First-Time Homebuyer Programs in New Mexico

First-time homebuyer grants and programs in New Mexico

Whether you need a little help with your down payment, or just better interest rates on a home loan, you’ll work with one of MFA’s participating lenders to figure out what program works best for you.

FirstHome

FirstHome is a mortgage for first-time buyers who have low to moderate incomes. MFA defines a first-time buyer as anyone who hasn’t owned and occupied a home as their primary residence over the last three years.

It’s compatible with FHA, VA, USDA and HFA Preferred Conventional mortgages. To qualify, you’ll have to contribute at least $500 of your own funds and have a minimum credit score of 620. The income and purchase price guidelines vary by household size and location.

You can use FirstHome on its own or in concert with FirstDown, MFA’s down payment assistance program.

FirstDown

FirstDown is a fixed-rate second mortgage that can help first-time homebuyers cover their down payment and closing costs.

When you use the FirstHome program, you can qualify for a second loan of up to $8,000 that features an extended repayment term and an affordable interest rate.

The credit score and income requirements for FirstDown are the same as with FirstHome, and you’ll also have to attend homebuyer counseling.

HomeNow

HomeNow is a second loan for low-income first-time homebuyers who have qualified for a FirstHome mortgage. You’ll have to fall below 80% of your area’s median income.

You could borrow up to 8% of the home’s purchase price or $8,000 (whichever is lower) to help cover your down payment and closing costs.

You’ll have to contribute at least $500 of your own funds to use this program. However, the loan has a 0% interest rate and is non-amortizing. If you meet MFA’s requirements, your loan will be totally forgiven after 10 years.

NextHome

NextHome offers both a primary mortgage and a second one of up to 3% of your first loan, which you can use to cover your down payment and closing costs.

It’s available to both first-time and repeat homebuyers. There are no monthly payments, and the loan may be forgiven if you meet certain requirements from MFA.

Borrowers must meet income and purchase price limits. Currently, the household income limit is $91,000 and the purchase price limit is $340,000. The minimum credit score requirement is 620, and you’ll have to contribute at least $500 of your own funds. Finally, you’ll have to plan to occupy the home as your primary residence within 60 days of closing.

This assistance program is compatible with FHA, VA, USDA and HFA Preferred Conventional mortgage loans.

More: With max mortgage calculator estimate monthly deductions

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First-time homebuyer New Mexico requirements

MFA helps homebuyers by offering mortgages with competitive interest rates and money they can put toward their down payment and closing costs. To qualify, you’ll need to meet the income and purchase price limits for your area of New Mexico.

All participants must also take part in homebuyer counseling through MFA's online program, eHome American, or through an approved counseling agency.

More: Get a free credit score and credit monitoring from Credit Sesame.

Nationwide first-time homebuyer programs

A “conventional” mortgage sourced through the private market has pretty demanding requirements, including a credit score of at least 620 and a typical down payment of 5%.

That’s easier said than done for many first-time buyers, so you may want to look into one of these nonconventional mortgages offered through the federal government.

More: Use these savings accounts to build up your down payment.

FHA loans

FHA loans were created by the Federal Housing Administration, which is a division of the Department of Housing and Urban Development, to help more Americans become homeowners.

These loans typically have less stringent requirements. You’ll need a minimum credit score of 580 and a 3.5% down payment, but if you’re able to put down more upfront, you could be eligible with a credit score as low as 500.

VA loans

These loans were created thanks to an act passed by Congress in 1944 to help veterans secure homes. As a result, the U.S. Department of Veterans Affairs (VA) can guarantee or insure home loans made to veterans by various lending institutions.

Active service members, veterans and some surviving military spouses can all qualify for a VA loan. There are fees associated — notably a sizable funding fee — but they are also exempt from down payment and mortgage insurance obligations.

USDA loans

USDA loans are for lower-income rural and suburban Americans and are guaranteed by the United States Department of Agriculture. Like VA loans, these loans don’t require a down payment or private mortgage insurance.

With a USDA home loan, you’ll have to pay a few fees: an upfront 1% guarantee fee and an annual 0.35% fee. But the total cost still ends up less than the amount you’d pay in mortgage insurance on another type of loan.

These loans aren’t meant for most households: They have a strict income limit. The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living. The USDA’s website has the exact figures for each region.

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Next steps

Now you know what programs are out there to help — but where do you even start?

Well, your credit store is crucial if you want to qualify for any of these options. The site Credit Sesame can help you find out your score for free.

Is your score not exactly up to MFA’s standards? There are some great options out there, like Credit Strong, which helps those with not-so-perfect credit get their scores up.

With your score in hand, your next step is to gather the essential documents you need to demonstrate that you’ve got a steady income.

Once you’re all set, it’s time to get pre-approved for a mortgage so you can start house hunting.