First-Time Homebuyer Programs in New Mexico

Among the many factors that homebuyers need to consider when buying a house is the down payment. The amount of money needed for this can be substantial and may stop them from making a purchase. First-time homebuyer programs in New Mexico provide assistance to buyers by helping them avoid paying an expensive down payment.

First-time homebuyers are under a lot of pressure. Not only are they on a quest to find a home, but they also need to manage their finances. Buying a home is not cheap, so this process can be overwhelming. Fortunately, the government can help them via first-time homebuyer programs that can give them loans with low down payments, making the process more realistic.

A down payment is a crucial component when getting a mortgage. It is the initial amount paid by the buyer for their home. Most people would advise paying 20% of the cost of the house for your down payment. It’s enough to lessen your debt so that you have lower monthly payments.

However, 20% can be a bit pricey for some homebuyers. Federal and New Mexico homebuyer programs help people purchase a home and pay for the down payment. First-time homebuyers in Mexico can have zero-down-payment or low-down-payment loan programs.

Through zero-down-payment lending programs like USDA and VA loans, homebuyers can buy their houses without making a down payment.

First-time homebuyers can get U.S. Department of Agriculture (USDA) Loans. These loans don’t require a down payment, so low to moderate-income buyers don’t need to worry about saving up a huge amount of money before they can buy a home.

Available loan offerings include:

• Single-Family Housing Direct Home Loans
• Section 502 Guaranteed Rural Housing Loan
• Section 504 Home Repair Program

Although there is no specific credit score requirement for USDA loans, applicants must fulfill income requirements. An applicant's income should be less than 115% of the median income in the area where they plan to purchase a home.

These loans are backed by the USDA Rural Development Guaranteed Housing Loan Program. It aims to establish and cultivate neighborhoods for a better quality of life. While doing so, the government can also provide clean and decent housing to its citizens.

Active duty service members, veterans and their qualifying family members are all eligible for U.S. Department of Veterans Affairs (VA) loans. These loans help members of the military and their families in buying or refinancing their homes.

VA loans will not require a down payment, and up to 25% of your loan could be guaranteed.

These have less stringent requirements. There is no maximum debt ratio, no maximum loan amount or credit score requirement. This makes them much easier to obtain if you meet the other qualification requirements.

There are different types of VA home loans to choose from, including:

• Home purchase loan
• Cash-out refinance loan
• Interest Rate Reduction Refinance Loan (IRRRL)
• Native American Direct Loan (NADL)

The "limit" on VA loans is not the maximum amount you can borrow. It refers to the guarantee or the maximum amount the VA loan can cover in case you default.

Your down payment can be less than 20% through low-down-payment loan programs. These programs include conventional loans and FHA loans.

Conventional loans are also referred to as Fannie Mae and Freddie Mac loans. These loans are provided by private lenders but are supported by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Conventional loans come from banks, credit unions and other private lending companies. They are generally not backed by a government entity or agency. Depending on your lender, the eligibility and credit requirements for conventional loans can change.

Based on whether or not they adhere to the restrictions established by Fannie Mae and Freddie Mac, conventional loans may be conforming or non-conforming.

If the loan is below or falls within this limit, the loan is conforming. If it exceeds this amount, like a jumbo loan of $800,000, the loan is non-conforming.

Keep in mind these loans require a down payment of at least 3% and may mandate private mortgage insurance (PMI).

FHA loans are private loans insured by the Federal Housing Administration (FHA). Though they’re not directly underwritten by a government entity, FHA loans can still make getting a mortgage easier for first-time homebuyers. It also allows you to make a small down payment for your home.

Homebuyers can obtain FHA loans with lower credit standards and smaller down payments compared to loans that aren’t insured by the FHA. A credit score of at least 580 makes you eligible for a 3.5% down payment. A lower credit score, specifically 500 up to 579, can get you a loan with a 10% down payment.

The FHA's responsibility is to guarantee your loan. This lessens the risk on the part of the private lender. Therefore, they are more likely to approve your loan application despite your bad credit and small down payment.

FHA 203(k) loans are also called renovation loans, Section 203(k) and rehab mortgages. Staying true to its many names, an FHA 203(k) loan covers the costs of renovation, rehabilitation and purchasing your home.

This loan program is especially great for homebuyers who are looking for a major DIY project. Some buyers even wind up purchasing an old house that needs renovation in order to save money or to stay within their budget.

FHA 203(k) loans can be used to pay for the house’s purchase price and its renovations. These loans make homebuyers’ lives easier by allowing them to skip the extra steps of getting individual loans to buy the house and renovate it.

Your home must be at least one year old to be eligible for an FHA 203(k) loan. Its purchase price should be within your county's maximum mortgage amount, and the renovation should cost at least $5,000.

You can look into New Mexico homebuyer programs to find the best one for your needs.

First-time homebuyers in New Mexico can either use the FirstHome or FirstDown program to supplement a down payment assistance second mortgage loan.

HomeNow is a zero-percent interest loan for first-time homebuyers in New Mexico. Applicants must be considered low-income.

More first-time homebuyer programs are offered in New Mexico through various organizations.

Do you still have questions about buying a home for the first time in New Mexico? These answers might be able to clear up any remaining confusion you may have.