First-Time Homebuyer Programs in New Mexico

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In New Mexico, where the average home value is $303,947, you'd need a down payment of $60,789 to avoid buying private mortgage insurance.

First-time homebuyer programs in New Mexico help make homeownership more accessible. Some mortgages let you make a smaller down payment, but they often have income limits and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

New Mexico First-Time Homebuyer Programs

New Mexico provides grants and loans to help first-time homebuyers cover down payment and closing costs. We compiled first-time homebuyer programs offered by New Mexico Mortgage Finance Authority (MFA) so you can find the best option for your needs and situation.

FirstHome

The FirstHome program provides affordable first mortgages to low to moderate-income first-time homebuyers in New Mexico. It can be paired with MFA’s down payment assistance programs and is available to those who haven’t owned or lived in a home as their primary residence in the past three years.

The program supports various mortgage types, including FHA, VA, USDA, HFA Advantage and HFA Preferred Conventional loans. It finances only single-family residences and prohibits using the property for income or business purposes. Homebuyers must occupy the property as their primary residence within 60 days of closing.

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ELIGIBILITY REQUIREMENTS

To qualify for the FirstHome program, you must meet these eligibility requirements:

  • Be a first-time homebuyer
  • Purchase a single-family residence
  • Occupy the property as the primary residence within 60 days of closing
  • Have a minimum credit score of 620, with alternative credit qualification allowed in some cases for those without a credit score
  • Complete pre-purchase counseling through MFA’s online program or a HUD-approved agency
  • Apply only through MFA-approved participating lenders

FirstDown

FirstDown is a fixed-rate second mortgage program that provides down payment and closing cost assistance to first-time homebuyers in New Mexico. It must be used with the FirstHome mortgage program and offers flexible repayment terms with affordable interest rates.

The program covers up to 4% of the home's sales price, which can be applied to down payment and closing costs. It shares the exact requirements as FirstHome, including a minimum credit score of 620 and mandatory homebuyer counseling.

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ELIGIBILITY REQUIREMENTS

To qualify for the FirstDown program, you must meet these eligibility requirements:

  • Be a first-time homebuyer
  • Use FirstDown with the FirstHome program
  • Have a minimum credit score of 620
  • Complete pre-purchase counseling through MFA’s online program or a HUD-approved agency
  • Apply only through MFA-approved participating lenders

FirstDown Plus

FirstDown Plus is a third mortgage program for first-time homebuyers in New Mexico. Used with FirstHome (the primary mortgage) and FirstDown (the second mortgage), it provides extra down payment assistance. Eligible buyers must not have owned or lived in a primary residence in the past three years.

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ELIGIBILITY REQUIREMENTS

To qualify for the FirstDown Plus program, you must meet these eligibility requirements:

  • Be a first-time homebuyer or have not owned a home as a primary residence in the last three years
  • Use FirstDown Plus alongside the FirstHome and FirstDown programs
  • Meet all FirstHome and FirstDown requirements
  • Apply only through MFA-approved participating lenders

HomeNow

HomeNow offers a $7,000 forgivable second mortgage for low-income first-time homebuyers in New Mexico. It assists with down payments and closing costs and must be paired with the FirstHome program. The loan is forgivable after 10 years if the home remains the borrower’s primary residence. It applies to single-family homes, including FHA-compliant manufactured homes, with no monthly payments required. It's available through MFA-approved lenders.

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ELIGIBILITY REQUIREMENTS

To qualify for the HomeNow program, you must meet these eligibility requirements:

  • Be a first-time homebuyer
  • Use HomeNow with the FirstHome program
  • Purchase a single-family residence in New Mexico, including detached homes, condos, townhomes and certain manufactured homes
  • Meet county-specific income and purchase price limits based on household size
  • Have a minimum credit score of 620, but alternative credit qualifications may apply if no credit score is available
  • Complete pre-purchase counseling through MFA’s online program or a HUD-approved agency
  • Occupy the property as the buyer's primary residence within 60 days of closing

Zero-Down-Payment Loan Programs in New Mexico

New Mexico offers zero-down-payment loan programs that don't require a down payment when purchasing a home. USDA and VA loans are government-backed loans with this benefit.

USDA Loans

USDA loans help low to moderate-income households own a home in rural areas. The U.S. Department of Agriculture issues these loans through its Rural Development Guaranteed Housing Loan program. This initiative benefits homebuyers in rural areas who may not qualify for traditional financing.

USDA loans offer several benefits, including no down payment requirements, lower interest rates than conventional loans and reduced mortgage insurance costs. These loans make homeownership more accessible to low-to-moderate-income households in eligible rural areas.

To qualify for a USDA loan, the property must be 2,000 square feet or below and located in a USDA-eligible rural area with a population of less than 35,000. Income limits vary by location. For instance, in Luna County, New Mexico, the income limit for a four-person, low-income household is $56,500, while in Eddy County, New Mexico, it's $75,900.

VA Loans

VA loans from the U.S. Department of Veterans Affairs are for veterans, active-duty service members and eligible surviving spouses seeking home financing options.

VA loans come with several advantages, including a no-down payment option. They don't require private mortgage insurance, reducing monthly payments. VA loans also typically offer lower interest rates than private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in New Mexico is 6.16%, while a 30-year fixed-rate VA loan has an APR of 6.36%.

Eligibility depends on several factors, including service length or commitment, duty status and character of service. Applicants must also meet location-based income limits and have a valid certificate of eligibility (COE).

Low-Down-Payment Loan Programs in New Mexico

First-time homebuyers in New Mexico can access low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

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    Conventional Loans

    Conventional loans are popular for homebuyers, offering flexible terms and competitive rates. There are two main types: conforming, which adhere to Freddie Mac or Fannie Mae guidelines, and non-conforming, which exceed these limits.

    Depending on the lender, you can secure a mortgage with as little as a 3% down payment. However, if your down payment is 20% or less, you must pay for private mortgage insurance (PMI). To qualify, you typically need a minimum credit score of 620 and a debt-to-income ratio of 43% or less.

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    FHA Loans

    FHA loans help more people own homes, following the Federal Housing Administration's guidelines. New Mexico's mortgage limits are $766,550 for single-family homes and $981,500 for two-family homes. These loans require a minimum credit score of 500 and a 3.5% down payment. PMI is mandatory if your down payment is less than 20%.

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    FHA 203(k)

    FHA 203(k) loans let homebuyers combine renovation costs with their mortgage. They require a 3.5% down payment and are available in standard and limited types. Eligibility includes a credit score of 500 to 580 and a front-end DTI ratio of 31% or lower. While not limited to first-time buyers, borrowers can't hold multiple FHA loans simultaneously.

FHA vs. Conventional Loan: Which Is Right for You?

FHA and conventional loans are often compared, as they're the most common types of mortgages. FHA loans require at least a 3.5% down payment, while conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements than FHA loans.

Interest rates are another critical consideration. As of November 2024, the APR for a 15-year fixed-rate conforming loan in New Mexico is 6.05%, compared to 7.98% for a 15-year fixed-rate FHA loan. APRs on FHA loans can be higher due to additional fees and costs associated with government-backed loans.

Use our FHA vs. conventional loan calculator below to compare both mortgage programs and determine the best option.

FHA vs. Conventional Loan Calculator

Compare FHA and conventional mortgage programs to better understand your loan opportunities in New Mexico.

Basic Details

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Calculation Results
Financial AnalysisFHAConventionalDifference
Monthly Payment (First Year)FHA$0Conventional$0Difference$0
Upfront Costs FHA$0Conventional$0Difference$0
Total 30-Year CostFHA$0Conventional$0Difference$0
Total 5-Year CostFHA$0Conventional$0Difference$0
Monthly Mortgage Insurance (First Year)FHA$0Conventional$0Difference$0
Down PaymentFHA$0Conventional$0Difference$0
Calculator results are rounded to the nearest whole dollar.
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RECOMMENDED CREDIT SCORES FOR FIRST-TIME HOMEBUYERS

Qualifying for first-time homebuyer programs often involves meeting minimum credit score requirements, which vary by loan program. Conventional loans typically require a 620 credit score, while government-backed loans like FHA loans may need a minimum credit score of only 500.

New Mexico's average credit score was 702 in the third quarter of 2023, according to Experian. This suggests that many residents may qualify for conventional and FHA loans, as the average score exceeds the minimum requirements for these programs.

FAQ: First-Time Homebuyer Programs in New Mexico

We answered frequently asked questions about first-time homebuyer programs in New Mexico to help you find the best option and move closer to homeownership.

Does New Mexico have first-time homebuyer programs?

What qualifies me as a first-time homebuyer in New Mexico?

Can you buy a house in New Mexico with no down payment?

Who can help me with my down payment on a house in New Mexico?

Additional Resources for First-Time Homebuyers in New Mexico

Explore additional MoneyGeek resources for first-time homebuyers in New Mexico to help you with the homebuying process.

About Zachary Romeo, CBCA


Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.


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