First Time Homebuyers

Updated: Mar 1

With everything that is happening in the world today and the amount of people having lost employment, many need assistance with buying their first property.

The Sate of New Mexico offers several programs designed to aid first time home buyers with buying their first property. These programs are also offered to those who have not purchased a home in the past three years

Buying a home can be stressful and confusing. REALTOR®s (such as Myself) can explain these programs in detail. With the help of lenders, a REALTOR® will be able to let you know if you are qualified for one of these programs and aid in the application process.

The first step would be to know the different loan vehicles that will form your mortgage. Following, you will find four types of mortgage vehicles:

Conventional mortgage:

A conventional mortgage is a loan that is not insured by the federal government. These loans must conform to the regulation of Freddie Mac and Fannie Mae. They offer down payments as low as 3% for first time home buyer’s and low-income families. You are also allowed to cancel your mortgage insurance if you place a 20% (or more) down payment.

FHA loans:

These mortgages are insured by the Federal Housing Administration (FHA) and can offer relaxed qualifying requirements. They are more lenient when it comes to down payments and credit scores. With a 10% down payment, you may qualify, even with a credit score as low as 500. If your credit score is 580 or higher, you qualify at a down payment as low as 3.5%. These loans require mortgage insurance which can not be cancelled during the life of the loan.

VA loans:

The U.S. Department of Veterans Affairs offers VA mortgage loans to active service members, veterans and the surviving spouses of veterans. VA Loans provide competitive interest rates. Sometimes you may qualify for no down payment or mortgage insurance using a VA loan. Many lenders will require a minimum credit score of 640, however, you may run across lenders that do not require a minimum credit score.

If you qualify for a VA loan, I would like to thank you (from the bottom of my heart) for your service and dedication to our great country.

USDA loans:

The USDA home loan program encourages homeownership for low income individuals in both rural and suburban locations. Many of these loans are obtained with no down payment. You can often qualify for these loans using rental and utility proof of payment. If your credit score is 640 or above, you often experience faster loan processing. These mortgages are only offered in certain areas. Check with your lender to see if they offer this product in the area that your new home is located.

Now that we have explored a little bit of information about the loan vehicles that can be used to obtain your home, let see what New Mexico offers in the way of First Time Home Buyer’s Programs:

The New Mexico MFA offers several programs to assist First Time Home Buyer’s. In 2019 they provided more than $527 million in low interest financing and grants. This includes $18.3 million in down payment assistance and $432.4 million in mortgages.

The programs offered by New Mexico MFA are:

First Home:

First Home is exclusively for First Time Home Buyer’s. It requires a $500 contribution from the buyer’s own funds. You will need a minimum credit score of 620. They will require you to complete a pre-purchase homebuyer counseling program. It will work with FHA, VA, USDA and HFA Preferred Conventional mortgage loans. You can attach down payment assistance as a second mortgage, or use the mortgage on it own.

First Down:

First Down is a down payment assistance program design to be attached to your First Home program as a second mortgage. It is again exclusive to First Time Home Buyer’s and subject to the same buyer’s requirements as the First Home program.

Next Home:

Next Home is a program offered to low income individuals in New Mexico with a household income level of $91,000 or lower. This program also requires a contribution of $500 and a minimum credit score of 620. It is a combination first and second mortgage. The second mortgage will equal 3% of the first mortgage, requires no monthly payment and may be forgiven if certain conditions are met.

Home Now:

Home Now is available to borrowers at or below 80% of the area median income level. You can find more information about the MFA’s target areas here. This loan provides the lesser of 8% of the sales price of the home or $8,000 to help cover down payment and closing costs. It must be used in conjunction with the First Home program. It requires a $500 contribution from the homebuyer and the loan may be forgiven after 10 full years if certain conditions are met.

Enlaces en Espanol:

Primer Hogar; Primer Entre; Proximo Hogar; Zonas De Enfoque

If you have any other questions about these programs, or any other real estate related questions please email or log in and post a comment below.

The information presented here is the opinion, views and writings of Troy Larson. They do not represent the opinion, views or writings of any other person, entity or company.

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