Best First-Time Home Buyer Programs in New Mexico

The Land of Enchantment is a great place to buy a home. If this is your first home purchase, you may qualify for assistance to help you buy your home. Here’s your guide to first-time home buyer programs for New Mexico residents. 

Best First-Time Home Buyer Programs in New Mexico:

• FIRSTHome
• FIRSTDown
• NEXTHome
• HOMENow

Best National First-Time Home Buyer Programs:

• Best National FHA Lender: Rocket Mortgage® by Quicken Loans®
• Best National VA Lender: Veterans United
• Best National USDA Lender: BBVA

First-Time Home Buyer Programs in New Mexico

The New Mexico Mortgage Finance Authority (MFA) offers programs to help first-time home buyers find affordable mortgages and assistance with down payments. Here are the programs and their eligibility requirements. 

1. FIRSTHome

FIRSTHome is New Mexico’s mortgage program for first-time home buyers. It offers affordable mortgages through partner lenders. Those mortgages can be conventional loans, FHA loans, VA loans or USDA loans. 

Eligibility requirements

• You must be a first-time home buyer. New Mexico defines a first-time buyer as someone who has not owned a home for 3 years. 
• You must meet the income limits. The income limits vary depending on where you buy your home. The income limit is also based on your family size. 
• You must buy a home under the purchase price limits. In Santa Fe County, the purchase price limit is $331,206. In Los Alamos County, the purchase price limit is $369,501. In all other counties, the purchase price limit is $283,349. 
• You must have a credit score of 620 or higher. If you don’t have a credit score, you may be accepted, but that’s determined on a case-by-case basis. 
• You must contribute at least $500. The $500 can’t be a gift, grant or any other assistance. 
• You must complete housing counseling from an approved agency. You can also take a homebuyer education class online. 

2. FIRSTDown

The MFA’s FIRSTDown program offers up to $8,000 to first-time home buyers. It provides a 2nd mortgage with an affordable interest rate and a 30-year repayment term. 

Eligibility requirements 

• You must use the FIRSTDown 2nd mortgage with a FIRSTHome mortgage. You must meet the requirements for a FIRSTHome mortgage, including income and purchase price limits. 

3. NEXTHome

NEXTHome combines a 1st mortgage to purchase your home and a 2nd mortgage that you can use for your down payment and closing costs. It’s available to first-time buyers and those who have purchased homes before. The 2nd mortgage is for 3% of the purchase price and there are no monthly payments. 

Eligibility requirements: 

• Your income must be less than $91,000 per year. 
• You must purchase a home that costs less than $340,000. 
• You must have a credit score of 620 or higher. 
• You must contribute $500 of your own funds.
• First-time home buyers must complete homebuyer counseling. 

4. HOMENow

The HOMENow program offers lower income first-time home buyers a forgivable loan to help cover closing costs and their down payment. You don’t have to make monthly payments on the loan. The loan is for either 8% of the sales price of the home or $8,000, whichever is less. If you stay in the home for 10 years, the loan will be forgiven. If you sell, refinance or move out before 10 years, you will need to repay the loan. 

Eligibility requirements 

• You must meet the income and purchase price limits set by the MFA. These vary by area and the income limits vary by family size. 
• You must contribute at least $500 of your own funds. 
• Your credit score must be 620 or higher. 
• You must complete housing counseling or an approved homebuyer education class. 
• You must use HOMENow in combination with a FIRSTHome mortgage and meet all of that program’s requirements. 

Best National First-Time Home Buyer Programs

In addition to New Mexico’s programs, you may also want to consider national loan programs. These programs are a popular choice with first-time borrowers because of their low or no down payment requirements. 

FHA Loans

The Federal Housing Administration (FHA) insures FHA loans. These loans offer low down payments and flexible credit requirements, so you don’t need to have a perfect credit score to qualify. The FHA is also flexible with your debt-to-income (DTI) ratio. This is your debt when compared to your monthly income. If you make $3,500 in gross income (pretax) and you have $1,200 in monthly debt payments (your prospective housing payment, credit card payments, car payments, etc.), your DTI is 34%. 

Lenders set the iInterest rates and loan terms vary. You can choose a fixed-interest rate or an adjustable-rate mortgage (ARM). A fixed-interest rate means you have the same interest rate for the entire loan term. If you choose a 30-year fixed-rate mortgage, you’ll have the same interest rate for 30-years. An ARM has an interest rate that the lender can change. The FHA allows both types of mortgages. 

Eligibility requirements

• Down payments: You must make a down payment of at least 3.5% if your credit score is 580 or higher. If your credit score is 500-579, your down payment has to be 10% or more. 
• Credit score: The minimum credit score for an FHA loan is 500. 
• Income: FHA loans don’t have an income limit. You do have to make enough to make your monthly loan payments. 
• DTI ratio: You can have a DTI ratio of up to 43%. The FHA will sometimes allow higher DTI ratios if you can prove you have a compensating factor, like a significant amount of savings. 
• Mortgage limits: The FHA’s mortgage limits vary by area. In most parts of the country, the loan limit for a single-family home is $331,760. In areas with higher housing costs, the mortgage limit can be as much as $765,600. You can find the limits for your area here. 
• Mortgage insurance: FHA loans have up-front mortgage insurance and ongoing mortgage insurance. Many borrowers include the up-front mortgage insurance payment in their loan, and the ongoing mortgage insurance is a part of your monthly payment. 

Best National FHA Lender: Rocket Mortgage® by Quicken Loans®

Rocket Mortgage® by Quicken Loans® provides a completely online mortgage experience. It has extensive learning resources for you to review so you make an informed loan decision. Once you’re ready to apply, you can apply using the Rocket Mortgage® website or mobile app.

If you have questions, you can contact an expert by phone or chat. It’s the easiest way to apply for an FHA loan. Rocket Mortgage® has outstanding reviews from borrowers and offers award-winning service. 

VA Loans

The Department of Veterans Affairs guarantees loans offered through private lenders. These loans have a lot of perks if you qualify, including no down payment requirement and no mortgage insurance. There is a VA funding fee, but that can be included in the loan. Those receiving disability compensation from the VA are exempt from the funding fee. Service members, veterans and some surviving spouses may qualify. If you have trouble making payments, the VA may be able to assist you, which is another important consideration.

Eligibility requirements

• Service requirements: The service requirements vary depending on your role and when you served. Service members on active duty need to have 90 continuous days of service. Those who served between August 2, 1990 and the present need to have served for 24 continuous months unless discharged due to hardship, a reduction in force or disability. Those who served earlier have different requirements. You will need to contact the VA to get a Certificate of Eligibility (COE). Some surviving spouses may also be eligible. 
• Income and purchase price: There are no income or purchase price limits. You do need to make enough to pay for the mortgage. 
• Debt-to-income ratio: There is no maximum DTI ratio, but you do need to have compensating factors such as a significant amount of reserves if your ratio is more than 41%. 
• Credit score: There is no minimum credit score, but lenders will review your overall credit history to determine how you handle debt. 

Best National VA Lender: Veterans United

Veterans United is the top VA lender in the country when it comes to volume, and for good reason. It has stellar reviews from borrowers due to its excellent services.

It focuses exclusively on VA loans, which means it knows every step of the process. You can reach representatives around the clock and start the application process online or by phone. 

USDA Loans

The Department of Agriculture insures home loans to help people buy homes in rural areas. These loans have no down payment requirement. You can check which areas are eligible for the program on the USDA website. 

Eligibility requirements

• You must meet be below the income limits, which vary by county. You can look up your area on the USDA website. 
• You must be a legal resident or citizen of the U.S.
• You must live in the property. 
• You must have a responsible credit history, but there is no set credit score requirement. 

Best National USDA Lender: BBVA

BBVA is highly experienced with USDA loans. You can start your application online or by phone, and the prequalification process takes about 15 minutes. It offers extensive resources on its website to help you learn about mortgages, insurance and more. BBVA is one of the top 25 largest commercial banks in the U.S. and it values every customer. 

Choosing a Mortgage

Choosing the right mortgage is a big decision. It can also be a challenge. If you’re self-employed, for example, you’ll need to provide additional proof of income. If you’ve had credit challenges, you might need to take steps to improve to get the loan you want. It takes time, but you can find a mortgage that’s a good fit for you and your family and realize your dream of homeownership.