New Mexico First-Time Home Buyer: 2024 Programs and Grants

What to know about buying a house in New Mexico

New Mexico has median home prices that are on par with the national median. However, New Mexico does provide help in the form of programs that can assist potential buyers.

If you live in New Mexico and are having trouble saving for your dream home, you may be eligible for one of several programs offered by the state’s Mortgage Finance Authority. Keep reading to learn more about that and other helpful resources 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 $374,300 in September 2024, according to Redfin. That increased 3.5% from a year earlier.

Buying a home for the first time in New Mexico can be a challenge, but with the right resources and support, it can also be a manageable and rewarding experience.

And the Land of Enchantment also offers a range of resources and support for first-time home buyers, including down payment assistance programs, homebuyer education courses, and affordable housing initiatives.

New Mexico home buyer stats

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 no 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 moderate to low 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 your mortgage loan, you could 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 to help New Mexico first-time home buyers with low or moderate incomes. Both home loan programs offer competitive interest rates and come in the form of a fixed-rate loan.

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 programs.

MFA FirstHOME Loan Program

This first-time buyer program provides an FHA, VA, USDA, or an HFA Preferred conventional loan. It can be used in conjunction with New Mexico’s down payment assistance program.

Borrowers must have a credit score of at least 620 and put down at least $500. If a buyer doesn’t have a credit score, alternative credit qualifications may be acceptable.

Unless the buyer intends to purchase a home in a targeted area, there are income and purchase price limits. Homes in planned unit developments, townhomes, condominiums, single-family detached homes, and some manufactured homes are all eligible for financing.

MFA NextHOME Loan Program

Everyone who meets the requirements for a NextHOME Loan may apply. However, first-time buyers with low and moderate incomes may benefit the most from the program. That’s because it pairs a first and a second mortgage to help with a down payment. Similar to FirstHOME, borrowers must have a credit score of at least 620 and contribute at least $500 toward the purchase.

One big difference is that the purchase price and income limits are the same for all borrowers, regardless of their location or how many people live in their household.

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 needed for an FHA loan.

NM first-time home buyer grants

The New Mexico Mortgage Finance Authority DPAs are designed to make homeownership more accessible and affordable for first-time home buyers in New Mexico. They can be a valuable resource for those needing help with the upfront costs of purchasing a home.

MFA FIRSTDown DPA

MFA doesn’t always 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 10^th 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 any home buyer assistance programs are available in your target areas.

MFA HOMENow DPA

MFA HOMENow is designed to assist first-time home buyers in New Mexico with home purchasing costs. The program offers eligible buyers a deferred, forgivable loan of up to $7,000 to help with the down payment and closing costs of purchasing a home. This loan does not have to be repaid as long as the buyer lives in the home as their primary residence for a set time period, usually five years.

Buyers must meet certain income and home purchase price requirements, as well as complete a homebuyer education course, to be eligible for MFA HOMENow. Furthermore, the home being purchased must be in New Mexico and meet certain property standards.

MFA DownPaymentAdvantage

DownPaymentAdvantage gives borrowers earning less than 80% of the area median income a $25,000 down payment assistance grant. The funds are not repaid, and you can combine them with the FirstDown and HomeNow down payment assistance programs to receive up to $35,000 in total down payment assistance.

Other New Mexico first-time home buyer assistance programs

You might be qualified for first-time buyer assistance instead of the MFA’s help, depending on the area where you want to buy a home.

Local programs, such as the one run by the Santa Fe Community Housing Trust, may also help first-time homebuyers. Plus, there are a few financial institutions in the state that will help with the down payment.

These programs and assistance can greatly benefit New Mexico first-time home buyers who may struggle with the initial costs of purchasing a home. It is important for potential buyers to research and explore all available options to find the best fit for their financial situation.

Buying a home in New Mexico’s major cities

Typical home prices in New Mexico’s three biggest cities can be 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 $374,900 in September 2024. That rose 4.1% 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:

• $11,247 for 3% down payment
• $74,980 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 $355,100 in September 2024. That rose 1.8% 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:

• $10,653 for 3% down payment
• $71,020 for 20% down payment

Unfortunately, we found no 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 $407,000 in September 2024. That rose 1.9% 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:

• $12,210 for 3% down payment
• $81,400 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:

1. You can borrow less: “No more than 50% of the required down payment and reasonable closing costs ... up to a maximum of $5,000”
2. Provided 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

• Albuquerque
• Las Cruces
• Santa Fe
• Rio Rancho

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, get personalized rate quotes from at least three mortgage lenders. Don’t just look at advertised rates online. Instead, apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you get the best deal on your new home loan.

¹Source: Redfin.com Housing Trends Report

²Source: Experian.com study of 2022 and 2021 data

³Based on a review of the state's available DPA grants at the time this was written