What to know about buying a house in New Mexico
On average, home prices in New Mexico are higher than the typical price nationwide. Fortunately, though, New Mexico offers assistance programs that can help would-be buyers.
New Mexico’s Mortgage Finance Authority has down payment assistance programs that, if you qualify, could help you bridge the gap between your savings and your down payment. Read on for details about that, plus other essential information for first-time buyers.
In this article (Skip to...)
- NM home buyer overview
- Home loan options
- NM home buyer programs
- First-time buyer grants
- Buying in New Mexico’s cities
- Resources
- NM mortgage rates
New Mexico home buyer overview
The median list price in New Mexico was $511,000 in September 2022, according to Redfin. That was 5.7% higher than the median price a year earlier.
New Mexico’s median home price was also significantly higher than the nationwide median of $406,100. But luckily, there are a variety of home buyer assistance programs in New Mexico that can help you overcome rising prices and afford your own home.
New Mexico home buyer stats
| Average Home Listing Price in NM1 | $511,000 |
| Minimum Down Payment in NM (3%) | $15,300 |
| 20% Down Payment in NM | $102,200 |
| Average Credit Score in NM2 | 699 |
| Maximum NM Home Buyer Grant3 | $8,000 forgivable loan from the MFA |
Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the U.S. Department of Agriculture), you may not need any down payment at all.
First-time home buyer loans in New Mexico
If you’re a first-time home buyer in New Mexico with a 20% down payment, you can get a conventional loan with a low interest rate. And you’ll never have to pay for private mortgage insurance (PMI).
Of course, few first-time buyers have saved enough for 20% down. But the good news is that you don’t need that much. Not by a long shot.
Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:
- Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years once you reach 20% home equity
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans and active-duty service members. Zero down payment is required. Minimum credit score varies by lender but often 620. Competitive interest rates and no ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
- USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often start at 640. Low mortgage insurance rates
- New Mexico Mortgage Finance Authority loans: These state-run mortgage programs may come with down payment assistance. More information below
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.
If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.
NM first-time home buyer programs
The New Mexico Mortgage Finance Authority (MFA) has two mortgage programs that can help New Mexico first-time home buyers on a low or moderate income. Both home loan programs offer competitive interest rates and come in the form of a fixed-rate loan.
- FirstHome Program: Geared toward buyers with moderate income
- HomeNow Program: Geared toward buyers with below-average income
You’ll need to be in one of these state-run loan programs if you want to take advantage of the MFA’s down payment assistance program, FirstDown.
New Mexico first-time home buyer program requirements
There are income limits on the amount you can earn that vary by program, county, and household size. To see the median income limit that applies to you, download MFA’s FirstHome Program fact sheet (in English or Spanish) or the HomeNow one, also in English and Spanish. You’ll also find details of home purchase price limits in those.
Whichever of the two programs you prefer, you face a few additional qualifying hurdles. You must:
- Have a credit score of 620 or higher (although the MFA may consider alternative indicators of creditworthiness in special circumstances)
- Choose a lender from a list of participating lenders
- Complete a home buyer education course
- Be able to show at least two years of steady employment
- Have your employer verify that your employment situation is stable
- Have a reasonable debt-to-income ratio
- Provide documentation revealing your financial situation
Most of those are things every mortgage lender would require. But the credit score threshold is higher than you’d need for an FHA loan.
NM first-time home buyer grants
MFA doesn’t offer grants to New Mexico first-time home buyers. But, under its FirstDown program, it does provide the next best thing: forgivable loans.
These “silent” second mortgages have no monthly payments, charge 0% interest, and come with no minimum loan amount. And, as long as you own and live in the home (without refinancing) for 10 years, the loan is forgiven. But, if you sell, move, or refinance before the end of the 10th year, you’ll have to pay back the entire sum you borrowed.
You must contribute $500 of your own money to your purchase transaction. But the state’s loan may, perhaps, cover the rest. Because you can borrow up to 8% of your next home’s purchase price, capped at $8,000.
In addition to the statewide help offered by MFA, an experienced real estate agent should know whether or not there are any home buyer assistance programs available in your target areas.
Buying a home in New Mexico’s major cities
Typical home prices in New Mexico’s three biggest cities are actually lower than the statewide median. So choosing a home in one of these metro areas could present a good opportunity for first-time buyers.
Albuquerque first-time home buyers
The median list price of homes in Albuquerque was $339,800 in September 2022. That was an increase of 15.2% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
- $10,200 for 3% down payment
- $68,000 for 20% down payment
Although the City of Albuquerque refers to down payment assistance on its website, we could find no details about the program. All it says is, “The HOME budget includes housing rehabilitation, down payment assistance, and affordable housing development.” But the link takes you to the U.S. Department of Housing and Urban Development’s website. You could request further information by calling the city at (505) 768-2860.
Las Cruces first-time home buyers
The median list price of homes in Las Cruces was $296,500 in September 2022. That was an increase of 16.3% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
- $8,900 for 3% down payment
- $59,300 for 20% down payment
Unfortunately, we couldn’t find any trace of a down payment assistance program on the City of Las Cruces website. But you could call the city at (575) 541-2000 to check we didn’t miss anything. Otherwise, you may have to fall back on the statewide MFA offering (details above).
Rio Rancho first-time home buyers
The median list price of homes in Rio Rancho was $371,000 in September 2022. That was an increase of 21.2% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
- $11,100 for 3% down payment
- $74,200 for 20% down payment
The Rio Rancho city website describes a down payment assistance program that’s similar to MFA’s offering. It’s a “silent” forgivable loan with no monthly payments and a 0% interest rate. But it differs in two important respects:
- You can borrow less: “No more than 50% of the required down payment and reasonable closing costs ... up to a maximum of $5,000”
- Povided you meet its conditions, the loan is forgiven after only five years. That’s half the 10-year forgiveness period under the MFA program
That second point could be very valuable and worth taking a hit on the amount you borrow. Because many homeowners, especially in fast-growing metro areas, such as Rio Rancho, stay in their homes for less than 10 years. So if you plan to move on between five and 10 years after you purchase, the city’s program may be more beneficial than the state’s.
Where to find home buying help in New Mexico
All the organizations we’ve listed above should provide advice freely to any first-time home buyer in the state of New Mexico or within their areas.
But, in addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides lists of statewide, regional, and local resources:
Statewide and regional first-time home buyer programs in New Mexico
- New Mexico Mortgage Finance Authority: Home loan programs, including down payment and closing cost assistance
- Habitat for Humanity: Through volunteer labor, builds and rehabilitates houses for families in need
- U.S. Department of Agriculture Rural Housing: Homebuyer assistance programs in rural communities
- Native American program: Home mortgage program for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities
New Mexico first-time home buyer programs by city/town
What are today’s mortgage rates in New Mexico?
You can see today’s live mortgage rates in New Mexico here.
Before you begin your homeownership journey, you can experiment with a home affordability calculator to see how your interest rate and down payment will affect your monthly mortgage payment.
When you’re ready to start, make sure you get personalized rate quotes from at least three mortgage lenders. Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.
1Source: Redfin.com New Mexico Association of Realtors Housing Trends Report
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state's available DPA grants at the time this was written
