In New Mexico, first time home buyers are looking for help with down payment assistance and closing costs just as they are in any other state. Yet the fact remains that there are more opportunities in some states than there are in others. Unfortunately for New Mexico residents, their state is one of those on the lean side. Because there isn't a long list of first time home buyer programs available in New Mexico, consumers must be diligent in seeking out all the opportunities they can find.
Your real estate agent and mortgage lender are the experts in this field. They are the first ones to check with to determine if there any first time home buyer programs available in your local area. They may know of state programs, local programs, and even programs offered by charitable organizations. They will also be well versed in what the qualifications for those programs are as well as how to apply.
The New Mexico Mortgage of Finance Authority (MFA)
The New Mexico MFA is a quasi-public corporation founded in 1975 with the original goal of providing low interest mortgages to qualified first time home buyers. Funds to finance these mortgages were raised by selling tax-exempt bonds. In the 35 years since the MFA has expanded its scope to include many more housing services. In 1997 the New Mexico state legislature centralized all of its housing related departments under the MFA.
For New Mexico's first time home buyers the MFA acts as a clearinghouse for federal, state, and private grants. The Authority makes low-interest loans, down payment assistance, and closing cost assistance available through various approved lenders in the state. Applying for MFA programs is usually part of the normal mortgage application process first time home buyers will go through. To date the MFA has distributed more than $4 billion in housing assistance to deserving families.
MFA First Mortgage Programs
The MFA currently has two mortgage programs available to first time home buyers. The first one is known as the Mortgage Saver program. This program is open to first time home buyers who have not owned a qualifying home within the last three years. Within Mortgage Saver there are several loan types which apply depending on the buyer's circumstances.
These mortgages come as 30-year fixed-rate products with interest rates well below conventional mortgages. For borrowers whose income is at 50% or less than the median in the area where they wish to purchase, they may be eligible for a mortgage with an even lower interest rate. Other benefits of Mortgage Saver loans include no, or reduced, origination fees and grants for down payment and closing cost assistance.
The second mortgage program is known as the HERO program. In terms of detail and structure it is very similar to what is offered under the Mortgage Saver programs. The one difference is that the HERO mortgage is specifically designed for families who have at least one member working in a qualifying occupation. Examples of qualifying occupations include military, police officer or firefighter, healthcare worker, or educator. A HERO all mortgage offers many of the same benefits including lower interest rates, low or no origination fees, and grant programs for down payment and closing costs.
MFA Down Payment Assistance
The MFA now currently offers three different down payment assistance programs known as Helping Hand, Mortgage Booster, and PaymentSaver. Helping Hand provides a 0% interest loan for up to $8,000 that can be used for down payment, closing costs or other costs related to the purchase of a first home. Helping Hand is a secondary loan that does not need to be repaid until the house is sold, refinanced, or assumed by a new buyer.
The Mortgage Booster program is another down payment assistance program worth up to $8,000 toward the cost of closing a first home. It is tied directly to a Mortgage Saver home loan and will carry the same interest rate. It is a 30-year fixed-rate secondary loan which is paid off over the life of the mortgage. If a house is sold or assumed before the mortgage has been completely paid off, the cost of the secondary loan must be factored in to the sale price of the home.
The PaymentSaver down payment assistance program provides financial assistance for closing costs and down payment based on consumer need. It is also tied to a Mortgage Saver loan but the interest rate is a fixed, low rate rather than being tied to the interest rate of the mortgage. The biggest obstacle to this program is that the amount of the loan cannot exceed 8% of the total purchase price of the home. The maximum amount for this program is $8,000.
Other Programs in New Mexico
There are other programs not administered by MFA available to New Mexico first time home buyers. Sometimes these programs are run at the county or local level; sometimes they are the domain of private charities or individuals. In either case, HUD maintains a running list of these programs; below is a partial list of such programs. Keep in mind that the HUD list may or may not be up to date.
- Albuquerque Family Housing Development Program Soft Second Loan (SSL)
- Albuquerque United South Broadway Corporation Down Payment/Closing Cost Grant Program
- Las Cruces Home Choice II Program (HCP)
- Southern New Mexico- Tierra Del Sol Housing Corporation