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New Mexico’s residents admire its unique culture and outdoor recreation. The Land of Enchantment has a strong electronics industry, which brought some $2 billion in total goods exports in a single year.
If you’re searching for a home in New Mexico, remember to shop around and compare mortgage rates. What may seem like a small difference could add up to thousands over the course of a 15-year or 30-year mortgage.
- Mortgage debt in New Mexico
- Types of home loans
- Conforming loan limits in New Mexico
- First-time homebuyer programs in New Mexico
- Mortgage refinancing rates in New Mexico
Mortgage debt in New Mexico
Credit Karma members with mortgages in New Mexico had average mortgage debt of $171,818 in 2020, with average monthly mortgage payments of $1,117.
That puts New Mexico below average for both mortgage debt and average monthly mortgage payments compared to Credit Karma members across the U.S. in 2020.
Types of home loans
If you choose to finance your dream home, you might be overwhelmed with the number of mortgage loan options out there. Here are some of the more common mortgage types New Mexico homeowners may consider.
Conventional loans in New Mexico
Conventional loans are mortgages that aren’t part of government programs. These loans tend to be good for people with solid credit and a down payment of at least 3% to 5%.
New Mexico FHA loans
FHA loans are a good option for first-time homebuyers to explore — particularly if your credit is less than perfect. That’s because you may be able to qualify with credit scores as low as 580 with a 3.5% down payment or 500 with a down payment of 10%. This FICO® score requirement is the FHA minimum standard. In general, additional lender credit score requirements may apply.
The FHA loan limit in 2021 is generally $356,352 for a one-unit property, but it can reach as high as $822,375 depending on where you live.
Two metro areas in New Mexico have higher limits.
- Los Alamos
- Santa Fe
You can find the exact limit by county on the U.S. Department of Housing and Urban Development website.
VA loans in New Mexico
If you’re an eligible veteran or service member comparing mortgage rates in New Mexico, a VA loan can be attractive since down payments and mortgage insurance aren’t typically required, and you may be able to qualify even if your credit isn’t great.
Similar to FHA loans, VA loans are insured by the federal government but issued by private lenders.
Conforming loan limits in New Mexico
Conforming loans are a type of home loan that meets certain loan limits set by the Federal Housing Finance Agency. This means they can be bought by Fannie Mae and Freddie Mac, federal-government-sponsored enterprises that guarantee mortgages.
Loans that exceed conforming loan limits are known as jumbo loans. Lenders often consider these loans riskier than conforming loans.
All of New Mexico’s counties have a conforming loan limit of $548,250 in 2021.
First-time homebuyer programs in New Mexico
If you’re hoping to buy your first home, there may be some assistance programs available to you in New Mexico.
- FIRSTHome: Offered by the New Mexico Mortgage Finance Authority, this program is designed for first-time homebuyers with low to moderate incomes. You can get a standalone first mortgage or combine it with down payment assistance in the form of a second mortgage. To qualify, you must have a minimum credit score of 620, though people with no credit score may be able to get alternative credit qualification in certain cases. Income, purchase price and other limits apply, and you’ll have to complete homebuyer counseling and contribute at least $500 of your own money toward your home.
- FirstDown: The MFA’s FirstDown program offers a second mortgage with a low interest rate to help first-time homebuyers with down payment and closing costs. You can get up to $8,000 and there are no loan minimums. Eligibility requirements for FirstDown are the same as those for FirstHome. This program is offered specifically for FirstHome loans.
- HomeNow: If you’re a first-time homebuyer and your income is at or below 80% of the area median income, you can apply for the MFA’s HomeNow program. You’ll get 8% of the sales price of your home or $8,000, whichever is lesser to cover down payment and closing costs. It’s a second mortgage that can be forgiven after 10 years if certain conditions are met. As with FirstDown, eligibility requirements are the same as those for FirstHome and this program is offered only in conunction with a FirstHome loan.
Mortgage refinancing rates in New Mexico
If you’re thinking about refinancing your mortgage, keep a few things in mind:
- Break-even cost — Once you know the closing costs for your refinance, you can use any savings on your monthly mortgage payment to calculate how long it will take you to recoup that investment and “break even.”
- Cash-out refinance — Have you accumulated equity in your home that you’d like to convert to cash? A cash-out refinance lets you refinance your home for more than what you owe and get cash in return. But you’ll owe the full amount plus interest and you’ll end up owning less equity in your home, which means less cash in your pocket if you sell in the future.
- Loan term — You also may want to either shorten or extend your loan term. For instance, if you have a 30-year mortgage, you may want to convert it to a 15-year loan. Keep in mind that reducing your term likely means you’re paying more each month — but less in interest over time. Lengthening your loan term may mean you pay less each month, but more interest over the course of the mortgage.