in home prices over the past few years, here are some estimated down payment amounts when you purchase your first home in New Mexico.

Average home price

$291,328

3.5% down payment (FHA loan min)

$10,196

10% down payment

$29,133

20% down payment

$58,266

With this potential down payment expense in mind, let's pivot and explore Wyoming's first-time home buyer mortgage programs, and then we'll take a look at down payment assistance and grants.



New Mexico first-time home buyer mortgage loans


Many Americans think that mortgages are the same, no matter which lender you use. But did you know that there are actually a handful of different loan types you may qualify for when looking to finance your new home purchase?


As a first-time buyer in New Mexico, you may consider using any of the following loans:


  1. Federal Housing Administration (FHA)

  2. Conventional

  3. Conventional 97

  4. United States Department of Agriculture (USDA)

  5. Veterans Affairs (VA)



1. FHA loans


First-time home buyers may opt to use FHA mortgage loans, which are backed by the United States Federal Housing Administration, part of the Department of Housing and Urban Development. These loans, which carry down payments as small as 3.5% of the home's purchase price, are only available to those purchasing their first and meet the following qualifications:


  • A credit score of 580 or greater (you may still get approved between 500-579, but you will need a larger down payment)

  • Have a two or more year record of stable income and employment

  • A debt-to-income ratio below 43%


You'll also need to work with an FHA approved and licensed lender.



2. Conventional mortgages


You may also opt for a conventional mortgage, especially if your credit score is high and you have a substantial down payment saved up already. These loans are what you traditionally think about when discussing getting a mortgage from a bank.


They oftentimes carry terms of either 15 or 30 years and may have either fixed or adjustable rates (known as an "ARM"). Do keep in mind that, until you reach 20% equity in your home, you will need to pay private mortgage insurance (PMI), so if you have 20% to put down, it could make sense to.



3. Conventional 97 program


New Mexico buyers may also opt for a Conventional 97 loan, a type of mortgage where you are only required to put 3% down. Though you will pay PMI, the program still allows for it to be cancelled once you hit 20% equity. So, depending on the size of your down payment and the interest rate environment at the time you purchase your home, ity could make sense to only put a few percent down and leave some cash in case something goes wrong.


Conventional 97 loans were intended to compete directly with FHA loans, as they carry less upfront fees with low down payments. These loans carry the following guidelines:


  • Fixed-interest rate mortgages

  • Borrow up to $647,200

  • The home must be your primary residence



4. USDA loan program


Other buyers will opt for USDA loans, which are designed specifically for low to medium income Americans buying homes in USDA designated rural areas. Depending on the home you purchase, you may qualify for low or even zero down payment. As a rural state, huge parts of New Mexico qualify.


Generally, eligibility requirements include the following:


  • Be a United States citizen or an eligible non-citizen national

  • Purchase a home to be your primary residence (not to rent or vacation in)

  • Meet local income guidelines (be within 115% of the median household income in your area as determined by the USDA)



5. VA loans


The last major category of loan is the VA loan, reserved for:


  • Veterans

  • Service members

  • Surviving military spouses


For those that qualify, you'll likely find very competitive interest rates, low closing costs, and no PMI or down payments. VA loans can be a great option to get into a home sooner.



New Mexico first-time home buyer programs


In addition to the loan programs listed above, first-time buyers in New Mexico also have access to some programs offered by the New Mexico Mortgage Finance Authority.



New Mexico MFA FIRSTHome loan


If you're purchasing a home for the first time ever or have not owned a home in the last three years), the FIRSTHome program may be right for you. Designed for those with low to moderate incomes, FIRSTHome is a first mortgage program that can be used to finance a single-family home across the state. To be eligible for a FIRSTHome loan, your income needs to be below thresholds set by county and household size:


  • 1-2 person households span from $65,520-$127,800

  • 3+ person households span from $76,440-$146,970


The house that you purchase will also need to be within the following program price limits:


  • Catron County - $351,365

  • Los Alamos County - $433,920

  • Santa Fe County - $362,439

  • All other counties - $311,980


The program can be used with FHA, USDA, VA, and some conventional loan programs. Other FIRSTHome eligibility requirements include:


  1. A minimum credit score of 620

  2. Must use at least $500 of your own money to buy the home

  3. The property must be a single-family home


You'll also need to complete homebuyer counseling before the purchase.



New Mexico down payment assistance


While FIRSTHome does provide some down payment assistance, there are other programs statewide that provide some help too.



MFA FIRSTDown program


Offering up to $8,000, New Mexico's FIRSTDown program is an option for FIRSTHome program participants. Putting a second mortgage on your home, you'll repay the assistance provided over the term of your mortgage at competitively low interest rates.


The program can be a great option for those looking to overcome the difficulty of saving up their first down payment.


Income and property price limits are the same as they were within the FIRSTHome program.



MFA HOMENow down payment program


You'll also want to consider MFA's HOMENow program, which provides down payment assistance to those making less than 80% of their area's median income (AMI) as determined by the U.S. Department of Housing and Urban Development.


The program can get you a second loan worth the lesser of:


  • 8% of the home's purchase price

  • $8,000


Like the FIRSTHome program, you'll need to contribute at least $500 of your own money to the home purchase.



First-time home buyer tips


Whether you decide to participate in one of these first-time buyer programs or not, we'd like to share a number of tips that we think you'll find helpful along the way:


  • Don't solely focus on your home's ultimate purchase price: Sure, budgets are really important when you're shopping for a home. But going a few thousand dollars over budget on a 30 year mortgage may not add to your mortgage payment much at all. In fact, higher interest rate environments are far more likely to increase your payments by more.

  • Browse for down payment/closing cost assistance in your area: Remember to search for and do some research on what may be offered in your area, as there are just too many grant and assistance programs to mention here.



Download our New Mexico mortgage calculator


My wife and I were first-time home buyers just a few months ago, and I remember the feeling well. Nothing weighed more heavily on my mind than trying to understand how different loan terms, rates, and other variables would impact my monthly payments.


So I built this mortgage calculator, and you can get it for free. It will help you:


  1. Understand how much home you can afford

  2. Show you how different home purchase prices, loan terms, interest rates, taxes, and homeowners insurance premiums will impact your monthly payments

  3. And more!


Get your copy today!





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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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