The state and federal government run several first-time home buyer programs in New Mexico to help make homeownership a reality for all. So don’t feel discouraged if your income isn’t stellar or if your credit history isn’t superb. Several programs help New Mexicans purchase homes despite their circumstances. Some also cater to specific groups such as veterans, teachers and Americans who can’t find mortgages through traditional means. But the house hunting process can be complex. So if you think you need professional guidance, our SmartAsset Advisor matching tool can connect you with up to three advisors in your area who can help you find the best rates and terms. The following gives you a glimpse of the top New Mexico first-time home buyer programs.
Federal First-Time Home Buyer ProgramsFHA Loans Pros – Credit score of at least 580 can help you get a low-interest rate loan with a 3.5% down payment Cons – Insurance premiums
– Long appraisal process Eligibility – Usually need a credit score of at least 500 Best For – Low-to-moderate income Americans
The Federal Housing Administration administers low-interest FHA loans to help Americans who otherwise can’t secure a mortgage through conventional means. In fact, a credit score of at least of at least 580 can help you qualify for a 3.5% down payment. However, people with scores between 500 and 579 may need to make down payments closer to 10%. The rate is still generous compared to one you’d find with a traditional mortgage.
In addition, you’d have to live in the property you’re looking to purchase as a primary residence. An FHA official would also have to run the property through an appraisal process to make sure it’s safe and inhabitable.
Your borrowing maximum will largely depend on your debt-to-income ratio. Individual lenders may have their own requirements as well as assistance programs. So be sure to shop around.
USDA Loans Pros – USDA loans can finance up to 100% of the home’s purchase price
– Credit score of at least 620 can help you secure the best rates Cons – Property you’re looking to purchase must be in a USDA designated area
– Income limits Eligibility – Buy a home in a designated rural area and not make more than 115% of the median income for that location Best For – Low-to-moderate income individuals interested in moving to rural or suburban areas in New Mexico
The United States Department of Agriculture created the USDA loan program in order to motivate people to live in rural America and revitalize its economy. You can qualify for a low-interest guaranteed USDA loan if you use it to purchase a single-family home in a USDA designated area, which includes some suburban locations. However, your income can’t exceed 115% of the median income for the designated area where your potential property stands.
And even though guaranteed USDA loans are backed by the federal government, they are issued by local lenders. So they tend to ease the credit score and income requirements for qualification. You can usually get a USDA loan with a modest interest rate and zero down payment if your FICO credit score is at least 620. But because the lender would be taking on some risk giving you a generous rate and little-to-no down payment, you’d have to pay insurance premiums either up-front or throughout the year.
The government doesn’t set a maximum amount you can borrow through USDA loans. But your lender would consider the max based on your debt-to-income ratio to make sure you can reasonably pay it back with modest terms.
VA Loans Pros – VA loans with low interest rates and zero down payments are available to those who qualify
– No PMI necessary Cons – VA funding fee can be high in some circumstances Eligibility – Most veterans and service members, as well as specific beneficiaries such as spouses, qualify Best For – Veterans and service members with adequate credit scores
To help America’s military veterans and service members find a peaceful dwelling in the states, the U.S. Department of Veterans Affairs established VA loans. These low-interest mortgages require no private mortgage insurance (PMI) component. Plus, eligible applicants can score one with no down payment. To put this into perspective, a conventional mortgage usually comes with a down payment worth at least 20% of a property’s value.
These loans are backed by the federal government, but they’re issued by mortgage lenders throughout New Mexico. The VA also caps the amount lenders can charge in closing costs. These charges, which are common for any type of mortgage, can climb very high when it comes to conventional mortgages.
However, you’d be responsible for a VA funding fee measuring at around 1.50% to 2.15%. This fee can be waived under certain circumstances.
Good Neighbor Next Door Program Pros – 50% discount off listing price of a home
– Guidance from a Good Neighbor Next Door agent Cons – Qualification limited to a very niche group of borrowers
– Properties must be in HUD designated areas Eligibility – Be a K-12 teacher, police officer, firefighter, or emergency medical technician (EMT)
– Live in revitalization area Best For – Select professionals with low-to-moderate income
Teachers, police officers, firefighters and emergency health technicians (EMTs) who are looking at first-time home buyer programs in New Mexico should definitely consider the Good Neighbor Next Door program. The U.S. Department of Housing and Urban Development (HUD) created this program to fuel the presence of these professionals in “revitalization areas.” New Mexico houses of few of these zones.
However, the Good Neighbor Next Door program doesn’t offer you a mortgage. Instead, it provides qualifying applicants with 50% discounts off the listing price of a single family home in a revitalization area. You can cover the rest with an FHA, USDA, VA or conventional loan you qualify for.
This is a generous perk, but one that’s a bit difficult to obtain. First, you need to go through pre-approval from a Good Neighbor Next Door agent. And you may apply for a listing along with other eligible individuals. So discounts are handed out following a random lottery. However, the program claims your agent can help you find a listing if you don’t get your bid.
Fannie Mae/Freddie Mac Pros – Low-interest loans and down payments
– Several options to fund down payments
– Cancelable PMI Cons – Need higher credit score for best rates
– Long appraisal process Eligibility – Low-to-moderate income Americans with less-than-favorable credit scores Best For – Americans who can’t find mortgages elsewhere
You may have heard of Fannie Mae and Freddie Mac. These government-created housing giants run programs designed to make home ownership obtainable for those who can’t secure mortgages through traditional means.
One of Freddie Mac’s most popular programs is Home Possible, which is among the easiest loans to get. You don’t even need a credit score to qualify for one of these low-interest loans with down payments ranging from 3% to 5%. Freddie Mac also offers a variety of loan options. You can take out 15-to-30-year-fixed-rate mortgages. Or you can apply for adjustable-rate mortgages (ARMs).
You’d have to take out PMI. But you can cancel it after you’ve covered at least 20% of your home’s value. And unlike with conventional mortgages, you have several ways to cover down payments. Funds can come from you, family members and even employer-assistance programs.
On the other hand, Fannie Mae sponsors HomeReady loans. These mortgages include many of the same benefits provided by the HomePossible Program. Your down payment for this type of loan can sink to as low as 3%. However, you’d need a credit score of at least 620 for the best rates.
Pros – Lax credit score and income requirements
– Reduced funding fee Cons – Available to a very niche group Eligibility – Be a veteran or current service member who also is a Native American, Native Hawaiian, Pacific Islander or belongs to another group designated by the VA. Best For – Native American service members and veterans with low to moderate income
If you’re a Native American veteran who is interested in first-time homebuyer programs in New Mexico, the Native American Direct Loan (NADL) program should be the first one off your checklist.
The VA issues these loans directly to eligible Native Americans, their spouses and other recognized groups to help them purchase a single-family home on Federal Trust land. These 30-year-fixed-rate mortgages come with no down payment and a 4.50% interest rate. Plus, you’re not required to buy PMI. The VA sets borrowing maximums to about $424,100 in most areas.
You’d also be required to pay a VA funding fee of 1.25% at closing. It can drop to as low as 0.50% under certain circumstances. And the VA is very generous when it comes to credit score and income requirements for these types of loans.
New Mexico First-Time Home Buyer Programs The New Mexico Mortgage Finance Authority Pros – Several benefits including low-interest mortgages and down payment assistance Cons – Need higher credit score to secure best rates Eligibility – Meet income, family size and household size requirements set by MFA-approved lenders Best For – Low-to-moderate income New Mexicans
- The New Mexico Mortgage Finance Authority (MFA) describes itself as a quasi-governmental entity aimed at helping low- to moderate-income New Mexicans find affordable housing. It provides low-interest mortgages, down payment assistance programs and more for first-time home buyers in New Mexico.
- The MFA offers 30-year-fixed-rate mortgages through its First Home Program. To qualify, you must meet certain income, family size and household size requirements set by an MFA-approved lender. The lender will also determine any closing cost or down payment assistance programs you’re eligible for. In addition, you can combine this mortgage with other lending products such as those insured by the FHA, VA and USDA.
- The MFA works with local lenders, local governments, tribal communities and more to help support its first-time home buyer programs in New Mexico.
Tips For Finding Your Dream Home in New Mexico
- Keep digging. This report covers first-time home buyer programs in New Mexico that support the entire state. However, many New Mexican cities and counties sponsor their own programs. They can include down payment and closing costs assistance as well as low-interest mortgages.
- A mortgage can be a complex machine with several moving parts: down payments, closing costs, insurance, etc. So, we’ve developed our mortgage calculator to to help you figure out the real cost of buying a home in New Mexico.
- The house hunting process can be long and complicated. But if you want some professional help, we’ve got you covered. Our SmartAsset matching tool connects you to up to three local advisors based in your area. These professionals can help you find the best mortgage rates in New Mexico with the terms that work best based on your individual situation
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The post First-Time Home Buyer Programs in New Mexico for 2018 appeared first on SmartAsset Blog.
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