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 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.

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.

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.

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.

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.

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 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 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 December 2024, the APR for a 15-year fixed-rate VA loan in New Mexico is 6.06%, while a 30-year fixed-rate VA loan has an APR of 6.26%.

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).

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.

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 December 2024, the APR for a 15-year fixed-rate conforming loan in New Mexico is 5.85%, compared to 8.02% 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.

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.

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